Hellenic Petroleum pipeline falls prey to FYROM politics
Two months before the crude oil pipeline connecting oil refiner Hellenic Petroleum’s refinery in Thessaloniki with OKTA’s facility in the Former Republic of Macedonia are due to start operations, doubts are being raised in the Eastern European country on the Greek project, this time by FYROM political opposition leader Branko Crvenkovski. These misgivings are upsetting the new positive bilateral economic climate, and in essence are shots directed at the new Greek investments in FYROM. This is not the first time that criticism has been leveled at Hellenic Petroleum’s project in FYROM. This time, however, the censure is related to the ongoing electoral campaign in the country and for this reason, Greece does not appear to be unduly concerned. However as the pipeline is connected to Hellenic Petroleum’s overall investments in FYROM, which include extending the pipeline to Kosovo and possibly to Nis in Serbia and the oil refiner’s activities in Southeastern Europe, the issue calls for a more careful approach. It also points to the need for initiatives, for example regarding Hellenic Petroleum’s bid to acquire a stake in Serbia’s Beopetrol, which is currently being privatized. Underpinning the situation in the FYROM petrol market is neither the OKTA project nor the pipeline. It is, rather, the country’s obligation to liberalize its oil product market as a result of the contract signed with the European Union, which bans monopolistic situations. This pact was signed two and a half years after the FYROM government signed the pipeline project with Hellenic Petroleum and states that the energy market should be opened up in 2004, and was the reason why the Greek refiner decided to invest in FYROM. The first indications of the FYROM government’s intentions appeared last summer, when it awarded a permit for oil product imports to a local company, Mak Petrol, forcing the OKTA refinery to scale back its production. The move also raised doubts over the oil pipeline’s productivity. Consequently, the critical question is whether Hellenic Petroleum considered the possible risks or whether it was taken by surprise by developments. Recently Mak Petrol stopped importing oil products, officially because it did not have the necessary accompanying documents, which led the local customs authorities to intervene in the case. Nevertheless there are serious doubts about this explanation, or whether this was just an excuse to reduce some of the political tension. On top of this, the legal battle between OKTA and Mak Petrol on the latter’s $1-million debt to the former has ended. Sources told Kathimerini that the debt has been settled and that OKTA has discontinued its legislation, which could have led to Mak Petrol’s bankruptcy. The latest criticism from Crvenkovski comes alongside his quest to become prime minister after the forthcoming elections. He has said that «the agreement was very suspicious» while condemning «criminal financial activities regardless of where the investments come from.» The same issue has been raised by New Democracy MP Yiannis Papathanasiou in the Greek Parliament. Once again, Greek investments in FYROM have fallen prey to local politics, with diplomatic sources saying that new investments such as telecoms operator OTE’s quest for a second mobile phone license could be affected. The oil pipeline should be completed by May 15 and ready to commence operations in the first half of June. Hellenic Petroleum says it does not have a time schedule for the network of 30 oil stations it plans to set up in FYROM. This could indicate a change of strategy for the new management, or it could be related to the country’s forthcoming general elections. Hellenic Petroleum’s five-year investment program for 2002-2006 sets out a total of 1.8 billion euros for expanding the capacity of its Thessaloniki refinery with the goal of serving the domestic market and the Southeastern European market. If the program is to be realized, then the OKTA refinery could be critical. Hellenic Petroleum is turning its attention further north to Serbia, Bulgaria and Albania, where it plans to set up a sales network, EKO. In 2002 it has already set up representative offices in Belgrade and Sofia to look into the markets. Vasilis Drakoulis, who is in charge of Hellenic Petroleum’s operations in the region, told Kathimerini that the company is aiming to launch a business subsidiary in Serbia next month, which will manage four to five European-size stations scheduled to be set up in the Belgrade region later in 2002 and to go into operations in a year’s time. The refiner expects to find the appropriate areas for the stations in the next two months. It aims to launch a business platform for all its activities in Serbia next month. Regarding Beopetrol, the Serbian government is due to draw up a short list of all interested bidders in the next three months. On monetary policy, the IMF said it welcomed the introduction of formal inflation targeting. But the lender’s board was split on whether Ankara could install a credible framework by midyear, with some directors saying a longer track record would be needed to make the new system workable.
