Talks for the reopening of an oil pipeline running from ELPE’s (Hellenic Petroleum) refinery in Thessaloniki to another company-owned refinery in the Former Yugoslav Republic of Macedonia (Fyrom) appear likely to resume following the seeming normalization of the political arena in the neighboring country as a result of the recent elections.
Fyrom’s new government, headed by Prime Minister-designate Zoran Zaev, set to assume power in June, will today seek a vote of confidence in parliament with the aim of restoring political normalization. This initiative is expected to unblock various investments, including the ELPE-controlled oil pipeline.
If all goes well, ELPE and Fyrom government officials should hold talks on the matter within the next few months and, if successful, pave the way for the oil pipeline’s reopening for the first time since 2013, when the inftrastructure was last used.
The oil pipeline’s prospective reopening will enable ELPE to supply its petroleum products to the neighboring market at a lower cost, eliminating current intermediary costs, and, further on, open up new routes to markets such as Serbia and Kosovo.
The pipeline’s reopening would devastate illicit petroleum product traders who have benefited from the pipeline’s protracted closure. Illicit traders have exploited the situation by declaring large amounts of petroleum products for export, thereby avoiding special consumption tax (EFK) and VAT, only to end up selling these amounts tax-free within the Greek market.
Beside’s Fyrom’s political instability, the influence of fuel smugglers is believed to have prolonged the pipeline’s closure.
ELPE acquired OKTA, its Fyrom refinery, in 1998 and, four years later, developed a pipeline linking its Thessaloniki and Fyrom units.
ELPE is not expected to use its OKTA unit as a refinery in the future as it has become obsolete and requires major investment amounts to become operational again.