Feb 23, 2012:

ATHENS- Austerity-hurt Greeks are stocking up heating oil, bracing for further fuel tax increases that form part of its EU/IMF-imposed austerity, the debt laden country's biggest refiner said on Thursday. And Hellenic is expected to face further challenges in the summer when Iranian crude supplying its refineries with at least a third of their input are banned.

Data from Eurostat suggests the proportion may have increased in the latter half, rising to 58 percent in the third quarter. Hellenic will also lose access to generous credit terms from Iran once sanctions on its oil kick in. But Chief Financial Officer Andreas Shiamishis said replacing supply from Iran would be easy, adding substitutes were likely to be sourced from Saudi Arabia, Iraq and Russia.

Heating oil sales increased in the first 11 months of last year, in contrast to gasoline and diesel sales which slumped by more than 10 percent, said the company at the presentation of its fourth-quarter financial results. "We've had a heavy winter, people are building inventories as the government has announced that they will adjust the excise duty in the next heating oil season" said Chief Executive Officer John Costopoulos in a conference call with analysts.

Greek petroleum products used to be among Europe's cheapest before the country's debt crisis. But since a 2010 bailout agreement with the EU and IMF to stave off a chaotic default that might destroy the euro, they have become among the most expensive.  Hellenic runs refineries and gas stations across the Balkans but still derives the biggest part of its profit at home, where fuel consumption has been hit by tax increases to shore up public finances.

Despite the crisis, however, the company posted an unexpected profit for the fourth quarter, helped by strong sales from its natural gas and power generation units because an unusually harsh winter boosted natural gas and electricity use for heating purposes. Net profit, adjusted for the value of the company's oil inventory, stood at 17 million euros, compared with analysts' average estimate of a 1.3 million euro loss.

"Gas and power fully supported our performance," Costopoulos said. Expecting higher sales from its new refinery unit at Elefsina, which is expected to start commercial operations in the second quarter, the company decided to maintain its dividend on 2011 earnings at the same level as last year, at 0.45 euros per share. Elefsina needs to start up and running so that Hellenic can begin lowering its debt and become a more attractive privatisation target.

The company has 350 million euros of debt maturing this year, with a further 1.3 billion euros following in 2012. "We have already started our refinancing discussions," Siamishis told the conference call, expressing hope that a debt cut deal will allow Greece return to markets and ease Greek companies' refinancing strains.

By Reuters