ELPE-Petrola merger will dominate the local market

The proposed merger between Hellenic Petroleum and Petrola Hellas creates a giant refiner that could dominate the Greek market. It remains to be seen, however, whether the firm will remain under state tutelage and what the effect on competition will be in a market with only one other competitor (Motor Oil). The Hellenic Petroleum Group, the larger of the two companies, was founded in 1971 as the State Petroleum Corporation (DEP). Until 1998, it was completely controlled by the State. During that period, it expanded into several sectors of the petroleum industry, either through acquisitions (its refineries) or by setting up subsidiaries. Before it was listed on the Athens Stock Exchange, DEP absorbed subsidiaries DEP-EKY (an oil and other hydrocarbons exploration company), ELDA (the Aspropyrgos refinery, west of Athens) and EKO (refineries, chemicals and gasoline stations) and was renamed Hellenic Petroleum (ELPE). It floated 23 percent of its shares in 1998 on the Athens and London exchanges. The State floated a second tranche of shares in 2000. The following year, it called for a tender for a «strategic investor» that would acquire up to 23 percent of the company. Petrola, along with Lukoil, Russia’s largest oil company, expressed an interest but the prolonged negotiations ultimately failed. Petrola had announced it retained an interest in a partnership with ELPE; still, yesterday’s announcement took most people by surprise. ELPE owns three refineries, in Aspropyrgos, Thessaloniki and Skopje, in the Former Yugoslav Republic of Macedonia (FYROM), 1,441 gasoline stations, in Greece, FYROM, Albania and Georgia, and exclusive exploration rights in a 62,000-square-kilometer area in Greece. It is also active in petrochemicals, research and technical studies. ELPE is quite active abroad: It has a 63 percent stake in ELPET-Valkaniki SA, which, in turn, owns 69 percent of the OKTA refinery in FYROM; through another subsidiary, Global SA, it controls 100 percent of commercial company Elda Petroleum Albania. Through EKO-ELDA, the refinery subsidiary, it controls 76.5 percent in EKO-Georgia Ltd. ELPE also takes part in consortia active in North Africa and the Middle East. ELPE employs 4,500, of whom 1,200 work abroad. Consolidated pretax profit in 2002 was 133.7 million euros, up from 75.8 million in 2001. Petrola Hellas was founded in 1969 by shipping tycoon Yiannis Latsis. Its refinery in Elefsina, west of Athens, has the biggest storage facilities in Greece and a refining capacity of 5 million metric tons per annum, 25 percent of the Greek market’s total capacity. It employs 550 and its stock has been listed on the Athens Stock Exchange since 2001. Petrola has a 20 percent market share in sales of refined oil products and a 36 percent share in fuel supplies to ships and aircraft. In 2000, it accounted for 29 percent of all oil product exports from Greece. Petrola showed a profit of 28.1 million euros in 2002, a 368 percent increase from 2001, despite the fact that turnover fell 5.8 percent, to 1.125 billion euros. (ANA, Kathimerini)