Albania wins the arbitration with the company Bankers Petroleum

2024-06-27 14:52:00, Aktualitet CNA

On June 7, 2024, after several years of arbitration proceedings, the international court operating under the International Chamber of Commerce (ICC) based in Paris has given the final decision on the dispute raised by Bankers Petroleum against the Ministry of Energy and Industry of Albania (MIE). and Albpetrol.

The dispute, brought to arbitration by Bankers, related to cost recovery proceedings under the 2004 License-Agreement and Hydrocarbons Agreement related to Bankers, in connection with operations in the Patos Marinza oil field.

At the conclusion of the trial, and because Bankers sought through arbitration to retain all sums generated from the production of the Patos Marinza field through the cost recovery procedure, Albania succeeded in prevailing on many of the issues of interpretation of the Agreements before the Tribunal.

Specifically, the Court agreed with Albania's interpretation of important aspects of the agreements, in particular that the categories of recoverable costs are specifically listed in the agreement, so that other costs such as payments made to Bankers' Canadian operations or payments for settlements of understanding disputes with other oil supply companies cannot be recovered (contrary to Bankers' claims).

The court also concluded that disputed costs that had been incurred, such as investments in community relations that had been exaggerated or payments for ground rents, could not be claimed either.

The tribunal agreed with Albania that important subcontracts should be awarded through rigorous tendering processes, increasing the transparency and efficiency of the project.

The Decision concludes that over 236 million dollars of the costs claimed by Bankers and contested by AKBN have been rejected and declared irrecoverable.

The result of the dispute is that Bankers will have to return to Albania sums on account of the Patos Marinza oil field. This will increase the historical profits of the oil field and lead to profit tax payments to the state.

Such a result acts as an important precedent for future income tax calculations both in Patos Marinzë and in all such assets belonging to the Albanian state where similar licensing agreements apply. The decision is also a strong vindication of the state's audits of hydrocarbon activities as well as its decision to dispute cost recoveries.

The result of this decision was achieved by the work done by the working group, consisting of experts from the Ministry of Infrastructure and Energy, AKBN, from the State Attorney's Office, assisted by an international professional legal team (Hogan Lovells Paris), with the support of international oil experts, to make appropriate submissions and explanations before the Tribunal.

Although it took many years to develop these procedures, Albania has already achieved this final, successful and verifiable result, giving much clarity to important future operations in Patos Marinzë.

The Ministry of Infrastructure and Energy looks forward to continuing to work with investors to utilize Albania's assets in the most efficient way possible, beneficial to all parties involved and especially to the Albanian people, as well as to work within the highest social standards. and environmental to ensure that such areas are properly maintained in accordance with international standards and properly rehabilitated at the end of their use./ CNA