refineries

Helleniq Energy: Clarity needed on DEPA Commercial future

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The future of gas company DEPA Commercial, whose privatization of the state’s 65 percent stake was postponed about a month ago, needs to be clarified in the immediate future, within the next three to six months, Andreas Siamisiis, chief executive of the Helleniq Energy group, holding a 35 percent stake in the gas company, has noted.

DEPA Commercial is currently developing business interests that directly compete against those of Helleniq Energy. These interests include participation in new gas-fueled power stations, both in Greece and abroad.

Subsequently, the current status, under which Helleniq Energy holds a 35 percent in DEPA Commercial, cannot be maintained. Helleniq Energy will need to sell its stake in the gas company, possibly to the Greek State or a third party.

Greek privatization fund TAIPED postponed its sale of DEPA Commercial until the company’s business plan, which includes an expansion strategy, begins reaping rewards, effectively meaning that no further steps concerning the company’s sale should be expected before late 2024 or early 2025.

As for Helleniq Energy, the company intends, in 2024, to intensify its efforts in the Bulgarian RES market, especially photovoltaics.

Helleniq Energy currently holds a 360-MW portfolio of RES projects in operation, along with projects at advanced stages of development, which, once launched, promise to boost the group’s total RES capacity to 1 GW over the next 18 months.

Besides its interests in renewables, Helleniq Energy is monitoring the sale process of Russian multinational energy corporation Lukoil’s refinery in Bulgaria. It is the only refinery in the neighboring country.

Although a Helleniq Energy move to acquire this refinery is hard to imagine, as it would run contrary to the group’s transformation plan, it cannot be ruled out as any new buyer might be interested in exporting fuel to Greece. Helleniq Energy may choose to buy the Lukoil refinery to block further competition in the Greek market.

Whatever the outcome, Helleniq Energy would not be prepared to spend big on such an acquisition.

 

 

Helleniq Energy ‘monitoring’ Lukoil refinery sale in Bulgaria

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Helleniq Energy, formerly Hellenic Petroleum (ELPE), is keeping a close watch on the sale process of Russian multinational energy corporation Lukoil’s refinery in Bulgaria, CEO Andreas Siamisiis has told analysts during a presentation of the Greek energy group’s 3Q and nine-month results.

Bulgarian finance minister Asen Vasilev recently told Financial Times that Lukoil is in the process of selling the only refinery in the neighboring country.

According to Siamisiis, political considerations, not just business decisions, are behind Lukoil’s decision to sell this asset in Bulgaria. Rumors of the refinery’s sale had circulated over the past year and a half, the Helleniq Energy chief executive added.

Though Helleniq Energy’s Vision 2025 strategy does not include major investments in refineries, the energy group is monitoring the sale of the Lukoil refinery in Bulgaria given its location in a neighboring region, Siamisiis pointed out.

As for Helleniq Energy’s diversification into renewables, the group has already built up 356 MW in facilities now operating, company officials informed. A further 700 MW in RES facilities are at various stages of development, which puts the group on target for 1,000 MW by 2025 and 2,000 MW by 2030, the officials added.

 

Helleniq Energy planning solar farm for Thessaloniki refinery

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Helleniq Energy, formerly named Hellenic Petroleum (ELPE), plans to fully cover the electricity needs of its Thessaloniki refinery with green energy through the development of a major-scale solar energy farm that will be directly linked to the refinery.

The solar energy farm is planned to be located in Thessaloniki’s wider area, facilitating its link with the refinery.

Helleniq Energy also intends to install standalone batteries for energy storage when the solar farm’s green energy is not instantly used by the refinery.

The use of hydrogen as a means of chemical storage of excess electricity generation is also being considered. In practice, this means megawatt-hours not consumed at the same time will be used to produce renewable hydrogen through electrolysis, which will later be used as fuel for electricity generation via fuel cells when there is no production from the solar energy facility, or when production to meet the refinery’s electricity needs is insufficient.

Helleniq Energy is determined to make its refineries energy-independent as electricity supply issues that have arisen over recent years have seriously impacted the energy group’s refineries.

The company is also considering installing a high performance heat and power cogeneration unit at its refinery in Elefsina, west of Athens, to fully cover this facility’s energy needs.

 

Windfall tax on refineries seen raising over €600m, for subsidies

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Finance ministry officials expect tax revenues to be raised by an extraordinary windfall earnings tax on refineries for 2022 to exceed 600 million euros, an amount planned to soon be distributed to help consumers counter higher costs of necessities.

The government has decided to proceed with this extraordinary tax once the EU has adopted relevant regulation, at a tax rate decided by Brussels. This means that the measure’s resulting tax revenue will be collected in 2023 and injected into next year’s budget.

However, according to reports, the 600 million-euro amount will be used before it is collected, probably before Christmas.

The government is likely to soon announce new subsidies complementing an existing consumer support program for basic goods, planned to also offer some relief to middle-income earners.

The new subsidy program could be announced when the 2023 state budget is voted in Parliament on December 17.

 

Windfall tax for oil and gas firms, government decides

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Windfall profits earned in 2022 by petroleum companies, through their refineries, as well as by natural gas wholesalers, will be subject to an extraordinary solidarity tax, the government has decided, energypress sources have informed.

The money to be collected through this extraordinary tax will go towards the Energy Transition Fund to support the government’s energy subsidies offered to households and businesses.

The government’s plan to move ahead with this extraordinary tax is linked to a probable European-wide solidarity tax on windfall profits earned by fossil fuel companies.

The Greek plan will be shaped along the lines of a windfall tax model imposed on electricity producers.

This new windfall tax on oil and gas companies was discussed at last Friday’s emergency meeting of EU energy ministers. It was supported by Greek energy minister Kostas Skrekas, as well as his German and Spanish counterparts.

The Greek government appears determined to implement the windfall tax on oil and gas companies even if it fails to receive EU approval. Athens recently imposed a 90 percent windfall tax on electricity producers without EU approval.

 

 

ELPE posting results amid strong pressure felt by petroleum industry

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ELPE (Hellenic Petroleum), to post financial results today amid the pandemic’s adverse conditions, seen also impacting the global petroleum industry throughout 2021, is expected to announce adjusted losses of 14 million euros for 4Q in 2020, following a profit of 24 million euros in the equivalent period a year earlier, according to an Optima Bank estimate.

The petroleum group’s adjusted EBITDA for 4Q is expected to be 62 million euros, a 48 percent reduction from the previous year.

As for 2020, overall, ELPE’s adjusted EBITDA is expected to be 318 million euros, a 44 percent reduction. Adjusted losses are expected to be 1.5 million euros following a profit of 182 million euros in 2019.

The petroleum group intends to move ahead with a transformation plan and green-energy investment plans this year.

ELPE, as an initial goal, aims to develop a RES portfolio totaling 300 MW capacity in 2021 and 600 MW by 2025.

The corporate group has already begun work on a 204-MW project in Kozani, northern Greece, following a takeover deal.

Any prospect of a recovery by the global petroleum industry appears distant. Many facilities around the world have continued to restrict their operations.

A recent Wood Mackenzie report projected the European refining industry will register losses measuring 1.4 million barrels per day until 2023 as a result of the pandemic’s ongoing lockdown measures.

At least two refineries in the Mediterranean region are currently examining the prospect of closing down.

Pros and cons for refineries, fuel demand sliding

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The drop in oil prices as a result of the price war between Saudi Arabia and Russia and the coronavirus spread presents a major challenge for petroleum firms.

Brent crude’s 30 percent plunge last Monday inflicted major damage on companies stocked with petroleum products, Greek refinery officials informed, as these products had been  purchased at previously higher prices.

The market volatility, however, has also created opportunities, namely lower-cost supply of raw materials without the need for high working capital. Operating costs have dropped considerably.

The major concern at refineries and petroleum product trading companies is demand, or fuel consumption, expected to drop amid the growing number of mobility restrictions being imposed by governments around the world in an effort to contain the coronavirus outbreak.

Demand for gasoline and diesel has dropped since last weekend as a result of reduced transportation needs. This decline in fuel demand is expected to continue following latest preventive measures. The Greek government yesterday announced a measure closing all educational institutions for 15 days as of today.

Fuel demand levels during the year’s first two-month period were unchanged compared to a year earlier, but the month of March has already shown first signs of a decline. Many airlines are cancelling flights.

Petroleum companies fear a further deterioration from May onward, when Greece’s tourism season begins in earnest.

For the first time since 2009, the International Energy Agency has forecast a drop in petroleum consumption for 2020.

ELPE, well placed with marine fuels, also eyeing gas, renewable energy

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Strategic decisions made by Hellenic Petroleum (ELPE) back in 2006 for an upgrade of the enterprise’s refinery in Elefsina, west of Athens, enabling production of the entire range of fuels, including new-era marine fuel, has provided flexibility for robust financial results.

Most refineries in the wider Mediterranean region are currently pressured by significantly narrowed profit margins. ELPE is an exception. Its ability to produce new low-suphur marine fuels has secured a strategic advantage over competitors.

Further investments currently being made in the company’s refinery division are expected to boost profit figures from levels of 700 to 800 million euros to one billion euros.

As part of its transformation for the future, ELPE is also striving for swifter growth in the renewable energy market. It aims to reach an operating RES capacity of 600 MW over the next two years. ELPE intends to participate in the next RES auction with facilities measuring 460 MW.

In the gas market, ELPE is closely following the forthcoming privatization of gas utility DEPA. The petroleum group, holding a 35 percent stake in DEPA, will either seek to acquire a full stake or sell its minority stake. The company wants a clear-cut solution.

Elsewhere, ELPE has already decided to sell its stake in distribution networks, promising a major cash influx.

In electricity, a final investment decision on the development of a new gas-fueled power station is expected by summer. This decision will greatly depend on the progress of the target model, as well as the government’s commitment to its decarbonization policy.

As for its hydrocarbon interests, ELPE plans to stage a first drilling operation at the Gulf of Patras block by the end of 2020. Seismic surveys at other blocks in its hydrocarbon porfolio are currently being conducted.

 

Jetoil placed on the comeback trail by new owner Centracore

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Bankruptcy-struck oil trading company Jetoil, now controlled by Austria’s Centracore and on the rebound, has reclaimed approximately 15 percent of the fuel-station network it controlled prior to the rescue plan.

Jetoil now operates 83 fuel stations (DODO, dealer-owned, dealer-operated), primarily in northern Greece, as well as the Thessaly, Epirus and other mainland regions.

At the peak of Jetoil’s crisis in the summer of 2016 – when founder Kyriakos Mamidakis committed suicide, aged 84, not long after the company had filed for bankruptcy – the company’s retail network had shrunk to just 34 outlets.

A Jetoil rescue plan was approved Iast year. Strategic investor Centracore agreed to take on the company’s liabilities following a partial haircut.

Besides a purchase price of 107 million euros, the new Jetoil shareholder has invested 10 million euros to upgrade the company’s storage facility in Kalohori, on the outskirts of Thessaloniki.

Jetoil has increased its sales in Greece and achieved significantly higher exports since its takeover. Total sales for the first financial year since Centracore’s entry reached 420 million euros generated by a trading volume of 350,000 metric tons.

In a year, the company has achieved 35 percent of its business plan’s target, set at one million metric tons of trading volume, or a 10 percent Greek market share, including exports.

The strategic investor, maintaining access to Russian refineries, has admitted the decision to invest in Greece was based on export potential to Balkan markets. Centracore obtained a Greek trading license in July, 2018.

Centracore is a Vienna-based trading company headed by Luxembourg’s UFG Europe Holding, holding an 80.1 percent share and comprised of private equity funds. Russian Petroleum company Rosneft holds the other 19.9 percent.

Market analysts expect ELPE 50.1% sale to reach over €2bn

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Market analysts, including HSBC, in a new report, expect the ELPE group (Hellenic Petroleum) sale offering a 50.1 percent stake to exceed 2 billion euros.

Besides the privatization’s higher aspirations generated by ELPE’s strong profit figures, including a streak of records, international analysts are also pointing to excellent prospects for the petroleum group over the next two years, at least, as well as its limited exposure to mazut.

ELPE’s share ended trading last Friday at 7.57 euros but the petroleum group’s privatization may escalate its share price by 50 percent to 11.7 euros, according to the recent HSBC report, covering refineries in Europe, the Middle East and Africa (EMEA).

Given a share price of 11.7 euros, a 50.1 percent stake of ELPE would be worth 1.78 billion euros. Adding a 20 percent premium to this figure for the petroleum firm’s management rights also offered in the sale increases the value to 2.1 billion euros.

ELPE, it should also be noted, is one of the wider region’s few refineries which, with a minimal amount of facility adjustments, will be capable of producing new environmentally friendly shipping fuels by 2020. This prospect, promising even higher profit levels at ELPE in the near future, is seen adding to the petroleum group’s appeal among investors.

According to latest developments, buyers will be asked to submit binding offers within the first quarter of 2019.

Two new participants, US firm Carlyle and Algeria’s Sonatrach, are believed to be discussing respective partnerships with the privatization’s list of two existing candidates, Switzerland’s Glencore and Dutch company Vitol. No official announcements have been made on the rumored Glencore-Carlyle and Vitol-Sonatrach pairings.

TAIPED, the privatization fund, has yet to set a deadline for new partnerships.