Having successfully implemented an important growth and transformation program during the five year period 2007–2012, the Group’s objective is to now take full advantage of its investments and maximize their economic benefit, through a strategy based on sustainable development, competitiveness and export orientation.
A series of actions and initiatives have already been implemented over the last few years, with a significant impact on the Group’s financial results.
The Group's strategic priorities are as follows:
Leveraging investments to improve results
- Operational optimisation and full realisation of synergies in the South Refining Hub (Aspropyrgos and Elefsina); these two plants constitute two of the most modern and complex refineries in the Mediterranean, with the appropriate size to achieve significant economies of scale
- Optimization of the new refining model, maximizing the full potential of all three refineries, as well as the synergies between them
- Supply Chain Optimization through broadening the supply of assessed crudes as well as increasing sourcing directly from producers, hence contributing to the optimisation of crude supply for our refineries
- Further development of international trading activities in the Mediterranean and the Balkans.
Significant progress has been achieved regarding the optimization of the operation of the Elefsina refinery and the implementation of a series of synergies between the three refineries, with a substantial effect on the Group’s financials, while exports now account for approximately 56% of total refining sales, 7% higher compared to 2015.
In 2016, the production units’ high operational and mechanical availability led to the highest production and sales (14.8 million and 15.5 million tons respectively) in the last 5 years.
Furthermore, during 2016, the Group concluded a number of agreements with crude oil producers and taking advantage of the increased liquidity, benefited from crude oil pricing spreads in the Mediterranean.
Focusing on transformation programs
- Optimise costs and operations benchmarking versus the safest and most competitive European refineries
- Enhance transformation programs and accelerate their implementation (DIAS, BEST 80)
- Focus on cost efficiencies in Central Services, Fuels Marketing and Procurement.
The implementation of the transformation and restructuring programs continued in 2016, mainly focusing on energy efficiency and improving the units’ performance in the context of scheduled maintenance, as well as reducing procurement costs with a total additional benefit of €32m.
Strategic transformation of fuels marketing
- Emphasis on network management, product and services portfolio, logistics as well as the development of our people and expertise
- Adapt activities, organisation and operating costs to the current environment
In 2016, initiatives with an emphasis on network management continued, further improving the efficiency and operating profitability of our fuels marketing subsidiaries, following the successful completion of the “KORYFI” marketing competitiveness program in 2014.
Maximising portfolio value
- Further enhance vertical integration in International Marketing and Petrochemicals with Refining
- Investments in International Marketing in order to strengthen the Group’s position in the main regional markets
- Focus on the Exploration of Hydrocarbons in Greece in cooperation with international partners, taking into account market conditions
- Strategic review of participation in DESFA. Realise the full benefit of our participation in DEPA and Elpedison
- Developing Renewable Energy Sources
The increased integration with Refining yielded significant benefits in Petrochemicals. Regarding the Group’s international activities, both the restructuring of the international marketing business supply model, by strengthening relationships with local suppliers and a higher level of integration with the Group’s refineries, which increased further in 2016, as well as the emphasis on trading activities, contributed to improving the Group’s competitiveness.
In Renewable Energy Sources, the Group has 200 MW power projects in various stages of development as well as 8.3 MW already in operation.
In 2016, the Group successfully participated in RAE’s pilot tender with three photovoltaic projects in Aspropyrgos, Thessaloniki and Kavala with a total capacity of 8.6 MW.
In the area of Exploration & Production of Hydrocarbons, the Group has already completed a series of exploration activities in the Patraikos Gulf (the collected data is currently in the process of scientific processing). The Group was also declared a “preferred bidder” for the offshore blocks 1, 2, and 10, as well as onshore blocks in Arta-Preveza and the NW Peloponnese, either independently or through participation in JVs.
Developing human resources
- Focus on developing our people and their expertise through investing in continuous training
- Establish a culture of excellence and reward in all of our activities
The Group has continued to invest in training throughout the crisis. In the last three years, the Group proceeded with the development of the EDGE and EDGE Commercial training programs and increased training hours.
Focusing on corporate social responsibility
- Provide support to the greater society, focusing on socially vulnerable groups in local communities
- Support of the young generation through awards of excellence to students, the provision of scholarships for international studies and work experience opportunities
During 2016, the Group focused on its social responsibility actions further highlighting its corporate responsibility profile.
The above initiatives will contribute to the achievement of the following financial objectives:
Improve profitability
- Increase EBITDA through the contribution from new investments and transformation programs
- Maximize net cash flows from increased profitability and capex control
Operational profitability (Adjusted EBITDA) continued to improve during 2016, reaching €731m, despite the significant decline in international refining margins (by 1.5 $/bbl), while capex amounted to €126m.
Deleveraging group
- Gradual reduction of indebtedness over the next few years, through increased cash flow
- Diversify funding sources and reduce finance costs
In October 2016, HELLENIC PETROLEUM FINANCE plc, a fully owned subsidiary of HELLENIC PETROLEUM S.A. issued a new Eurobond of €375 million at an interest rate of 4.875%. This resulted in: a significant decrease in the interest cost - by €15 million on an annual basis, reducing financial risks and contributing to the improvement of the debt liabilities’ maturity profile.