A Canadian oil company has had its licence to produce oil withdrawn for failing to produce the letter of credit (L/C) the Albanian government wanted to guarantee that work specified in its licence would be completed.

Albania's ministry of infrastructure and energy's Agjencia Kombëtare e Burimeve Natyrore (National Agency of Natural Resources - AKBN) has withdrawn the Velca Block production sharing agreement (PSA) concluded between state-owned oil company Albpetrol and Canada-based Pennine Petroleum Corporation, according to statement issued by Pennine

Licence withdrawn

According to the AKBN's letter, the licence has been withdrawn as a result of Pennine not providing a L/C for the initial phase of works described in the PSA.

Pennine has been informed that it may re-apply for the license.

Rigorous search

Pennine said it 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.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.