The Greek petroleum industry continues to grow, but substitution is taking hold

Consumption of petroleum products in Greece grew at an average annual rate of 2.7 percent in the 1985-2000 period (a total of 43 percent) to 19.5 Mtoe (million tons in oil equivalent), according to a sectoral study by the Institute for Economic and Industrial Research (IOBE). Total production of energy goods, however, grew slightly faster over the period in question, and petroleum products in 2000 commanded a 70 percent market share, marginally lower than in 1985. According to IOBE, this is attributed to the slow substitution of other forms of energy for petroleum products. The dependence of sectors of the economy on petroleum products remained almost stable or fell marginally, with transport accounting on average for 57.6 percent of total demand, industry 16.7 percent, households 16 percent, the farm sector 8.5 percent and services for 1.5 percent. Demand by households and the transport sector grew 46.4 percent and 23.6 percent respectively over the period. According to the International Energy Agency, petroleum products will continue to command a leading position in the country’s total energy demand in the present decade. This is projected to fall to 67 percent by 2010, despite an estimated rise in demand to 19.87 Mtoe. IOBE considers that the performance of the local petroleum production sector is poor and without any noteworthy prospects. Production of crude oil fell during the 1985-2001 period and reserves, estimated at 9 million barrels in 2001, are projected to dry up by 2010. Greece’s oil products trade balance was continually in deficit, reaching 19.49 Mtoe in 2001. Exports slowed down over the period, standing at 40 percent of the 1985 levels in terms of quantity in 2001. The US absorbed 20 percent of exports, the countries of the former Yugoslavia 9 percent, Spain 6 percent, and France and Lebanon 5 percent each. By contrast, imports of petroleum products stood 55 percent higher in 2001 than their 1985 level. Russia is Greece’s chief supplier with a 33 percent share, followed by Saudi Arabia with 24.5 percent, Iran with 22.7 percent, and Iraq and Libya with 6.2 percent each. Companies The report gives a positive financial picture of Greek oil refining and marketing companies, in contrast to that of liquefied petroleum gas (LPG) trading firms. Refinery sales grew by an average annual rate of 18.6 percent in the 1997-2001 period, approaching a total of 5.58 billion euros, while net pretax profits grew by an average annual rate of 258 percent to 142.35 million euros. Hellenic Petroleum (ELPE) is Greece’s leading refiner, commanding a 51.6 percent share, followed by Motor Oil with 27 percent and Petrola with 21.4 percent in 2001 (ELPE and Petrola merged in 2003). Turnover and net pretax profits of petroleum marketing companies excluding LPG grew at average respective annual rates of 21.6 and 40 percent between 1997 and 2001 to 5 billion and 61.7 million euros. Of the 30 petroleum products marketing firms (excluding LPG), BP accounted for 28 percent of the market, followed by Shell with 22.7 percent, Avin Oil with 10.3 percent, Mamid Oil-Jet Oil with 9.9 percent and Aegean Oil with 4.6 percent. According to estimates by the Organization of Economic Cooperation and Development, the substitution of other forms of energy for petroleum products in Greece will continue but at a slow pace, due to the high capital investment required.

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