Energy and resources in Albania
Albania is largely self-sufficient in energy resources and in most years (up to 1989) has been a net exporter of electricity and refinery oil by-products.
Albania is rich with energy resources: oil, gas, coal, wood, peat, and hydro-energy potential, etc., which contribute in different ways to meet energy demands in the country.
Energy and resources sector in Albania is dominated by the:
- petroleum sector,
- hydro-energy sector and
- Mining and quarry sector..
Based on preliminary results published by INSTAT1, the Energy and resources sector accounted for 7% of the gross domestic product in 2013 and 2014. Oil and mining sector together account for a share at 5% of the GDP, while the power sector comprised about 2% of the GDP.
Crude oil comprises the primary source of energy produced in Albania representing 67.7% of primary energy sources produced in 2014 (2013: 59.1%) followed by the power sector with about 20% of primary energy sources produced in 2014 (2013: 29.3%).
If we consider revenue generated by main revenue streams (royalties, profit tax, share on oil production, signature bonuses, and other industry related payments) the extractive sector and hydro-energy sector contributed at minimum an amount of Lek 12.9 billion or 3.9% of total Government’s revenue in the National Budget 2013. In 2014, the extractive sector and the hydro-energy sector contributed at minimum Lek 12.7 billion, representing 3.5% of the revenue recorded in the National Budget (refer to table below).
Royalty comprises the primary revenue stream contributed by the extractive sector of oil, gas and mining to the National budget. Royalty collected in 2014 was 3% lower than royalty collected in 2013. Royalty decreased despite the increase oil and mining production. Such drop in royalty is attributed to the decrease in international prices for oil and mineral ores. Share of oil production is the second largest revenue stream collected by the oil sector. Private oil companies entirely paid in kind the share of oil production of 75,825 ton in 2013 and 94,304 ton in 2014. Values shown above for share of oil production were estimated using the annual average sales price applied by Albpetrol in 2013 of USD 441/ton and USD 396/ton in 2014. Amount in USD were converted in Lek with the average rate of the Bank of Albania for the year 2013 and 2014, respectively at 1 USD equal to 105.7 Lek and 1 USD equal to 105.5 Lek.
In 2013, the National Budget collected revenue of Lek 15,439 billion from the privatization of the HPPs of Ulza, Shkopet and Bistrica 1 and 2, which were operating under KESH until mid-2013. Due to its one off nature, this revenue is not included in the table above. Had this amount been included in the revenue shown above, the contribution to the revenue National Budget would be increased from 3.9% to 8.7%.
Source – Albanian Customs Administrate2
Exports from the extractive sector have increased substantially by over 100% in the last four years. In 2013 exports from the extractive sector amounted at Lek 96.7 billion or 39% of total exports. This share dropped in 2014 to 32% of total exports or Lek 82.2 billion. Such share is attributed to the crude oil exports which accounted from 64% to 75% of total extractive exports in the last four years, as shown chart 4.
Crude oil was mainly exported to Italy, Spain and Malta. While China was the major buyer of the Albanian chromium and copper ore.
1. Annual National Accounts (Production Approach) 2008-2014 published on www.instat.gov.al.
2. Source – Albanian Customs Administrate.