Big Banc Split Corp T.BNK

Albania to re-write oil contract

[wallop13]

I don't like this. More tax. Jeez


Markets | Wed Jan 20, 2016 12:57pm EST

Related: STOCKS, MARKETS, FINANCIALS

Albania to re-write oil contract with Bankers after tax tiff

 

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* Albania says to renegotiate contracts with oil companies

* Wants to impose limit on cost recovery of oil companies

* Companies only pay 50 pct profit tax after recovering costs

* Albania is in dispute with Bankers Petroleum over tax it says it is owed

TIRANA, Jan 20 Albania will re-negotiate its oil output-sharing contracts with Bankers Petroleum and other oil firms and impose a limit on their recoverable expenses to improve tax receipts, Energy Minister Damian Gjiknuri on Wednesday.

Albania has accused corporations of understating profits made in the country to avoid its 50 percent profit tax. The dispute with oil firms stems from a clause in their contracts that allows firms to pay profit tax only if they have recovered their costs. None has paid profit tax, Gjiknuri said, only royalties, since they report they have not recovered costs.

Canadian firm Bankers temporarily settled a dispute over taxes after it agreed to pay in instalments $57 million, in what Albania claims is owed for 2011, so it could gain control of its Albanian bank accounts while it seeks a final solution through an third-party auditor or the court.

"...We shall re-negotiate some of the current contracts, including the biggest contract of Albania, Bankers Petroleum," Gjiknuri told a meeting of the Extractive Industries Transparency Initiative (EITI).

Bankers Petroleum were not immediately available to comment.

"Our goal is to re-negotiate the terms, once we have settled some contradictory or conflictive elements pertaining to the payment of the profit tax," Gjiknuri added.

Referring to Bankers' payments, Gjiknuri said the local agencies had worked hard to detail the real spending in the oil industry and so help put a cap on the firms cost recovery.

In the contracts being negotiated with Royal Dutch Shell and Israeli's Delek Group, Gjiknuri said Albania was imposing a ceiling on costs, for the first time in Albania.

"This means that a portion of the oil, before the company recovers the costs, will be divided for profit. The oil to be split between the state and the private entity will flow from the first barrel to help the state get more than now," he said. (Reporting By Benet Koleka, Editing by Elaine Hardcastle)

[nexthink]

That's very bad news. So BNK will pay higher taxes in the future. Again big uncertainty to produce oil in a banana republic. That's explain also the discount compare to companies like CPG. Brent trading at $25 now. So BNK is losing $2 per barrel they produce taking into account the hedging program. Oil analysts forecast oil to find support at $18. Big resitance there. It should stay

[cashtango00]

great timing on adding new taxes, oil companies trying to stay alive so tax them some more.  I was looking for an entry here, not so much anymore.  there is enough risk in oil without this.  Keep your oil Albania, try and extract it yourself.  

[corvette67]

Those comments seem to indicate Albania failed to achieve its' objectives through the audit process. Surprise! GLTA

[wallop13]

Probably, so they come up with somthing worse. This is really disappointing. It's such a bad tax policy. How can we grow and compete with a cap like that? It will undoubtedly effect BNK growth. This is a joke how the government keeps kicking BNK while it's down. Might as well just nationalize BNK, we're half way there.

[corvette67]

Wallop---I don't think it will be that easy. They have a judicial system and they are trying to get into the EU. A lot of bad optics for Albania. There is obviously an existing legal contract. JMHO

[braincloud]

How in the EFF did you arrive at that conclusion exactly. Can you walk me through how you arrived at that? The audit isn't even over yet. Do you have a brother -in-law or cousin in Albania that is feeding you information?

[braincloud]

Where does it say that BNK will pay more taxes exactly??? How is this bad news exactly? How do you jump to conclusions like that?

[cashtango00]

Braincloud, do people often call you a condescending douche bag? Because you really come off as one: "Where does it say that BNK will pay more taxes exactly??? How is this bad news exactly? How do you jump to conclusions like that?" Really?  the press release quotes: Albania will re-negotiate its oil output-sharing contracts with Bankers Petroleum and other oil firms and impose

[braincloud]

No, actually you are the first. Thanks for that . Look, as I read it the new tax regime which they refer to where there will be a profit share out of the gate doesn't include BNK. Yes, there will be some revisions to the cost pool qualifications but that only means that perhaps there will be some current inclusions that won't apply in the future. Does that mean that there is more tax? No

[cashtango00]

Not sure how " i'm spreading misinterpretations or conjecture"  .  Albania said they are "improving tax receipts"  Its pretty black and white... they are looking for more taxes.  The question of how much more tax is now the question.  

[braincloud]

I don't want to argue the poitbany further. I happened to know that what is being discussed is the nature of what is going to be included in the cost recovery pool. That is the nature of the re-negotiation, NOT the potential of re-negotiating their entire contract. The new contracts being negotiated wth the likes of Shell  and Delek will have a component of oil as part of a profit tax

[grantoue]

The cost recovery pool is a sum made up of deffered profit taxes to fund developing the resource?.

[braincloud]

Not quite. The COST RECOVERY POOL ( see my post from a few weeks ago were I posted the Petroleum Agreement ) is the running total of expenses including CAPEX and OPEX once recovered  will be the PROFIT TAX POOL. So in the 2011 case BNK spent $253 million in CAPEX ( currently being reviewed) BNK would need to recover THAT amount PLUS another $106 million before they'd owe the ALBS $53

[wallop13]

You can interpret the press release any way you like. The reality here is that the current government is not happy with the amount of tax Bankers has been paying and they have now made it clear they plan to do something about it. No audit can change that. They have the right to make their tax law, however unfriendly that may be to corporations, and the growth of those corporations.

[wallop13]

Albania will re-negotiate its oil output-sharing contracts with Bankers Petroleum and other oil firms and impose a limit on their recoverable expenses to improve tax receipts, Energy Minister Damian Gjiknuri on Wednesday. The oil to be split between the state and the private entity will flow from the first barrel to help the state get more than now," he said. It's there for all to read

[braincloud]

Read it one more time. Please. You are mixing up the new deals with BNK and BNK has already suggested that there may be some elements of "costs" that may be disallowed.

[braincloud]

I guess you can interpret it the way you want. The way I read it it doesn't suggest that BNK will be subject to a portion prior to recovering costs. That will be imposed on NEW players "for the first time". BNK will have certain "conflictive elements" once settled there may be terms re-negotiated. Hey, I could be wrong, but that's how I interpret the statement. Besides,