Bankers Petroleum posts record high losses as Chinese acquisition delayed
Story Highlights
- The losses are the worst Bankers has incurred during more than a decade of operations in Albania and come after China’s Geo Jade is about to conclude the takeover of Albania's largest oil producer and exporter for C$575 million (€392 mln)
Related Articles
TIRANA, Aug. 15 - Canada-based Bankers Petroleum, the country's largest oil producer, posted record high losses of about $34 million in the first half of this year ahead of its expected acquisition by a Chinese company which has been delayed by late September.
The company's huge losses were a result of a sharp cut in international oil prices affecting production, sales and royalties to the Albanian government. The losses are the worst Bankers has incurred during more than a decade of operations in Albania and come after China’s Geo Jade is about to conclude the takeover of Albania's largest oil producer and exporter for C$575 million (€392 mln). The takeover has been held back by a final approval by the Chinese State Administration of Foreign Exchange, SAFE.
Bankers Petroleum, says failure to receive the final approval by Sept. 30 would entitle the Canadian company to $20 million in compensation for the termination of the preliminary deal signed last March.
The company's poor financial performance comes as Bankers' average oil prices for the first half of this year hit a record low of only $25.2/barrel, down from $43.78 during the same period in 2015 and a record high of $87 a barrel in the first half of 2014, just before international oil prices embarked on a downward trend that took them a 12-year low of below $30 in early 2016. The low prices also affected production which dropped by an annual 20 percent to 16,649 barrels of oil per day in the first half of this year.
Due to the poor quality of its crude oil, Bankers’ sale prices represent only about 62 percent of the average Brent oil price.
Royalties to the Albanian government also dropped to a mere $10 million in the first half of this year, down from $22 million during the same period last year and a record high of $47 million in the first half of 2014, posing a key threat to public finances.
Since late 2015, Bankers Petroleum has delayed new drilling, saying that activity will resume as soon as pricing improves.
Last March’s surprise Bankers Petroleum sale deal came as the country’s biggest oil producer had recently been facing tough times after more than a decade of operations in Albania due to a sharp cut in international oil prices and tax and environmental disputes with the Albanian government.
Bankers Petroleum suffered losses of $3.6 million in 2015 when oil prices almost halved following record high profits of about $129 million in 2014.
Since 2004, Bankers operates and has the full rights to develop the Patos-Marinza and Kuà§ova heavy oilfields under a 25-year concession contract with the Albanian government. The Patos-Marinza oilfield is the largest onshore oilfield in continental Europe, holding approximately 5.4 billion barrels of original oil in place. The Kuà§ova field has 297 million barrels of original-oil-in-place.
The Chinese are also about to take over the country's sole international airport. Albania’s Competition Authority has recently okayed the takeover deal between the TIA airport concessionaire and China Everbright which will manage the country’s sole international airport for another 11 years for a reported €82 million.
If completed, the deals would make China one of the country’s biggest foreign investors.
