Shell, the Dutch multinational company, has decided to withdraw from its oil exploration efforts in Block 4, located in the southern part of Albania. Additionally, the company has suspended all other oil extraction activities in the country and is contemplating a full exit from Albania. In its audited financial statements for 2023, which were published earlier this year, Shell Albania Block 4 BV-Albania Branch confirmed that, after evaluating its operations in the country, the management has concluded that it will not continue business activities for the foreseeable future. The company stated that the liquidation of its Albanian operations is expected to begin in 2025.
Shell Albania Block 4 BV is the subsidiary responsible for managing the exploration activities in Block 4, which is situated in the southern and southeastern regions of Albania. The company was granted exploration rights for this area in June 2018 by the Albanian Council of Ministers. The contract initially envisioned three exploration phases, spanning a total of seven years. However, due to the disruptions caused by the global Covid-19 pandemic and fluctuations in the energy market, Shell suspended exploration activities in Block 4 in 2022 for up to two years.
Despite these delays, Shell decided not to proceed into the second phase of exploration in 2023, opting to permanently cease operations in Block 4. By the end of the year, Shell Albania Block 4 BV reported accumulated losses of approximately 25 million euros, primarily due to exploration-related costs.
Similarly, Shell Upstream Albania BV-Albania Branch, which manages the company’s major oil exploration activities in Albania, particularly the wells in the Shpirag region, is in a comparable situation. In its 2023 financial statements, Shell has acknowledged that its Albanian branch is no longer considered a going concern. The company has also written down the value of oil exploration wells by over 500 million euros, a move that reflects the company’s assessment that it will not be able to extract and sell oil from these wells. This write-down led to a pre-tax loss of a record 54.8 billion lek (approximately 540 million euros) for Shell Upstream Albania in 2023.
As a result of these losses, Shell Upstream Albania reported total accumulated losses of around 108.6 billion lek, which, at today’s exchange rate, is approximately 1.1 billion euros.
