Greece is an important potential transit site for energy exports from the Caspian/Caucasus regions, with limited energy reserves of its own.

GENERAL BACKGROUND
The Greek government, currently headed by Costas Simitis' Panhellenic Socialist Party (Pasok), remains firmly committed to achieving the economic targets ("convergence criteria") required under the Maastricht treaty for entry into Europe's Economic and Monetary Union (EMU). In order to accomplish the ambitious goal of membership in the EMU by 2002, Greece will need to reduce its government budget deficit much further (although significant progress has been made) from a projected 4.2% in 1997 to the 3% EMU guideline. This will be made more difficult by the government's commitment to a weapons-acquisition program. Greece will also need to meet relatively stringent inflation and interest rate conditions. Greece's challenge can be summarized by the fact that after 15 years in the European Union (EU), and large amounts of EU economic assistance, the country remains among the EU's poorest, least economically developed members. Overall, however, the Greek economy appears to be improving steadily.

On the positive side, consumer price inflation is falling, from 8.8% in 1996 to 6.8% in 1997, with the OECD forecasting a further decline to 5.8% in 1998. This reduction in inflation has resulted mainly from the central bank's twin policies of a "hard drachma" combined with restrictive monetary growth. At the same time, interest rates also have fallen. On the negative side, unemployment remains high (around 10%) and appears, if anything, to be worsening slightly. Further, the country remains burdened with a massive national debt. The country's "hard drachma" policy, considered central to anti-inflationary efforts, continues, but is responsible for a widening current account deficit. Meanwhile, the government continues its economic reform policy, including partial privatization of state-owned companies. Overall, Greece's economy is growing at a moderate pace -- between 2.6% and 3.3% in 1997, with an OECD forecast of 3.1% growth in 1998 -- despite continued fiscal tightening. An important question for Mr. Simitis' government is whether further economic reforms will lead to a renewal of social protests and/or opposition by powerful interest groups.

Relations with Turkey were very tense during 1996 and early 1997. At one point, last-minute intervention by top U.S. troubleshooter Richard Holbrooke was required to avert a possible military clash. This tension was caused largely by disputes over sovereignty and economic rights in Aegean waters surrounding hundreds of Greek islands, many of which lie only a few miles off the Turkish coast. Possibly the most contentious issue is that of the continental shelf, believed to contain valuable oil deposits. Greece has insisted that this issue be referred to the International Court of Justice in The Hague.

Another ongoing source of tension is that of Cyprus, which has been divided into Greek and Turkish parts since 1974, when Turkey sent troops to the island. Recently, Rauf Denktash, leader of the breakaway Turkish Cypriot state, warned that war could break out in the region if the EU admits Greek Cyprus. Generally, Greek-Turkish relations appear to have improved in recent months following an important agreement between Greece and Turkey at the NATO summit in Madrid in July 1997. Under this agreement, the two sides renounce the use or threat of force Recently, the Greek Cypriots announced plans to purchase S-300 air defense missiles, which have a range of 93 miles, from Russia.

OIL
Greece produces 14,000 barrels per day (b/d) of oil, all from the Prinos area in the Aegean Sea off the coast of Kavala. The Prinos fields (including Prinos and Prinos North, which began production in late October 1996) are operated by a U.S., Greek, and Canadian consortium known as the North Aegean Petroleum Company. Greek oil production has been declining steadily since it peaked at 25,000 b/d in the mid-1980s. This situation has not been helped by a Greek-Turkish dispute over oil rights on the Aegean continental shelf.

In December 1996, Greece's state petroleum company (Public Petroleum Corp. of Greece) awarded 4 exploration licenses to foreign firms. Enterprise Oil, Union Texas Petroleum, Hungary's MOL were awarded the onshore Northwest Peloponnesos and Ionnina licenses, while Triton Energy was awarded a license covering the offshore Gulf of Patraikos (West) and the onshore Aitoloakarnania tracts.

Refining
Greece plans to spend an estimated $418 million between 1997 and 2001 modernizing and expanding the state-owned ELDA and EKO refineries. ELDA is located in Aspropyrgos near Athens, and currently has a capacity of 121,000 b/d, including upgrading and reforming capability. EKO is located in Kalohori near Thessaloniki in northern Greece. This plant is a simple hydro skimming (topping-reforming) plant with a capacity of 66,500 b/d.

Pipelines
In January 1997, Greece agreed with Bulgaria and Russia on an $800 million plan to build a 200-mile-long oil pipeline linking the Bulgarian port of Burgas with Alexandroupolis in Greece. The pipeline is to carry between 600,000 bbl/d and 800,000 b/d of oil and bypass the Bosporus straits. Meanwhile, companies from Greece and the former Yugoslav Republic (FYR) of Macedonia hope to build a $52 million, 186-mile-long crude oil pipeline linking refineries and a port in Salonika, Greece with Skopje, FYR Macedonia. Discussions for construction of this pipeline began in June 1997. Work is to be carried out by 2 private firms -- Mamidakis of Greece and Okta of FYR Macedonia. If completed, the pipeline is expected to transport about 200,000 barrels per day (b/d) of oil, at half the current cost.

NATURAL GAS
In January 1997, Greece and Russia opened the Greco-Russian gas pipeline, a joint project between the 2 countries which has taken a decade to complete. The pipeline will deliver 71 million cubic feet per year of natural gas for the next 25 years, and will be extended to the Albanian border. Also, in July 1997, the European Commission decided to co-finance a feasibility study for a gas interconnector between Greece and Albania.

ELECTRICITY
Greece's demand for electric power is growing at a 3-5 percent annual rate. Existing power plants use domestic sources of energy (mainly lignite and hydroelectricity), to generate 47 percent of total electric power production. The remaining 53 percent of Greek electric power output is produced by imported crude oil. Greece has been unable to import electricity from the EU since 1991, when power lines in the former Yugoslavia were destroyed. A proposed 500-megawatt subsea link between Puglia, Italy, and Ipiros, Greece, was recently approved after a lengthy delay due to environmental objections on the Italian side. Other possibilities include interconnecting the Greek and Turkish electric power grids, as well as linking with Albania, the former Yugoslavia, and Bulgaria.

Greece's state-owned Public Power Corporation (PPC) is poised for a restructuring into 4 autonomous units as part of a move towards increased competition, set to begin in 2001. At that time, 27% of Greece's electricity market is to be opened to competition, with PPC retaining its distribution network (although private electric power producers will be allowed to use it for a fee). Under EU guidelines, Greece must establish an independent regulator to oversee market opening and set electricity rates. Meanwhile, PPC is pressing ahead to bring up to 400 megawatts per year on line over the next 5 years.

Greece's 1994-2003, 10-year, electric power development plan calls for construction of 3 natural gas and 4 lignite-fired power stations, a bituminous coal-fired unit, 28 hydroelectric plants, as well as a number of solar and wind energy units. In addition, the plan

calls for installing a third high-voltage power line linking Northern and Southern Greece, as well as laying submarine cables connecting the mainland with major islands and Italy. Around half of the financing for these projects is expected to come from the EU. Greece currently imports about 70 percent of its electric power equipment from EU members Germany, Italy, France, and Britain. U.S. firms are considered to have good sales opportunities in the following areas: cogeneration systems; wind energy turbines and systems; air pollution equipment; small hydroelectric units; switchgear and parts; controlling equipment; insulators and transformers; consulting engineering and financial services.

Greece's Ministry of Development is aiming for 250-300 megawatts in new wind-powered generators by the year 2000. The majority of these windparks are to be built by the private sector. Estimates are that the market for wind generation in Greece will reach $520 million by 2000. Wind power may make particular sense for Greece, with its hundreds of isolated islands like Crete and Rhodes, where electric power demand is growing 8 percent annually -- nearly twice the Greek average.

Solar power is another option, with current plans moving ahead to build the world's largest solar station, on the island of Crete. The 50-megawatt photovoltaic (PV) plant is expected to come partly online by late 1998 (and fully online by 2003), and to supply 100,000 people on the island at a cost of 8.5 cents per kilowatt, less than conventional electricity supply on Crete. The $17.7 million project is to be funded 55% by the Greek government and the European Commission, with Amoco/Enron Solar building the plant.

COUNTRY OVERVIEW
President: Constantinos Stephanopoulos (5-year term beginning May 5, 1995)
Prime Minister: Konstandinos (Costas) Simitis (Panhellenic Socialist Movement - Pasok); since January 19, 1996 -- re-elected to a 4-year term on 9/22/96
Independence: 1829 (from the Ottoman Empire)
Population (7/96E): 10.5 million
Location/Size: Southern Europe, bordering the Aegean, Ionian and Mediterranean Seas/131,940 sq. km.
Major Cities: Athens (capital), Piraeus, Thessaloniki, Patras
Languages: Greek (official), English, French
Ethnic Groups: Greek (98%); other (2%)
Religion: Greek Orthodox (98%), Muslim (1%)
Defense (8/96): Army (122,000), Navy (19,500), Air Force (26,800), National Guard (35,000), Gendarmerie (26,500)

ECONOMIC OVERVIEW
Currency: Drachma
Market Exchange Rate (9/9/97): US$1 = 284.6 drachmas
Gross Domestic Product (GDP) (market exchange rates - 1997E): $120.9 billion
Real GDP Growth Rate (1996E): 2.6%
Unemployment Rate (1997E): 10.4%
Inflation Rate (Consumer prices, 1997E): 6.5%
Major Trading Partners: Italy, Germany, France, United Kingdom, United States
Merchandise Exports (1997E): $11.8 billion
Merchandise Imports (1997E): $28.0 billion
Trade balance (1997E): -$16.2 billion
Major Export Products: Manufactured goods, foodstuffs, fuels
Major Import Products: Manufactured goods, foodstuffs, fuels
Foreign Exchange Reserves (1997E): $20 billion
Total External Debt (1997E): $31 billion

ENERGY OVERVIEW
Minister of Development: Vasiliki Papandreou
Proven Oil Reserves (1/1/97): 12 million barrels
Oil Production (1H97E): 14,000 barrels per day (b/d)
Oil Production Capacity (1997E): 15,000 b/d
Oil Consumption (1996E): 366,000 b/d
Crude Oil Refining Capacity (1/1/97E): 395,500 b/d
Net Oil Imports (1997E): 350,000 b/d
Major Crude Oil Import Sources: Persian Gulf OPEC
Natural Gas Reserves (1/1/97): 300 billion cubic feet (Bcf)
Natural Gas Production (1995E): None
Natural Gas Consumption (1995E): 1 Bcf
Coal Reserves (12/31/93): 3.3 billion short tons
Coal Production (1995E): 64 million short tons (Mmst)
Coal Consumption (1995E): 67 Mmst
Electric Generation Capacity (1996E): 8.6 gigawatts (6 gigawatts thermal, 3 gigawatts hydroelectric and other renewables)
Electricity Production (1996E): 40.2 billion kilowatthours

ENVIRONMENT OVERVIEW
Total Energy Consumption (1995): 1.2 quadrillion Btu
Energy Consumption per Capita (1995): 110.9 million Btu (vs. 331.8 million Btu in U.S.)
Energy-related Carbon Emissions (1995): 24.1 million metric tons (0.4% of world carbon emissions)
Carbon Emissions per Capita (1995): 2.3 metric tons (vs. 5.42 metric tons in U.S.)
Major Environmental Issues: Air and water pollution

OIL AND GAS INDUSTRIES
Organization: Public Petroleum Corp. of Greece - the state petroleum company; DEP -- the state-controlled oil refining group; Public Power Corporation - the state-owned utility
Major Refineries (capacity - b/d, 1996E): Aspropyrgos (121,000), Aghi Theodori (100,000), Elefsis (108,000); Thessaloniki (66,500)
Pipelines: Crude oil: 16 miles; Petroleum products: 339 miles
Major Ports: Piraeus, Thessaloniki, Patras

Links to other sites:
1997 CIA World Factbook - Greece
U.S. Department of Energy's Office of Fossil Energy's International section - Greece

The following links are provided solely as a service to our customers, and therefore should not be construed as advocating or reflecting any position of the Energy Information Administration (EIA) or the United States Government. In addition, EIA does not guarantee the content or accuracy of any information presented in linked sites.

Greece -- Center for Renewable Energy Resources
Renewable Energy Distributors in Greece

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File last modified: September 17, 1997

Contact:

Lowell Feld
lfeld@eia.doe.gov
Phone: (202)586-9502
Fax: (202)586-9753