Albania

EITI Status Meaningful progress
Joined EITI in 2009
Latest Data From 2016
Latest Validation 2018
Website EITI Albania
Last updated 22 October 2019

Overview

Rich in natural resources, Albania is using the EITI to modernise and promote good governance of the extractive industries. As of 2016, the energy sector contributes 6% of GDP with USD 805 million government revenues. Its energy sector includes hydrocarbons (crude oil, natural gas, solid fuels), hydropower and renewable energy systems (RES), with crude oil being its primary source. The mining sector is represented by mostly chromium and limestone contributing 55% and 31% to the domestic mining output respectively. At the same time, Albania is the only EITI implementing country to expand its EITI scope to hydropower.

While Albania’s extractive sector was previously dominated by state-owned enterprises, in 1994 it opened up to private investment. The Albanian government is working to promote investment in its energy sector to stimulate development and job creation.

The petroleum industry has two main systems for awarding contracts: competitive bidding and ad hoc negotiations. The Ministry of Energy and Industry (MEI) grants mining licenses and hydropower concessions. The state-owned enterprise, Albpetrol, may sub-contract its exploration and production rights to oil and gas companies through petroleum agreements, approved by MEI.

Production

In 2016, the oil and gas sector counted seven companies extracting crude oil in the southern part of Albania and four companies engaged in exploration activities. In 2016, Albpetrol reported domestic crude oil production at 1,034 thousand tons with an estimated worth of USD 179.3 million based on average export prices in 2016. The biggest operating oilfield is Patos-Marinza, which represents 87% of total crude oil production. Crude oil is mainly exported to Italy, Spain and Malta.

Domestic mining output was estimated at USD 214.1 million in 2016 (including the value added through mineral processing). Chromium contributed the largest share with about 74% of domestic mining output value. Limestone and other construction minerals represented the second largest group of minerals after chromium, with 22% of the domestic mining output value.

Natural resources

Source: Albania’s 2013-2014 EITI Report.

CommodityReservesUnitSignificance
Oil437.6Million tons
Gas18,164Million Nm3
Chromium10Million tons
Copper50Million tons
Nickel300Million tons
Hydro power10,000GWhAnnual potential capacity of hydropower production

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Commodity trading

Albpetrol sells the oil received from PSAs (profit share) and extracted through its own oil field operations (equity oil) through open public auctions. The auctions allocate annual contracts to sell oil, and the quantity of oil to be sold under the contract is based on the annual forecasts of oil to be received in-kind by Albpetrol. Albpetrol delivers oil and collects payments from the company contracted to sell the oil in accordance with a pre-defined annual schedule.

Albania’s 2015 EITI Report, published in March 2017, disclosed new information on how the country’s commodity trading industry works. In 2016, Albania signaled its interest to participate in the EITI’s targeted efforts on commodity trading. The country has also produced its commodity trading report in 2018.

Revenue collection

A share of oil and bonuses are collected by the state-owned enterprises Albpetrol and AKBN, whereas a royalty tax, profit tax, dividends and other payments are collected by the government. The government’s revenues from extractive industries and hydropower sector amounted to USD 805 million in 2016, which comprises about 5% of total revenue recorded in the State budget.

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Revenue allocation

Royalties levied from taxable sales of oil, gas, and minerals is recorded in the state budget. According to the “Law on National taxes no. 9975, dated 28 July 2008, amended,” 5% of royalty tax collected must be allocated to each local government unit (“LGU”), proportionate to their contribution to the domestic output of oil, gas and mining.

According to the 2016 EITI Report, subnational transfers amounted to USD 3.5 million in 2016 and represents the main revenue allocated to the local governments.

Innovations

The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.

Commodity trading is covered in the 2015 EITI Report and in a standalone 2018 Commodity Trading Report.

  • Hydropower is included in EITI reporting makes Albania so far the only EITI implementing country covering hydropower sector.

Implementation

Governance

Mining companies are required to implement the EITI, according to Law 10304. The Presidential Order No. 71 (dated 21 July 2011) establishes the EITI structures and process that must be followed. As of March 2015, oil companies are required to participate in the EITI, according to an amended legislation on hydrocarbons, Law 7746 from 28 July 1993.

Timeline

Albania is using the EITI process for wider reforms in the sector, including the development of a revenue management plan to address informality in the mining sector and building its capacity in contracts.

 

 

Validation

In February 2018, the EITI Board agreed that Albania has made meaningful progress in implementing the 2016 EITI Standard. In the second Validation, the EITI International Secretariat assessed the progress made in addressing the ten corrective actions established by the EITI Board following the first Validation. On 17 June 2019, the Board decided that Albania made meaningful progress with considerable improvements. The third validation of Albania will commence on 17 June 2020. The MSG has to address six corrective actions.

Albania's progress by requirement

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