* Shell-Petromanas discovery attracts interest
* Government mulling over future of state oil firm
By Benet Koleka
TIRANA, May 6 Albania plans to auction off 13
oil exploration blocks, including one offshore, to oil majors
and other foreign companies after a significant discovery has
attracted strong interest, a government minister said.
The government previously negotiated contracts one-on-one
with foreign oil companies and has now changed its strategy
because of "much higher interest over the last months from big
international firms", Energy and Mining Minister Damian Gjiknuri
told Reuters on Tuesday.
Royal Dutch Shell and Petromanas Energy Inc
said in November they had found good quality oil and gas in test
flows from their first well in Shpirag, in southern Albania, and
continue drilling to determine the capacity of the reservoir.
"Some reputable companies have expressed interest about
specific areas in Albania, probably influenced by the latest
discoveries of Shell-Petromanas," Gjiknuri said in an interview.
"What should a government do when it has various requests
for the same block? It is only normal for the government to
favour auctions to get the best possible offers," he added.
Shell, which owns 75 percent of the joint venture, said the
results were encouraging and supported "the potential of this
oil play in Albania".
Gjiknuri would not name the foreign companies that have
approached Albania since the Socialist-led coalition government
took power last September, soon after the botched privatisation
of the state-owned Albpetrol oil company.
"They are oil majors and also second-level companies but
much more powerful than most companies that have come to
Albania, including from beyond the (Atlantic) ocean," he said.
The government is still discussing the timetable for the
auctions or whether to hold separate auctions for selected
areas, while the oil and gas law needs to be changed, Gjiknuri
said.
The Dumre block in central Albania, sandwiched between two
blocks under contract to Petromanas, is drawing strong interest
and is likely to be the first to go under the hammer, he said.
The auctions will ensure that the blocks end up with
companies that have the financial and technical capacity to
invest and develop them, he said.
Some oil blocks in Albania had fallen into the "wrong
hands", Gjiknuri said, citing data that production-sharing
contracts with some foreign partners have failed to produce as
much from a well as cash-strapped Albpetrol was able to do on
its own.
Albania's crude output amounted to more than 1.2 million
tonnes in 2013, including 1.06 million by Canada's Bankers
Petroleum, 87,063 tonnes from Canada's Stream Oil
and 37,406 tonnes by Albpetrol on its own. Three foreign
firms produced the rest.
The National Agency of Natural Resources is in the process
of recruiting a law firm to advise on its existing contracts.
Gjiknuri said this was the logical course of action when a
contract had problems but declined to name any specific case.
The government is also mulling whether to restructure
Albpetrol to form a partnership with a foreign company, to sell
it off entirely or to upgrade its technical ability to monitor
the contracts and development of the oil sector, he said.
(Reporting By Benet Koleka; editing by Jane Baird)