-Investment drive oils the wheels of industry-

IMPORTS OF oil and natural gas are key factors in determining Greece's economic prospects, given that the country has few significant energy resources of its own besides some deposits of lignite. Oil imports currently cover 60 per cent of Greece's energy requirements, which the International Energy Agency forecasts will rise at an annual rate of 4.4 per cent during the next decade, compared with a little over one per cent for the EU as a whole. Coping with this rapid growth is a major challenge for the country's leading energy companies, led by the partly-privatised state oil enterprise, Hellenic Petroleum. In the wake of restructuring after a minority share in the firm was sold three years ago, Hellenic Petroleum has embarked on a major investment drive.

Traditionally, the firm imported and refined crude oil but now plans to expand. "Our objective is to become an energy company," says chairman Eleftherios Tzellas. "We hope to increase our turnover by 50 per cent within the next three to five years," he adds. Sales revenue is estimated at $4 billion for this year. Hellenic Petroleum is investing some $700 million to double capacity at its refineries within the next five years. It owns over a quarter of the Greek petrol market, and last year acquired Mamidakis, a private business with a refinery and network of petrol stations. Dr Tzellas aims to expand into the petrol markets of southeastern and central Europe, where his company already supplies about 25 per cent of the region's oil needs. "Our challenge is how to establish a strategic alliance with other firms and to develop our activities in the larger markets."

Significantly, Hellenic Petroleum intends to start producing oil in its own right, and it has set a target of around 100,000 barrels per day (bpd) during the next seven to 10 years. The company has exclusive rights to explore 54,000 sq km of Greek land and is working on four projects to search for oil in the west of the coun-try. It has formed a consortium with an Austrian company, OMV, to develop proven oil reserves in Iran and carry out exploration work in Albania. Hellenic Petroleum has increased its participation in the natural gas market and set up a small subsidiary to look at developing solar energy.

Natural gas came late to Greece, and at present it provides only about five per cent of the country's energy needs, compared with an EU average of 20 per cent. Greek officials say the government aims to double the use of gas within the next decade. The firm has a 35 per cent share of public gas enterprise Depa, which will remain the sole importer of gas until 2006. The state plans to liberalise distribution before then, under propos-als to award 30-year licences to the private operators of local grids. Moves are also afoot to bring the private sector into the power gener-ation and distribution markets, and Hellenic Petroleum hopes to take part in this process.

"After electricity is liberalised, we will start to invest in that market," says Dr Tzellas. The shift into new markets does not mean Hellenic Petroleum is about to move away from its core activity. The company is spending a total of $270 million in the petrochemicals sector, including a new polypropylene complex due to start production later this year.