Paydirt for Feb. 28, 2018: The next hundred years: Albania begins moving on its massive oil promise

Bankers Petroleum Ltd., with current PNN chairman Richard Wadsworth at the helm, pioneered oil production in Albania's Patos-Marinza heavy oil fields in 2004.

Bankers Petroleum Ltd., with current PNN chairman Richard Wadsworth at the helm, pioneered oil production in Albania's Patos-Marinza heavy oil fields in 2004.

Government determined to ‘pave the way for this impact,’ says Prime Minister Edi Rama

In 1918, Albania’s first oil reserves were discovered in the Drashovica region by a team of Italian researchers.

Today, exactly 100 years later, Albania seems more determined than ever to deliver on that vast promise.

“The history of trying to discover oil is 100 years old, but this extraordinary wealth has not yet had the impact that it should and could have—and may still have—in the life of our people,” said Albanian Prime Minister Edi Rama during last week’s announcement of an oil exploration agreement with Royal Dutch Shell for Albania’s Block 4 concession.

“This is our major goal—to pave the way for this impact,” added Rama. “We are rightly happy and hopeful for the future of the oil and gas sector in our country.”

According to government estimates, Albania has about 220 million barrels of oil reserves and 5.7 billion cubic metres of natural gas reserves.

In addition to Shell’s activities in Albania, Pennine Petroleum Corporation (TSX-V: PNN) recently received final government approval for its own Production Sharing Agreement (PSA) for the nearby Velca Block—a joint venture with Albpetrol Sh.A, Albania’s national oil company.

Pennine recently announced that it was targeting a Q3 2018 spudding date for its Velca Block earning well No. 1.

“Pennine is pleased and humbled to be part of the next 100 years of critical resource development in Albania, which is shaping up as a central hub for energy transportation and infrastructure,” says Pennine’s Chief Executive Officer, N. Desmond Smith. “Like many others, we see Albania as the energy gateway to Europe.”

Pennine’s chairman Richard Wadsworth was integral in developing Albania’s Patos-Marinza heavy oil fields, the largest onshore oil field in Europe, as the co-founder of Bankers Petroleum Ltd.

The Ramica structure target, where Pennine is currently determining a precise drilling location, has a best-case scenario of 26.5 million barrels of recoverable hydrocarbons, according to PNN’s NI 51-101 compliant independent prospective resource estimate.

Shell purchased Albanian assets of Canada-based Petromanas Energy in early 2016, and was encouraged by results of its own Albanian drilling program, with European vice president Edwin Verdonk commenting in recent years: “The results can support the oil game in Albania.”

Since mid-2017, Albania has touted itself as a “new oil frontier,” and taken steps to attract foreign oil investment dollars.

“Albania today, in relation to the non-distant past, guarantees clarity, transparency and justice in the relations between government and foreign investors,” Rama said last week. “Any foreign investor can see Albania as a country with many opportunities. There is a lot to discover, especially in the hydrocarbon sector.”

Albania’s move to attract foreign investment has been noticed across the Adriatic in Italy, which is already Albania’s largest trade partner.

Alberto Cutillo, Italy’s ambassador to Albania, recently remarked: “The reform is expected to attract more investment. Albania can become the gateway to the entire Western Balkans. Albania deserves the opening of negotiations, and if this happens, Albania will be a new (model) for the modernization of the economic system.”