Fuel demand dives, heating fuel sales supported by low prices

Fuel consumption, down to unprecedented levels as a result of the lockdown, has produced a nationwide gasoline sales drop of 70 percent this month. The slide in gasoline sales has been even steeper in urban centers, falling by as much as 80 percent.

The reduction in demand for diesel has been milder, limited to levels of far less than 50 percent as a result of ongoing agricultural activities around Greece.

On the contrary, heating fuel demand has stood firm against the wider downward trend, supported by extremely attractive prices that have encouraged consumers to stock up as early as now for next winter.

Heating fuel prices have registered a 24 percent drop since the beginning of the year, falling to 0.815 euros per liter from 1.07 euros per liter.

The heating fuel price reduction in Greece is far smaller than that of international oil prices because a considerable percentage of the local retail price is comprised of taxes.

The heating fuel season ends at the end of April, meaning consumers have about two more weeks to place orders at the current prices.

An OPEC agreement reached last week for a 10 percent reduction in output considerably increases the likelihood of a price rebound. The production cutback puts an end to the Saudi-Russian price war.

Overall Greek fuel demand continued slide in 2018, falling 5%

Volume-based fuel sales fell by 5 percent in 2018, driven lower primarily by weaker gasoline and heating fuel demand, which dropped by 5 and 17 percent, respectively, according to data released by SEEPE, the Hellenic Petroleum Marketing Companies Association. The drop in auto diesel demand was milder, falling 1.5 percent.

These latest figures, four months following Greece’s exit from the country’s bailout program, do not bode well for the economy, fuel data being a key indicator of its prospects.

The SEEPE figures could have been worse had it not been for the cold weather experienced in December, which generated a 15 percent increase in monthly demand for heating fuel.

Despite the latest slide in overall fuel demand, the extent of the drop is smaller compared to slumps of previous years during the recession, which has led to successive fuel demand reductions over the past seven years. Heating fuel demand has slumped by a total of 43 percent during this period.

Fuel taxes in Greece have played a big role in this weakened demand. Greece’s Special Consumption Tax (EFK) imposed on fuel is Europe’s third highest, behind the Netherlands and Italy, while the VAT rate, at 24 percent, is the continent’s fifth highest. Greek gasoline prices are the EU’s third highest. Netherlands tops the list and is followed by Italy. VAT rates in most developed EU states range between 19 and 21 percent.

Greece’s VAT-EFK combination is causing double taxation – or tax on taxes.

The influence of euro-dollar exchange rates has impacted fuel prices in Greece at an extent of between 30 and 40 percent. Local retail fuel prices are mainly shaped by fuel taxes to a degree of between 60 to 70 percent, well over the EU average. The fuel tax proportions are lower in member states such as Germany, Finland and France, where disposable income levels are far higher than in Greece.

 

 

Local refineries post subdued 1Q results, higher fuel prices now dropping

The current year did not begin favorably for the local petroleum sector, as indicated by first-quarter results posted by of the country’s two biggest refineries controlling the Greek fuel market.

Drastically reduced heating fuel sales were the main factor behind the disappointing first quarter results, compared to last year, despite an increase in demand for diesel and a modest rise in gasoline sales following an extended downward trajectory.

ELPE (Hellenic Petroleum), which announced its first-quarter results yesterday, reported a 13 percent fuel sales decline, overall, down to a level of 826,000 metric tons, despite operating a greater number of refueling stations, up to 1,749 in the first quarter from 1,737 a year earlier.

ELPE’s heating fuel sales fell by 22 percent in the first quarter, year on year, while diesel and gasoline sales rose by 6 and 2 percent, respectively.

The increased first-quarter sale figures for auto fuels, offering wider profit margins, helped the group’s EBITDA/metric ton margin improve slightly, by one percentage point.

Motor Oil Hellas, the Greek fuel market’s other major player, reported a 6.2 percent overall decline in auto and heating fuel sales.

Auto fuel sales at the group rose by 3.8 percent in the first quarter. Gasoline sales were up by over one percent while demand for diesel increased by 5.8 percent. However, the significant drop in heating fuel sales drove the group’s overall results lower.

Higher fuel prices in the first quarter have been attributed as a factor affecting sale levels in the sector. Prices at local pumps have just begun dropping as lower international prices begin to impact the Greek retail fuel market.

 

Major fuel demand decline in 2017, signs of life in January

The prolonged bailout negotiations in the first half of 2017 not only impacted bond spreads and business loan interest rates but market sentiment, overall, which has affected fuel consumption levels, officials at Greek petroleum company Motor Oil Hellas noted yesterday while presenting the corporation’s results.

Despite the negative Greek market conditions, the refinery group posted record results as a result of its increased emphasis on exports to make up for lower demand in the domestic fuel market, which appears to be entering a new crisis period.

Overall demand for the corporation’s petroleum products in 2017 fell by 2.1 percent. Gasoline registered the biggest drop, falling 3.1 percent. Diesel demand increased by 0.5 percent while heating fuel, affected by poor activity in December, down by 30 percent compared to the equivalent month a year earlier, fell by over 2 percent, overall.

Latest fuel market data for January showed some signs of improvement for the auto fuel sector but the decline in heating fuel demand was sustained.

Gasoline demand rose by 11 percent in January, diesel demand rose by 23 percent, while heating fuel demand slumped 37 percent.

The significant decline in heating fuel registered for the winter gone by can be attributed to a particularly heavy winter a year earlier, which had boosted heating fuel demand to particularly elevated levels.

Returning to Motor Oil Hellas, overall fuel sales, in volume terms, achieved a new record level in 2017, reaching 13.7 million metric tons, up from 13.04 million metric tons in 2016. The refinery group’s exports exceeded the 10 million mark for the first time, reaching 10.2 million metric tons.

 

Local diesel prices now EU’s 5th highest from 15th a year ago

The price of auto diesel in Greece has climbed ten places over the past year, from fifteenth highest to fifth on the EU-28 list, an unprecendented leap for an EU member state, according to seasoned pundits.

A year ago, auto diesel prices in the Greek market were marginally higher than the EU average but are now five percent over the common market’s average of 1.243 euros per liter.

Auto diesel was priced at 1.186 euros per liter on December 19, 2016 and has now risen to 1.303 euros per liter, a 10 percent year-on-year increase.

The sharp price increase of the fuel, prompted by tax increases, has caught many diesel vehicle owners who have switched technologies by surprise.

Finland, the UK, Italy and Sweden occupy the EU’s top four places in terms of auto diesel prices.

Greece has also climbed higher on the EU list of gasoline and heating fuel prices over the past year. Last December, gasoline prices in Greece were the EU’s fourth highest and have since climbed a place to third. The price of heating fuel in Greece has risen from ninth to eighth place in the EU since last December.

The price of gasoline in Greece is currently at 1.534 euros per liter, 13 percent over the EU average of 1.359 euros per liter, according to latest European Commission data.

 

 

ELPE gasoline refinery west of Athens repaired and operating

The ELPE (Hellenic Petroleum) refinery in Aspropyrgos, slightly west of Athens, yesterday recommenced producing gasoline following repair work to a unit that was struck by technical issues several days earlier.

The repair work needed at the damaged refinery, which produces all of ELPE’s gasoline output, was completed on Saturday.

ELPE is scheduled to announce its 3Q results this Thursday. Analysts have forecast an upward trajectory ahead of new record figures at the end of the year.

An Investment Bank of Greece (IBG) analysis expects ELPE’s 3Q net profit to reach 100 million euros, which would represent a 29 percent year-on-year increase. If the impact of currency exchange rates is removed, the net profit would be 75.5 million euros, a marginal 0.5 percent increase compared to a year earlier, according to the IBG analysis.

It has forecast a 3Q EBITDA figure of 228 million euros, up 15 percent year-on-year, and a net EBITDA performance of 193 million euros.

ELPE is expected to post record figures at the end of the year as a result of the local market’s continuously rising geostrategic importance.

In 2016, ELPE posted an EBITDA figure of 731 million euros, while production reached 14.8 million tons, up 16 percent year-on-year, setting a new corporate group record.