ECONOMY

Oil refiner sees huge synergies from merger

Hellenic Petroleum (ELPE) expects to generate synergies of up to 45 million euros annually as a result of higher commissions and sales as well as lower import costs following its merger with Petrola, its chief executive said yesterday. Athanassios Karahalios said a conservative estimate placed synergies from the merger at 25 million euros on a yearly basis. «An optimistic estimate would put the synergies at 40-45 million euros annually,» he said. Synergies are expected to come from increased commission and higher sales and lower costs from imports of heating oil, among others, Karahalios said. Analysts said the projected synergies, even conservatively estimated, would justify the merger of the two oil refiners which has come under attack by both trade unionists and opposition parties. «The 25-million-euro figure is a big number considering that Hellenic Petroleum posted 130 million euros in net profits last year and Petrola 28 million euros in pretax profits,» said Alexandros Boulougouris, energy analyst at P&K Securities. «If Hellenic Petroleum can realize these synergies, then the merger would be a positive move,» he pointed out. The government last week unveiled plans to sell 16.65 percent of Hellenic Petroleum to the Latsis group-controlled Paneuropean Oil and Industrial Holdings, the principal stakeholder in Petrola, for 326 million euros. Hellenic Petroleum will subsequently take over Petrola, with the Latsis group taking a 25.35 percent share and the State controlling the management for the next five years. Not only will the merged company enjoy economies of scale, it is expected to have better access to the capital markets and credit rating agencies, Karahalios said. He dismissed concerns over layoffs, saying the oil refiner will keep the present work force and even expects to generate more jobs from its 1.8-billion-euro investment program. Petros Kalaitzis, president of Petrola, said the Latsis group sees Hellenic Petroleum as a vehicle for expansion into the Balkans energy market. The merger is expected to be completed by the end of the year.