Albania Minister of Energy maps out extractives reform

Albania Minister of Energy maps out extractives reform

Oil Tower in Marinëz- Fier, Albania. Submitted for the 2014 EITI photo competition.

Albania has released its 2011 EITI report, its first under the EITI Standard, which details revenue from the country’s oil, gas and mining sectors.

Following Albania’s EITI, the government is now preparing a wider sector reform.

Albanian Minister of Energy and Industry Mr Damian Gjiknuri commented:

With our EITI process, we will launch a revenue management plan, establish control mechanisms, examine rates for the regions as well as build our capacity in contracts. Creating a broader understanding of the extractive industries and putting the necessary processes in place should make our country, particularly given its geographical proximity to European markets, more attractive for investment.

“Although oil, gas and mining presently contribute only two percent of our country’s GDP, I am fully determined to increase our production in new extracting activities to bolster the government’s revenue and to work towards addressing informality in the mining sector,” Mr Gjuknuri added.

The 40-page report, prepared by Deloitte, for the first time includes contextual information to allow greater understanding about the industry. The sector brought in US $89.3 million or Albanian lek 9.32 billion.

Ms Dorina Çinari, head of the National Secretariat, said, “We are pleased to have completed our 2011 report under the Standard. A great deal of effort has gone into it and we hope that this provides a better understanding of the extractives to our citizens as well as to potential investors in Albania.”

Over 80% of this state revenue from the extractive sector comes from petroleum licenses, predominantly the Pator-Marinza onshore license (in the south of the country) operated by Bankers Petroleum. Italy is the main export market.

Mining takes up 19% of the country’s extractive revenue stream, two-thirds of which is from chromium extracted in the eastern Bulqiza region. Exports play an important role in Albania with chromium alone bringing in US $115 million in 2011. Looking at Albania’s copper revenue for 2011, the dramatic boost in world copper prices that year is apparent. Despite production of around US $10 million, Albania exported US $42 million to take advantage of the spike in copper prices at US $8,000 per metric tonne.

The cash flows of the two sectors were reconciled to over 99%, meaning there is hardly any difference between what the government received from the companies and what the companies declared to have paid to the government.

In 2009, Albania announced its commitment to join the EITI, becoming a compliant country in 2013. The Multi-Stakeholder Group, consisting of the government, private companies and civil society, will be publishing its 2012 report later this year, its fourth since joining the process.

For further information about the EITI Albania, please visit the country page on the EITI website and thenational EITI website.