Macedonia Approves Sale of Oil Refinery to Greek Joint Venture

Strategic Insights -

Macedonia's parliament has approved the sale of a majority stake in Okta, the country's only oil refinery, to a Greek joint venture led by Hellenic Petroleum. The $190m deal marks the biggest foreign investment to date in the former Yugoslav republic. The Greek group has agreed to build a 220km pipeline to carry crude oil from the northern Greek port Thessaloniki to Skopje, and to double Okta's yearly capacity to 2m tonnes of refined products. The sale has been delayed due to infighting in Macedonia's coalition government, but President Kiro Gligorov has finally given his approval, despite reservations about the unresolved dispute over Macedonia's name with Greece.

Key Takeaways:

  • The sale of Okta's majority stake to the Greek joint venture led by Hellenic Petroleum is valued at $190m, making it the biggest foreign investment in Macedonia to date.
  • The Greek group has agreed to build a 220km pipeline from Thessaloniki to Skopje and double Okta's yearly capacity to 2m tonnes of refined products.
  • A Greek management team is already in place at Okta, but the formal approval of the takeover was delayed due to infighting in Macedonia's coalition government.
  • Okta has raised output to cover increased demand for petroleum products in Kosovo, which was formerly supplied by refineries in Serbia damaged in the NATO bombardment this year.
  • Hellpet Balkan, the joint venture with Meton-Etep, will have an option to increase its 64% stake in Okta.
  • The joint venture plans to invest in Macedonia's energy sector, including the refurbishment of a disused power plant to supply electricity to northern Greece.
  • Macedonia has attracted little foreign investment due to concerns about political risk, but Greece's Socialist government has backed a drive by companies to invest in the country.
  • Greek banks, including National Bank of Greece and Alpha Credit Bank, are acquiring Macedonian banks, and Olympic Airways will launch direct flights from Athens to Skopje.

Statistics:

  • $190m: The value of the deal for the sale of Okta's majority stake
  • 220km: The length of the pipeline to be built from Thessaloniki to Skopje
  • 2m tonnes: Okta's yearly capacity to be doubled
  • 64%: The stake in Okta held by Hellpet Balkan, with an option to increase
  • Kosovo: The region that was formerly supplied by refineries in Serbia, now supplied by Okta

Sources:

  • Financial Times Limited 1999.