Albania’s infrastructure and energy ministry has withdrawn the Velca Block production sharing agreement (PSA) concluded between state-owned oil company Albpetrol and Canada-based Pennine Petroleum Corporation, Pennine said.
“The licence has been withdrawn as a result of Pennine not providing a letter of credit for the initial phase of works described in the PSA,” the company said in a statement on Wednesday.
Pennine has been informed that it may re-apply for the licence, the company noted, adding that it has been rigorous in its search for treasury-based financing or joint venture partners for the Velca Block in North America, London and Europe, with no success.
“The company is currently investigating opportunities with a focus on producing assets with strong development potential in stable political and pricing regimes in Canada and abroad,” Pennine said.
The PSA envisaged an exploration phase and a drilling phase. The drilling phase was set to last four years, in which the company was obliged to drill at least two wells to a depth of 2,500 meters or more.
The Velca Block is located 10 km southeast of the port city of Vlora, in southern Albania.