Resolution to Bankers PSA dispute confirms Albania's stable, consistent environment
Sept. 14, 2016
By N. Desmond Smith, Chief Financial Officer
A stable environment—for economic growth, employment, tax revenue and ever-improving quality of life.
It’s the direct result of consistently applying the rule of law and property rights. And it’s the sort of stability that was recently reaffirmed in Albania—after the Balkan republic honored its agreements, and accepted the outcome of recent binding resolution to a production sharing agreement (PSA) dispute with Bankers Petroleum Ltd.
At issue were 2011 Bankers expenditures, identified in November 2015 by Albania’s state tax inspectorate. Given that certain expense recording procedures are an integral part of any PSA, Bankers and Albania’s Ministry of Energy and Industry wisely and respectfully came to a mutual agreement—the establishment of a renowned international panel of experts to interpret salient details of the respective arguments.
Following precedents set by previous Albania governments, this panel was assembled to establish go-forward methodology for all business activities of a similar nature.
The panel’s ruling, made public in recent days, included a recommendation for the establishment of a new commercial alignment, with the Republic of Albania receiving a “profit oil” share of production—from the very first barrel—in existing and future PSAs.
“Profit oil” from the first barrel, in addition to royalties for mineral rights, serves all parties more than adequately. Once again, Albania has demonstrated that it possesses a transparent and internationally accepted business dispute resolution process.
Our leadership team at Pennine Petroleum Corporation applauds Albania for this diplomatic resolution. Ultimately, it underscores the stable and consistent environment that exists in this Balkan republic—to nurture the quality of life of its citizens, and attract more businesses of all types.