ELPE investment to boost diesel output

Oil refiner Hellenic Petroleum (HELPE) plans to invest about 500 million euros in a hydrocracker and coker to boost production of transport fuels, its chief executive said yesterday. «The board of directors met and approved a 10-million-euro front-end engineering design (FEED) study for a hydrocracker and coker to be located in the Elefsina refinery,» CEO Panos Kavoulakos told Reuters. He said the units would enable HELPE to meet new specifications for ultra-low sulfur diesel fuel and fuel oil and also help cut emissions of sulfur dioxide and particulates. Hydrocrackers use gas oil to produce diesel, which is in short supply in Europe, as drivers are increasingly switching to it since it has better fuel efficiency and lower taxes than gasoline in many countries. Cokers can produce gasoline and gas oil from cheaper heavy fuel oil, which is oversupplied in Europe. «It’s a huge investment for the refinery,» said Lindsay Sword, downstream oil consultant at Wood Mackenzie. «They’re looking at wider European diesel demand, not just at the Greek market, as we’re forecasting an increasing diesel shortage.» HELPE decided to locate the units in Elefsina as 65 to 70 percent of Greece’s gas oil and diesel market and 70 percent of the refiner’s fuel oil production are in the south, Kavoulakos added. He said the final decision on the project and its processing capacity will be made next summer once the study is completed. The hydrocracker and coker are expected to come on stream in 2009, adding 120 million euros annually to HELPE’s earnings before interest, tax, depreciation and amortization (EBITDA). The refiner posted 372 million euros in EBITDA in 2004. Hellenic Petroleum is also considering boosting capacity at its 75,000-bpd Thessaloniki plant in northern Greece, said Kavoulakos. He declined to provide details. (Reuters)

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