Pipeline will boost production at refinery

THE BIGGEST energy project in the Balkans, a pipeline linking the northern Greek port of Thessaloniki with the OKTA oil refinery outside Skopje, began full operations in September. The pipeline, which took three years to build, will provide Macedonia with a constant and reliable source of oil and, in the longer term, there are plans to export refined oil products to neighboring areas.
Macedonia has been paying a high price to move a million tons of oil and petroleum products a year from Thessaloniki by road and rail. The 130-mile pipeline will cut those costs by transporting 2.5 million tons of crude oil to the refinery per year.

Plans to make OKTA part of a network extending to Kosovo and south Serbia

OKTA, Macedonia’s sole refinery, was established in 1982 as the regional facility for southern Yugoslavia. It was acquired in 1999 by Greece’s state-owned oil refining group, Hellenic Petroleum, as part of its strategy to enter the Balkans energy market.
With an annual capacity of 4 million tons, OKTA is well able to meet Macedonia’s own need for 1.25 million tons of refined products per year—expected to rise to 1.5 million tons by 2006. A ready, and cheaper, supply of crude oil means the spare capacity can be used to produce products for export to neighboring areas like Kosovo, where refining capacity was destroyed during the recent conflict.

Managing director of OKTA

Hellenic Petroleum is the main investor in the pipeline and the European Bank for Reconstruction and Development (EBRD) provided a loan of $50 million towards the $130 million cost. Hellenic Petroleum holds an 80 percent stake through its subsidiary El Pet Balkiniki, with the remaining 20 percent held by the Macedonian government.
Petros Karalis, OKTA’s managing director, says Hellenic Petroleum expects to see a return on its investment within 10 years.
“OKTA is now where it was planned to be,” he says. “We have finished a very big project in very difficult times, but this is not a static business. There are a lot of things going on and we have the capacity to do a lot more.
“We would like to see OKTA working within a network that covers Macedonia and Kosovo. We are looking to expand to other areas, like southern Serbia.”

A new project, entirely Greek-funded, has been launched to build a $40 million pipeline to transport refined product from OKTA to the Kosovan capital, Pristina. Construction, which began in September, is expected to be completed within two years. Sixty miles long, the pipeline is designed to have the capacity to transport 300,000 tons of oil derivatives per year. There will be a second pipeline from OKTA to southern Serbia.
In the meantime, Hellenic Petroleum has started to modernize the refinery and bring it up to EU standards. “Refurbishment has already started,” says Mr. Karalis. “This is a fiber decentralization plan, worth $16-17 million, which is going to produce products of EU quality. We are going to reduce the sulphur content in products and there are some minor projects which will bring the total amount invested in the refinery to around $40 million.”

Oil derivatives produced at OKTA include liquefied petroleum gas, naphtha, motor gasoline, diesel fuel and fuel oil. Environmental protection is regarded as a priority. OKTA is the only company in Macedonia which has complete physical, chemical and biological waste water treatment. The refinery’s power supply comes from its own power station. Surplus supply electricity is directed to the national distribution system.
Another of the strategic objectives of OKTA is to extend the distribution network by building around 30 modern petrol stations. “Our retail business is small at present, but we have plans to develop in that direction,” says Mr. Karalis.

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