A joint venture between Europetrol Durrës Albania and Bitex Refinery has been announced as the winner of the auction to purchase 101,000 tons of crude oil from Albpetrol. Official documents published by Albpetrol show that the two companies purchased the oil at a price of $0.0105, or 1 cent per barrel above the floor price.
The oil that Albpetrol sells is auctioned at a floor price. This time, this price was determined according to the formula 77.45% of the Brent Price – 4.07 USD/bbl + K. This is the price below which bids are not accepted and are automatically disqualified.
In the floor formula, Brent represents the USD/barrel price of Platts Brent, -4.04 USD/barrel is the average total cost (transportation, warehousing, stockpiling, product analysis, insurance), while K is the USD/barrel value offered by the bidder above the minimum selling price. Therefore, the K coefficient is the only element of the price that is competed for.
The higher a company offers the K coefficient, the higher the price and the more money Albpetrol earns from the sale of oil. But in this case, Frident Kuqit's Europetrol and Likometave's Bitex have offered the coefficient of 0.105 dollars or 1 cent per barrel with the floor price set by Albpetrol. In total, the value that the two companies will pay for the entire quantity of 101 thousand tons is about 31 million euros.
Announcement of the auction winner
The two companies were apparently confident that they would win the auction even at the floor price since they were the only bidders in the auction. The 109,000 tons that Albpetrol put up for sale in the auction comes from oil produced by the state-owned company itself, but also from quantities it receives from concession companies such as Bankers Petroleum.
For a long time, Albpetrol received its pre-existing production fee in cash. But in the 2010s, the law was changed in Parliament and concession companies were forced to pay for pre-existing production of wells in oil quantities.
Since then, Albpetrol has been selling oil at auctions at prices significantly below the stock exchange and far below what concession companies sell, even though it is the same quality of oil.
Editorial
