Albania in tax dispute with Canada's Bankers Petroleum

By Llazar Semini, Associated Press

A legal row over tax payments between the government of Albania and Canadian-based Bankers Petroleum Ltd. has escalated.

TIRANA, Albania (AP) — A legal row over tax payments between the government of Albania and Canadian-based Bankers Petroleum Ltd. has escalated, with the oil and gas company threatening to cut production.

Albania's tax department last month froze the company's bank account after alleging it had not properly paid its taxes. It says it should pay $75 million on its 2011 profit and also justify a $220 million expenditure in 2013.

Bankers Petroleum has in return filed two complaints with the International Court of Arbitration. On Wednesday, the company threatened "to curtail production" unless its account is unblocked.

The Albanian government insisted the oil fields "belong to all Albanians and cannot be misused or used as a threat to the country."

Bankers Petroleum said that "all of our costs were necessary expenses to support our ongoing oilfield operations." It adds that the account suspension makes it "unable to pay royalty taxes or pay our suppliers."

An output sharing contract allows Bankers Petroleum to recover its costs before paying tax but the Albanian government audits have found the company's expenses were already covered in 2011 and Bankers Petroleum had to pay a 50 percent profit tax in 2011.

Energy Minister Damian Gjiknuri has said that "the audits from specialized agencies have concluded there are swollen costs."

"Production is very important and we do not want any company to release such messages suggesting cuts or problems with oil production, as that would affect the Albanian economy," he said.

Bankers Petroleum has been operating in Albania's oil-rich Patos-Marinze area since 2004, raising its production from 40,000 tons per year to one million currently.

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