The industry of oil exploitation in Albania as well as in the rest of the world, cannot say they have been operating successfully. International factors that have impact on this sector are mostly related to recent events in the markets of minerals, especially hydrocarbons. However not the entire industry is having a bad day.
When it comes to the production of hydrocarbons, there have been very few positive outcomes in the past year.
It has been a year when companies had to accept the new reality. The scale of the funding that was circulating has dropped significantly. The average price in 2015 has dropped to a third of a price from the year before.
The company Transatlantic, which bought Stream Oil and Gas, was struck hard by this new situation. Due to big financial problems that followed the activities in Albania from day one, they have paid little attention to the improvement of the parameters of the deposits that they own according to the contract. This showed in the reduction of the extractive capacity. The monthly scale of production fell from 6000 tons to 4.500 tons a month.
The other two companies Bankers Petroleum and Transoil, also had a drop in production and slowed down when it comes to opening new wells.
Bankers stopped the operations of 2 out of 3 contractors for the drilling of wells while Transoil dropped productivity per time unit. Both drills were completed only halfway compared to the plan from the beginning of the year.
This process was followed by the review of the wells, while the income from the production does not justify keeping them operational.
All this led to the reduction of total production.
In 2016 we expect further deterioration of the situation but in a lower intensity.
At the current level of prices, when oil is getting closer to 30 dollars per barrel (which it should reach pretty soon, probably in the other half of January) the main problem is the survival of the companies.
The current costs of oil extraction are higher than the market price of oil. Considering that the oil production price per barrel is around 35 dollars in Albania, while the Albanian oil sells for 70 percent of brent ore, companies have a financial gap of 13 to 14 dollars per barrel on average.
If we consider the fact that the rate of the selling price per barrel could deteriorate from two reasons: 1. Oil balance in the market is currently discriminating the oil fuel and less quality oil such as Albanian directly, so the companies will have to lower the prices and 2. Due to global economy situation the demand for bitumen is dropping which is the main product coming from Albanian oil, so the situation is getting worse.
While the current conditions are a nightmare for the production companies, it appears that the exploration companies have a blooming business this year. The reduction in the price of oil and depression of the entire sector is good news to them, considering that the operational costs of the companies seeking oil will be smaller.
That shows in Albania too where the interest for blocks is record high. It appears that the Albanian blocks drew the attention of oil giants and that the exploration is an area worth of investment, transmits Serbia-energy.eu