CONTROVERSIAL GREEK BUSINESSMAN PLOTS RETURN IN ALBANIA’S OILFIELDS

Stream Oil & Gas founder SotiriosKapotas plots his return in the oil market in Albania through the company ‘Letho Resources’, seeking to conclude a new petroleum agreement with Albpetrol for the Gorisht-Kocul oilfield, only a few years after his previous company left behind a trail of debt.

For nearly a decade, ‘Stream Oil and Gas’ – which merged with Transatlantic Petroleum in 2014, led by Greek businessman SotiriosKapotas and his Albanian partner Arian Tartari, controlled through production sharing agreements with state-owned oil company Albpetrol, the oilfield of Ballsh-Hekal, Gorisht-Kocul, Cakran - Mollaj as well as the gas field of Delvina.

In 2017, after accumulating tens of millions of dollars in debt to Albpetrol and other local contractors, Transatlantic Petroleum Ltd was sold and divested its debt to another ‘offshore’ company, prompting the Ministry of Energy to terminate its production sharing agreements, restoring its oilfields of Albpetrol.

A year later, Albpetrol opened a fresh tender in order reach new production sharing agreements for the three oil fields, Gorisht-Kocul, Cakran-Mollaj and Amonica.

One of the main contenders is again businessman SotiriosKapotas, who is trying to make a comeback and control the Gorishti-Koculoifield through Letho Resources, which has waged a two-year legal battle against Albpetrol to be declared the winner of the tender.

Court documents show that Letho Resources and another Canadian company - Alcan Petroleum Ltd share a common address in Tirana, which previously belonged to Stream Oil and Gas. Alcan Petrolem Ltd has also filed a lawsuit against Albpetrol for the 2018 tender held for the three oilfields.

In addition to the administrative lawsuit against Albpetrol to be declared the wined of the much-contested tender for the Gorisht-Kocul oilfield, Letho Resources has also entered into an agreement to acquire the current Ballsh-Hekal oil concessionaire, Anio Oil and Gas sh.p.k.

Letho Resources did not respond to written inquiries about its chief executive, SotiriosKapotas’s controversial past in the Albanian extractive industries market. Meanwhile, Arian Tartari was unreachable for comment until the publication of this article.

Albpetrol and the Ministry of Energy and Infrastructure did not respond to a BESAR LIKMETA | BIRN | TIRANA

Oil well on the village Hekal in Mallakastra | Photo: Besar Likmeta

request for comment from BIRN if they had approved the transfer of the Ballsh-Hekal oilfield from Anio Oil and Gas to Letho Resources Corporation.

Political allegations According to the International Trade Administration, an agency of the US Commerce Department of Commerce, it is estimated that Albania has recoverable oil reserves equal to 120 million barrels and 5.7 billion m3 of gas. The largest oilfield is Patos-Marinza, which has been controlled by Bankers Petroleum since 2004 through a production sharing agreement with Albpetrol.

From 2007 to 2017, Albpetrol had a similar agreement for the Ballsh-Hekal, Gorisht-Kocul, Cakran - Mollaj oilfields and the Delvina gas field with the ‘Stream Oil and Gas’, which merged in 2014 with the company ‘Transatlantic Petroleum Ltd’.

‘Stream Oil and Gas’ is a company founded on July 20, 2007 in the Cayman Islands - a British Caribbean territory considered a fiscal paradise. The company’s initial capital was 500,000 CAD. Three weeks after its founding, on July 8, 2007, the company entered into four production sharing agreements with Albpetrol. On April 2 nd , 2008, the directors of Stream Oil and Gas appointed its branch managers in Albania, businessman Arian Tartari and Greek businessman SotiriosKapotas, while the company was headquartered in “Ismail Qemali Street, Samos Tower, Floor V.”

According to data from the System for Electronic Disclosure by Insidersin Canada, SEDI, as one of the company’s directors, Tartari received on April 4, 2008, 6 million shares of Stream Oil and Gas - half of which were sold in 2014.

Tartariss shares in the company brought accusation by the then opposition Socialist Party, which in 2010 accused the businessman of benefits from the close ties to the family of former PM SaliBerisha. Tartari’s partner, AlbanaVokshi is a former Democratic Party MP.

“Berisha has favored the company of MP AlbanaVokshi’s husband for personal gain, granting him the right to use 4 of the country’s 6 oilfields,” said Erion Brace at a press conference in August 2010, then deputy chairman of the Socialist Party parliamentary group.

“On August 15, just one week after receiving government contracts, the company’s shareholders entered into transactions and bought 2 million shares of Stream Oil’s founders for $ 5 million,” Brace said.

‘Stream Oil and Gas’ director SotiriosKapotas considered the Socialist Party’s allegations false and threatened to sue Albanian in local and international courts. In a statement to the media, Kapotas urged the government and the opposition

to protect the company’s name and its investments against false statements, while adding that he would seek damages

“’Stream Oil’ has no political bias and is in Albania to invest and not to be a political tool,” he underlined.

A trail of debts One year after the Socialist Party came to power, on September 3, 2014 Stream Oil and Gas merged with Transatlantic Petroluem Ltd under a deal reported to be wotth $ 41.2 million. In addition to Albania, Transatlantic Petroleum Ltd stated that it had interests in oilfields in Turkey and Bulgaria.

In 2015, the Albanian subsidiary of the company, according to data from the National Business Center, changed its name from ‘Stream Oil and Gas’ to ‘Transatlantic Petroleum’. It was during this period that the company’s problems with contractors began to surface, as a consequence of successive orders to seize shareholder quotas for outstanding obligations by private bailiffs.

According to the 2015 balance sheet, Transatlantic Petroleum Company had outstanding liabilities to suppliers worth 1.87 billion lek (€15 million). However, while the shares of the Transatlantic Petroleum’s subsidiary in Albania were sequestered due request for payment from debtors, the parent company sold its assets to another offshore company. At the

Oil well on the village Hekal in Mallakastra | Photo: Besar Likmeta

end of February 2016, Transatlantic Petroleum LTD entered into an agreement with GBC Oil Ltd. Through its TAT Holdings BC subsidiary, Transatlantic Petroleum sold all ‘Stream Oil and Gas’ assets to GBC Oil in exchange for the payment of a $ 2.3 million loan to Raiffeissen Bank - obtained from the subsidiary in Albania, as well as the acquisition the company’s liabilities that included $ 23.1 million payable to suppliers and loans woth $ 6.1 million. In the meantime, the company transferred $ 12.9 million worth of assets and liabilities in the Delvina gas field to a company called Delvina Gas Holdings.

GCB Oil is a company registered in Delaware, USA, and owned by Continental Oil and Gas according to the Albanian Competition Authority. In 2017, Transatlanic Petroleum also sold its 25% stake of Delvina Gas Holdings for $ 300,000 to Delvina Investment Partners LTD, divesting itself completely the Albanian hydrocarbon market.

Due to debts in 2016, Transatlantic Petroleum Albania lost its rights to the Ballsh-Hekal oilfield, which were transferred after an auction to Anio Oil and Gas.

Whereas in January 2017, the Ministry of Energy and Infrastructure as a shareholder representative granted approval to Albpetrol to terminate the production sharing agreement with Transatlantic Petroleum Albania Ltd and take back con

Greek businessman, Sotirios Kapotas.

trol of Gorisht-Kocul and Cakran-Mollaj oilfields due to accumulated debts .

“The reason for the requisition of these two oilfields by the concessionary company is the non-fulfillment of the contractual obligations, where the most important is the creation of a large financial obligation towards Albpetrolsh.a. This obligation amounts to $20 million, a substantial part of which was created during 2008-2013, ” said the Ministry of Energy and Infrastructure in a press release.

Similarly in March 2017, Albpetrol initiated procedures for seizing control of the Amonica oilfield from Phoenix Petroleum for “non-compliance with contractual obligations.”

Kapotas returns Following the requisition of the three oilfields, Gorisht-Kocul, Cakran - Mollaj and Amonica, Albpetrol launched a “call for expression of Interest” for the conclusion of the new petroleum sharing agreements.

Nine oil companies participated in the tender, including Bankers Petroleum, Transoil Group AG (later Terraoil Swiss), Shandong Kerui Petroleum Equipment, Letho, Verssa Versatile, Pennine, Alcan, Fluid Oil and Zennith Energy.

On May 9, 2018, former Minister of Energy and Infrastructure, Damian Gjiknuri ordered the establishment of a negotiating group for the conclusion of petroleum sharing agreements with the company Terraoil Swiss (then Transoil Group) and one month later asked Albpetrol to make a request to the National Agency for Natural Resources for licensing.

The decision to open the call was initially contested by the company JurimexKomerz Transit GmbH, which had held several talks with Albpetrol in 2017 for a production sharing agrement of these three oil fields. Meanwhile, the announcement of Transoil Group as a winner - later Terraoil Swiss, was also contested by Alcan Petroleum Ltd and Letho Resources Corporation.

Letho Resources Corp. is a Canadian joint stock company founded in 2005 with an address in Vancouver, British Columbia, Canada.

On October 3, 2018, Letho appointed SotiriosKapotas as Chief Executive Officer, motivating this decision in the transformation of the company into “an Albanian-focused oil producer”.

At the Vlora Administrative Court, Letho Resources won a lawsuit against Albpetrol the right to negotiate a production sharing agreement for the Gorisht-Kocul field.

According to the court ruling, Terraoil Swiss was favored in the tender, should have not qualified and that the production sharing agreement with Albpetrol could cost the state between $250 million and $300 million in losses. The case is currently before the Administrative Court of Appeal. The other competitor in the tender, Alcan Petroleum LTD is a limited liability company, also registered in Vancouver, British Columbia. In the lawsuits, Letho Resources and Alcan Petroleum LTD provided the same address in Albania; the former office of ‘Stream Oil and Gas’ in “Ismail Qemali Street, Samos Tower, Floor V.” Jurimex also gives the same address in the administrative lawsuit in Vlora Administrative Court.

At the same address is still listed a consulting company with shareholders SotiriosKapotas and Arian Tartari, called “KSP1 Consulting”, but the link between the three companies is unclear. What is clear is the SotiriosKapotas’ association with Letho Resources, where he has served as executive director and president since October 3, 2018.

Earlier, in July 2018, Letho Resources also signed an agreement with Anio Oil and Gas to acquire rights to the Ballsh-Hekal oilfield and advanced a $ 500,000 loan to the Albanian oil company. This agreement does not appear to be reflected in the National Business Center.

Albania Prosecutors to Probe Panic-Mongering About Coronavirus Prosecutors in Albania have warned that the malicious distribution of fake information about the coronavirus, with the purpose of spreading panic, will be treated as a criminal offence.

GJERGJ EREBARA | BIRN | TIRANA

Prosecutors in Albania said they were opening an investigation into what they called “diffusion of fake information or announcements in any form aimed at creating a state of insecurity and panic among the people”, warning that causing panic in this manner is a crime.

Prosecutors said they suspected fearful messages were being spread mainly through WhattsApp.

The prosecutor’s announcement on Monday followed an eruption of coronavirus cases in nearby Italy, a country with which Albania has multiple links.

The scare over the virus prompted directors and teachers of a private school in Tirana to take a two-week holiday. Their announcement met harsh criticism from the Minister of Education, BesaShahini, however, who warned she might annul the operating license for the school.

“The directors that are spreading panic by closing down their school in an illegal way, allegedly to prevent a viral situation that does NOT exist in Albania, should be investigated by the justice bodies,” she said.

The school defended its decision to close for a fortnight, however, retorting: “Between HEALTH and ANTI-PANIC the Ministry choose the later”.

The Socialist government of Prime Minister Edi Rama has been engaged for months in a battle against what it calls fake news, aiming to justify its attempt to impose a tough regulatory regime on the online media that has been criticized widely by both Albanian and international rights organisations.

After Albania was hit by a 6.3M earthquake on November 26, Rama complained again about panic being spread on the online media. Police and prosecutors promptly arrested a 25-year-old Facebook user and charged two others with spreading panic, in what local rights groups said were disproportionate and unreasonable measures. Meanwhile, in Italy, the government has approved an extraordinary law with immediate effect to fight the spread of the virus, by banning cultural events and protests in several towns in the north, where 219 cases of the virus and five deaths had been reported by Monday afternoon.

Worldwide, concerns about a global pandemic have grown, as countries fail to contain the spread of the virus through quarantine measures. Some 78,811 people have been infected and 2,462 people had died from the virus so far, according to the World Health Organization.