18
February 2020
INVESTIGATION
Breach of Procurement for Oilfields Tender Could Cost Albania $300 million According to a verdict of the Vlora Administrative Court, the selection of the Swiss company ‘Terraoil Swiss’ as the winner in the concession of the three oil fields in southern Albania was done in breach of procurement rules by former Energy Minister Damian Gjiknuri and stateowned oil company Albpetrol, with a damage to the state in the tune of $250-300 million. BESAR LIKMETA | BIRN | TIRANA
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n March 2018, the state-owned oil company Albpetrol opened a tender for the Cakran-Mollaj, Gorisht-Kocul and Amonica oilfields. On May 9, 2018, former Minister of Energy and Infrastructure Damian Gjiknuri ordered the creation of a negotiating group for the signing of the petroleum agreements with the company Terraoil Swiss (then Transoil Group) and a month later asked Albpetrol to file a request to the National Agency for Natural Resources for licensing agreement. Not all bidders in the tender agreed with the decision of the Ministry of Energy and Infrastructure and one of them the Canadian company Letho Resources Corp. filed a lawsuit in the Vlora Administrative Court. The decision of the Vlora Administrative Court, obtained by BIRN, shows that Terraoil did not meet the requirements to qualify for the tender for the three oil fields and to be declared the winner. According to the court, the company Terraoil Swiss sh.a., represented by the Albanian lawyer ShefqetDizdari, in its tender application did not submit the required documents for the fulfilment of the technical criteria. The court also notes that the tender was held in lack of transparency by Albpetrol and the Ministry of Energy and Infrastructure, while Terraoil Swiss was declared the winner, although it had a “less favourable” financial offer than the plaintiff for one of the oil fields, Cakran- Mollaj. “In monetary terms, Letho’s bid for the Albanian state is about $10 million better than the Terraoil Swiss bid (formerly Transoil Group sh.a),” the Vlora Administrative Court said. “Given the duration of 25 + 5 years of petroleum agreements, it turns out that the offer of Letho Resources Corp. would bring a benefit to the Albanian state of $ 250-300 million more than that of Tran-
The map of the oil fields in southern Albania.
soil Group AG, ”the ruling adds. In its objections to the court, the Swiss company said that the complaint brought by the plaintiff was unsubstantiated in law and evidence because “the plaintiff did not exhaust the administrative complaint” mechanism. According to Terraoil the lawsuit was also filed “beyond the 45-day time limit.” Terraoil Swiss and former Minister of Energy and Infrastructure Damian Gjiknuri did not respond to a request for comment from BIRN. Albpetrol, meanwhile, denied having illegally favored Transoil Group, now Terraoil Swiss. “The Administrative Court of First Instance in Vlora, in its decision, has not stated that Albpetrol has illegally favored
Transoil Group,” the state-owned oil company said in a written response. The decision of the Vlora Administrative Court was appealed on September 30th 2019 to the Administrative Court of Appeals. Lack of transparency On March 8, 2018, Albpetrol announced an invitation for expressions of interest for companies interested in concluding petroleum agreements for three free oilfields, Cakran-Mollaj, Gorisht-Kocul and Amonica. According to the announcement made by Albpetrol, companies interested in these oilfields were to formally submit the application form and all relevant docu-
mentation by March 31st2018. This application was to consist of authentic documents, which would be submitted separately for each oilfield. Each interested party, in order to fill out the application form, had to obtain from Albpetrol the data for each oilfield, for which it had to make a payment of $6500 for each data package. Nine oil companies participated in the tender, including Bankers Petroleum, Transoil Group AG (later Terraoil Swiss), Shandong Kerui Petroleum Equipment, Letho, Verssa Versatile, Pennine, Alcan, Fluid Oil and Zennith Energy. According to the “Regulation on the Signing of Petroleum Agreements”, within 10 days of the deadline for submission of applications, Albpetrol sends all documentation to the Ministry of Infrastructure and Energy. In the meantime, the Ministry of Infrastructure and Energy, within 7 days of receiving the documentation of the bidding companies, gives the approval for the winning bid. However, according to the Court, in the tender for the three oilfields in southern Albania the regulatory framework was not respected. Not only did Albpetrol not open the negotiations according to legal deadlines, but did not make any public announcement on the tender during this period following the initial notice of expression of interests. After Alcan filed a lawsuit against Albpetrol, the bidding operators learned that the state-owned oil company had declared without any transparency Terraoil Swiss as the winner and had begun negotiations for the contract of the petroleum agree-
