Greece: Can oil put the country out of poverty?

In its eighth year of paralyzing austerity, Greece is facing another hot summer. Political controversies will be even more heated than the blessed Peloponnese climate, as the Tsipras Government is expected to vote on another round of austerity measures to unlock a final €12 billion bailout tranche. 

If the vote is passed, Greece should exit the bailout programme on August 20 this year and, if all goes according to plan, Athens might see some sort of debt relief after the three botched bailout loans. Against the background of an impending labour, tax and pension reforms, many Greeks still wonder where future Greek economic growth will come from – the recent surge in tourism, accounting for 20 percent of national GDP, has certain organic limits, whilst other sectors of economy have been largely withering.

Despite colossal constraints, the Greek economy has been growing for the fifth consecutive quarter already, albeit from a very low baseline. Greece’s GDP is expected by the IMF to grow 2 percent this year, yet much more is needed. Energy might play a key role in kick-starting economic growth in the long-suffering country – Greeks already are Europe’s foremost shippers, so perhaps it is even logical that they develop other spheres of activity, too. 

Hellenic Petroleum, the leading actor on the Greek downstream market, has been posting profits against all odds (i.e. higher taxation) and even managed to expand its presence abroad, most notably in the Former Yugoslav Republic of Macedonia. Notwithstanding its noteworthy success, the Tsipras government is about to privatize 50.1 percent of Hellenic Petroleum, delivering on previous EU bailout instructions.

There is little doubt Hellenic Petroleum, Europe’s third largest refiner, will be privatized (international trading majors Glencore and Vitol are seen as most likely candidates so far), just as the national gas corporation DEPA and the power utility company PPC. 

The new owners ought to bring in a more profitable and market-oriented business approach, yet the truly untapped potential for Greece lies beneath the waves of the Ionian Sea. Although the idea might seem ridiculous at first, it need not be dismissed right off the bat, as continental Europe’s (excluding Russia) largest oil field, the Albanian Patos-Marinza, is located quite close to the island of Corfu, which is set to become the primary drilling site of the new Greek offshore drive. The rest of the article is available here.
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