Refining, Supply & Trading

Τhe three refineries and their individual technical characteristics are described below:

Τhe domestic refineries are treated as a single, unified system. Crude oil purchases, production scheduling and sales forecasting are carried out for the Group’s refining system centrally, with the objective of optimizing profitability, while taking into account prevailing (Eastern Mediterranean/South Eastern Europe) crude oil and product prices as well as domestic demand. Increased refining complexity enable the high conversion of intermediate products (SRAR, VGO) and flexibility in crude slate and processing levels, a key competitive advantage for the Group.

In 2018, Med FCC benchmark margins averaged $5.0/bbl (2017: $5.9/bbl). Hydroskimming margins averaged $1.6/bbl (2017: $2.7/bbl) and Hydrocracking margins $5.5/bbl (2017: $5.2/bbl).

Mediterranean Benchmark Refining (FCC and Hydrocracking) Margins
($/bbl)

In 2018, refining production recorded new historical highs (15.5 million tons), due to the high units’ availability. As a result of increased production, HELLENIC PETROLEUM sales increased for the 8th consecutive year, amounting to 16.5 million tons, with exports accounting for 57% of total sales and the Group sustaining its position as one of the most export oriented in the Eastern Mediterranean. These results were achieved mainly due to the operational optimization at the Elefsina Refinery and the synergies between the three Group refineries, while the Aspropyrgos and Elefsina Refineries reported new record high in processing, with 8.9 million tons and 6.2 million tons respectively.

Production (MT’000)

High value product yields (gasoline, jet fuel and diesel) at Aspropyrgos and Elefsina refineries’ increased further, standing at very competitive levels with the European refining industry, with white products yield at 84%.

HELPE refining system overview

Energy efficiency is a main pillar of the Refining strategy, with sustained efforts to improve the relevant indicators. In 2018, energy consumption and costs at Aspropyrgos and Elefsina decreased further, while at Thessaloniki, relevant indicators were kept at the record low levels of 2017.

Moreover, the use of natural gas substituting LPG, naphtha and fuel oil for hydrogen production and own-consumption at the Elefsina and Thessaloniki refineries increased, resulting in a significant financial contribution.

The percentage of intra-refinery flows of intermediate products and raw materials exchanged between the three refineries exceeded 13%, contributing to the operational optimization in production, logistics and trading.

New IMO operational model – Aspropyrgos Refi nery

From 1.1.2020 changes in bunker fuel specifications will be effective globally (IMO/MARPOL). This change is expected to have a significant impact on the refining and shipping industries, as the main existing bunker fuel (high sulphur fuel oil - HSFO) will be substituted by other fuels, of higher environmental standards regarding sulphur content, mainly 0.5% sulphur fuel oil and marine gasoil.

Although its refining system output of HSFO is low compared to its Med peers, HELPE has already started preparations in order to meet the new standards. The Elefsina and Thessaloniki refineries do not produce bunker fuel of current standards, therefore no adjustments are required in their operation. The Aspropyrgos refinery is expected to further diversify its crude slate, through the processing of very low sulphur crude oil (“IMO crude oil") aiming to significantly reduce the production of HSFO to less than 5%, while increasing diesel output and start producing new specs fuel oil, in order to meet market requirements. During 2018, new types of crude oil were successfully tested and preparation is expected to continue through 2019, in order to enable transition to the new operational mode in 4Q19.

Financial Data and key operational indicators:

Crude oil supply

Crude oil supplies are centrally coordinated through term contracts and spot transactions. In 2018, the crude oil market was affected by the resumption of US sanctions on Iran.

The crude slate of HELLENIC PETROLEUM was adjusted to prevailing market conditions, resulting in an increase of crude oil supply from Iraq (29%) and Kazakhstan (18%), while the offtake from Iran decreased to 11%. Contribution from Russia (9%), Libya (7%), Saudi Arabia (6%) and Egypt (5%) remained relatively stable. Furthermore, in 2018, HELLENIC PETROLEUM recorded its first purchase of US crude.

Both the Group’s ability to access and its refineries’ flexibility to process a wide range of crude oil types, proved to be particularly important in terms of driving profitability. The Group’s ability to respond to sharp supply shortages of specific types of crude oil also ensured uninterrupted supply into the markets where the Group operates.

Diversified crude oil and feedstock supply sourcing

Wholesale Trading (Refined product sales)

Oil products sales are carried out by the parent company HELLENIC PETROLEUM SA to the fuels marketing companies in Greece, including the subsidiary EKO ABEE, as well as to certain special customers, such as the country’s armed forces, whilst approximately 50% of production is exported. All of the Group’s refined products comply with the applicable European standards.

During 2018, total sales from domestic refineries increased by 2.5% to 16.4 million tons.

Domestic market sales decreased by 10% to 4.4 million tons, as FO sales to PPC stopped and heating gasoil demand was weaker.

Aviation sales continued to rise and amounted to 769 thousand tons (+ 17%), while marine fuels volumes were 10% lower to 1.8 million tons mainly due to bunkering fuel oil. Exports came in at particularly high levels and amounted to 9.4 million tons increased by 12%.

Sales per trade channel (ΜΤ’000)

OKTA facilities

The Group’s international activities refer to the OKTA facilities in Skopje, connected to the Thessaloniki refinery through a pipeline transporting high value-added products (e.g. diesel). The refinery’s location is one of its significant competitive advantages for the domestic distribution of products through marketing companies, as well as exports to neighbouring Balkan markets.

In 2018, OKTA focused on the trading and distribution of petroleum products with sales of 756 thousand tons, flat vs last year.