ELPE acts against any possible fallout of US sanctions on Iran

ELPE (Hellenic Petroleum) has stopped placing new Iranian crude orders and also settled the biggest part of an older outstanding amount owed to the country’s state-run oil company as protection against any negative fallout that could result from US President Donald Trump’s new sanctions against Iran, announced in May.

Like other petroleum firms in various countries, ELPE reached its decision to stop ordering Iranian crude to safeguard itself against a variety of problems, including exclusion from transactions, with American banks and oil companies.

The US president has issued a strong warning to anyone trading with Iran, following his re-imposition of sanctions on the country.

“Anyone doing business with Iran will NOT be doing business with the United States,” the president tweeted.

Some re-imposed sanctions have just taken effect and tougher ones relating to oil exports will begin in November.

The EU, China and India have announced they do not intend to follow the American example and impose sanctions on Iran, as they had done in 2012, when the US last imposed sanctions on the country, international news agencies have reported over the past few days. However, all three could end up succumbing to market pressure if their oil firms find themselves in danger of being blocked out of US financial and oil markets.

Returning to ELPE, the Greek petroleum firm has already taken action to fill the void created by its decision to stop placing Iranian crude orders. A wider strategy adopted by the firm’s administration to diversify crude supply sources for ELPE’s three refineries – two west of Athens in Aspropyrgos and Elefsina, as well as a third facility in Thessaloniki – has helped cover the shortage.

According to ELPE’s annual economic report for 2017, Iranian and Iraqi crude represented 22 percent of total orders placed by the Greek firm. Russia and Kazakhstan each represented 10 percent of ELPE’s crude orders in 2017, Saudi Arabia supplied 5 percent, Mediterranean countries provided 9 percent, as did Libya, Egypt’s share was 4 percent, while various other countries supplied 13 percent.

Iranian crude exports declined by 300,000 bpd (barrels per day) to 2.3 million bpd in July as a result of reduced orders by European refineries, according to international news agency reports. Officials in Washington anticipate Iran’s crude exports could drop to a level of less than one million bpd.

 

 

 

PPC advisers upbeat on wider turnout for lignite units sale

The main power utility PPC’s advisers steering the utility’s bailout-required sale of lignite mines and power stations representing 40 percent of the utility’s overall lignite capacity, are confident that, besides local players, a considerable number of foreign investors will also emerge to submit first-round expressions of interest. The deadline for participants expires today.

Over the past few days, it has been rumored that the sale could attract investors from India. This remains to be seen, later today. For the time being, a number of local players, namely GEK-Terna, Mytilineos and Viohalco, as well as the Copelouzos group, expected to join forces with China’s Shenhua for this sale, are believed to be the only certainties.

It is not yet known if any of these probable participants will submit binding second-round bids. They are expected to decide after examining PPC’s financial, technical and legal information to be made available to first-round participants through a data room. These details will help participants determine whether the purchase of lignite units represents a sustainable investment or not. Investors are not expected to decide any sooner than next month.

The sale price to be demanded by PPC will be a crucial factor for investors. Though definitely interested in acquiring lignite-fired power stations and mines as a means of  controlling their cost of electricity sold, participating independent suppliers are troubled by the rising production cost of solid fuel-based power generation, a development prompted by EU climate change policies.

According to European Commission studies and forecasts, emission right costs in the EU, already elevated, are expected to climb further, from 14.43 euros per ton, yesterday’s price, to over 30 euros per ton in 2030.

Given these conditions, investor interest in PPC’s disinvestment of lignite units is expected to be limited to industrial enterprises eligible for offsetting mechanisms compensating such expenses.