Qualitative Analysis of Companies: Albpetrol

Introduction

Albpetrol is the Albanian state-owned company responsible for the exploration, production, and commercialization of oil and natural gas in Albania. Founded in 1993, the company inherited and expanded upon the petroleum operations established during the socialist period in the country. Its activities include the administration of oil and gas fields, such as Patos-Marinza, one of the largest onshore oil fields in Europe. Albpetrol plays a significant role in Albania’s energy sector, managing the country’s strategic natural resources and contributing to the national energy infrastructure.

History

The origins of Albpetrol trace back to the socialist period when the Albanian government began systematic efforts to explore and develop the country’s natural resources, including oil and natural gas. During this time, resource management was centralized and directly controlled by the state, focusing on energy self-sufficiency.

In 1993, following Albania's transition to a market economy, Albpetrol was formally established as a state entity with the aim of managing oil and gas-related operations. The new structure sought to consolidate existing activities, modernize exploration and production processes, and manage discovered oil fields like Patos-Marinza, Ku?ova, and others. The company also assumed a regulatory role at certain times, overseeing contracts and partnerships with private companies interested in investing in resource exploration and development in the country.

Activities

Albpetrol engages in hydrocarbon-related activities, including the research, extraction, and commercialization of crude oil. Its operations cover the entire cycle of seismic, geological, geophysical, and mechanical works, both on Albanian territory and abroad. The company also supervises hydrocarbon contracts with concessionary companies and holds environmental licenses to operate in various oil and gas fields, such as Ku?ovo, Patos-Marinza, and Divjak?-Lushnje. Since 2003, Albpetrol has also been active in electricity supply and commercialization, gas transportation, and managing related infrastructure, like fuel product transmission networks and industrial facilities.

Production

Albpetrol SH.A currently operates in two sandstone fields and four carbonate fields. Between 2015 and 2024, annual oil production fluctuated, recording 60,462.31 tons in 2015, peaking at 93,095.96 tons in 2017, and totaling 668,867.26 tons during the period.

Oil Fields

The 6,799 oil wells in Albania can be grouped into five major fields. Albpetrol SH.A operates in various oil fields in the country, each with specific characteristics:

• Ku?ov? Field: This sandstone field is explored through relatively shallow vertical wells, reaching depths of up to 1,000 meters. Due to low reservoir energy, wells produce between 50 and 200 liters of oil per day. Albpetrol manages approximately 1,613 wells in this field, with around 950 actively producing.
• Patos Field: Another sandstone field where Albpetrol manages a small portion not granted to "Bankers Petroleum Albania" Ltd. The wells are vertical, usually not exceeding 1,200 meters in depth. There are 888 wells in inventory, of which 22 are currently active.
• Cakran-Mollaj Field: This carbonate reservoir of limestone, discovered in 1977, has wells that reach up to 3,800 meters deep. Albpetrol owns 63 wells here, with 32 actively producing oil and gas. The extracted oil is considered light, with a specific gravity of approximately 0.9 g/cm3.
• Gorisht-Kocul Field: This carbonate field consists of two overlying anticlines: Gorisht and Kocul. It has 284 vertical wells, with depths ranging between 700 and 1,500 meters, of which 142 are active. The produced oil is relatively heavy, with a specific gravity of 0.965 g/cm3.

Company Oil Deposits

Albpetrol SH.A. explores and produces hydrocarbons in various oil fields in Albania, mainly classified into two types of deposits: Neogene and carbonate.

• Neogene Deposits: Located in the southeastern part of the Pre-Adriatic Plain, these deposits are characterized by sandy formations resulting from marine and lagoon sedimentation. The hydrocarbons present are predominantly heavy and viscous oils, with some layers containing gas caps. The primary energy for extraction comes from gas dissolved in oil. Wells in these deposits vary in depth, generally between 700 and 1,500 meters, with spacing of 80 to 300 meters depending on the specific formation. Notable fields include Patos-Marinza and Ku?ov?.
• Carbonate Deposits: Situated in the Kurvelesh belt, these deposits span formations from the Jurassic to the Paleogene periods. They are typically anticlinical structures, covered by flysch deposits from the Oligocene. They feature double porosity, with natural fractures and low matrix porosity. The primary energy extraction comes from active aquifers beneath. Except in the Cakran-Mollaj field, the oils from these deposits are typically heavy, viscous, and have high sulfur content. Wells are completed with casing up to the top of the limestone, with the productive section open. Significant fields include Gorisht-Kocul and Cakran-Mollaj.

In total, Albpetrol manages over 400 active wells in its oil fields, making significant contributions to hydrocarbon production in Albania.

Oil and Gas Market in Albania

Albania’s oil and gas market has significant reserves and modest production. Albpetrol, the state company, estimates that the country has recoverable reserves of approximately 120 million barrels of oil and 5.7 billion cubic meters of natural gas.

The Patos-Marinza field is the largest onshore oil field in continental Europe. In recent years, crude oil production in Albania has fluctuated, reaching a historic peak of 24,000 barrels per day in January 2016. Internationally, the country has attracted investments from companies like Shell, which announced the discovery of a gas and oil basin in southern Albania, with testing expected to begin soon.

Albania’s energy infrastructure also benefits from the Trans Adriatic Pipeline (TAP), a 878-kilometer project that transports up to 10 billion cubic meters of natural gas per year, integrating Albania into the European energy market.

Despite these potentialities, the sector faces production constraints related to technological modernization, infrastructure investments, and compliance with international environmental standards.

Energy Market in Albania

Albania's energy market is primarily supported by renewable sources, with hydropower accounting for about 98% of the country’s electricity generation. This dependence on hydropower makes the energy system vulnerable to climate variations, especially during dry periods, leading the country to import electricity to meet domestic demand.

To diversify its energy matrix and increase supply security, Albania has been investing in other renewable sources, such as solar energy. International partnerships, like the collaboration between Masdar and KESH, aim to develop clean energy projects, strengthening the country’s position in the European energy market.

Despite these advances, the sector faces technical and commercial losses in electricity distribution, with reports indicating that more than half of the generated energy is lost or stolen, resulting in considerable economic losses.

SWOT Analysis

Strengths

• Experience: Albpetrol has extensive experience in the Albanian oil and gas sector, providing the company with deep geological and operational knowledge of the fields it explores in Albania.
• Consolidated Infrastructure: The company manages more than 400 active wells and has a vast network of infrastructure, including treatment stations, pipelines, and industrial facilities, ensuring efficient and continuous production.
• Largest Oil Producer in Albania: Albpetrol is the leading player in the country’s oil market, responsible for a significant portion of national production, granting it a strategic role in the Albanian economy.
• Substantial Hydrocarbon Reserves: Albpetrol holds considerable recoverable reserves of oil and natural gas, providing a solid foundation for future extraction and contributing to long-term sustainability.
• Strategic Partnerships: The company has established international collaborations, such as with Shell, to explore new gas and oil basins, expanding its capacity for development and access to new exploration areas.

Weaknesses

• Low Operational Efficiency: Despite having a large infrastructure, the company struggles to modernize its processes, resulting in low productivity and high operational costs.
• High Dependence on Non-Renewables: While responsible for much of Albania’s oil production, Albpetrol remains heavily reliant on traditional hydrocarbons, making it vulnerable to global price fluctuations.
• Environmental Challenges: Albpetrol faces criticism due to the environmental impacts of its operations, particularly in older oil fields, where emission control and waste management are still limited.
• Political and Regulatory Instability: The Albanian energy sector, including Albpetrol, frequently experiences political and regulatory changes, negatively affecting investment predictability and long-term project continuity.
• Low Investment in Research and Development: The lack of continuous investment in research and development limits Albpetrol’s ability to explore new technologies and optimize its operations, making it less competitive in an evolving market.

Opportunities

• Growing Energy Demand: Albania’s economic growth and the rising demand for energy in the southeastern European region offer opportunities for Albpetrol to expand production and capture new markets.
• Investments in Renewable Sources: Albania has high potential for renewable energy exploration, such as solar and wind power, allowing Albpetrol to diversify its operations and reduce dependence on traditional hydrocarbons.
• Strategic Collaborations: The company can strengthen its international partnerships, such as its recent collaboration with Shell, to explore new oil and gas areas, broadening its exploration and development capacity.
• Sustainability Initiatives: With the growing global pressure for sustainability, Albpetrol can modernize its processes, adopt more sustainable practices, and improve its market image.
• Integration into the European Energy Market: Albania is increasingly connected to the European energy market through projects like the Trans Adriatic Pipeline (TAP), which opens new opportunities for Albpetrol to expand exports and attract investments.

Threats

• Volatility in Oil Prices: The global oil market is highly volatile, which can lead to significant price fluctuations, directly affecting Albpetrol’s revenue, especially due to its reliance on hydrocarbons.
• International Competition: Companies like Shell and BP are increasingly present in the region, intensifying competition and pressuring Albpetrol to compete on costs and efficiency, making it vulnerable to market losses.
• Strict Environmental Regulations: The imposition of stricter environmental regulations by the EU and other international bodies could increase Albpetrol’s operational costs, requiring significant investment in sustainability, which negatively impacts profitability.
• Global Energy Crisis: Global geopolitical instability, especially in the Middle East, could result in energy crises affecting oil prices and availability, creating additional challenges for Albpetrol.
• Dependence on Hydroelectricity: Albania’s heavy reliance on hydroelectric power makes the energy sector vulnerable to climatic variations, such as prolonged droughts, limiting electricity production and impacting Albpetrol’s financial performance.

Conclusion

The SWOT analysis of Albpetrol shows a company with both opportunities and limitations. Its long-standing operational experience, vast infrastructure, and market leadership in Albania are strong points that distinguish it in the energy sector. However, its high dependence on traditional hydrocarbons, low operational efficiency, and environmental impacts are limiting factors. On the external front, volatility in oil prices, increasing competition, and regulatory changes pose threats that could impact its profitability and reputation. Yet, Albpetrol has opportunities to diversify its operations, explore new renewable sources, and expand international partnerships, which can strengthen its market position. By focusing on technological modernization, sustainability, and operational efficiency, Albpetrol has the potential to overcome current limitations and solidify its position as a key player in the regional energy market.

References

https://albpetrol.al/aktiviteti-i-shoqerise/

https://albpetrol.al/prodhimi-i-naftes-nder-vite/

https://albpetrol.al/vendburimet/

https://albpetrol.al/puset-e-naftes/

https://albpetrol.al/vendburimet-neogenike/

https://albpetrol.al/vendburimet-gelqerore/