* BP joins Glencore, Vitol as supplier of crude to Hellenic
* Switch to new suppliers after Iran embargo was costly
* Some deals concluded through barter and cash - traders
* More traders eye business as Greek worries ease
By Julia Payne
LONDON, March 22 Greece's largest refiner is
finding it easier to secure crude as improving credit conditions
allow suppliers to cautiously return, although it still must pay
Hellenic Petroleum, was dealt a double body blow
when it was forced to abandon cheap Iranian oil imports due to
sanctions at the height of the Greek economic crisis when
liquidity was squeezed.
For the past year, the refiner has been reliant mostly on
deliveries from trading houses Vitol and Glencore.
Now, BP and other, smaller players are
dealing with Hellenic, say traders, and others may follow.
"Credit conditions have significantly improved since the
recent EU/IMF resolutions on Greece and the disbursement of the
bailout tranche last December," the spokesman for Hellenic said.
Towards the end of last year, the euro zone finalised a 50
billion euro package for Greek banks and Hellenic refinanced 1.2
billion euro in loans.
Hellenic, which has a refining capacity of 310,000 barrels
per day, fell victim to the Greek financial crisis as
international banks stopped dealing with most Greek institutions
and their letters of credit, fearing defaults.
Iran was the only country that continued to deal with Greece
on the open credit basis, a standard practice in the industry
when payments for oil are due several months after the delivery
to allow refiners to generate cash from selling products.
However, Western sanctions on Iran cut off vital crude flows
last spring, which accounted for up to 30 percent of Hellenic's
For most of the second half of last year Hellenic relied on
Vitol and Glencore, which supplied mostly Russian Urals and some
Iraqi Basra Light crude grades.
Hellenic said while the switch was costly it is not facing
any issues with crude supply.
"Adverse factors affecting results were the increased crude
oil cost due to suppliers switching and Greek crisis related
risk," the company said in financial disclosures.
Hellenic's year-on-year operating profit and cash flows
fell by a third in 2012 compared with 2011.
Open credit is difficult to secure as it requires the
counterparty to take on the full risk of potential non-payment.
Most traders pulled the plug on supplies to Greece with only
Glencore and Vitol, as suppliers of last resort, taking on the
risk without any bank backing in case of non-payment - but
charging hefty premiums.
Glencore still accounts for the bulk of deliveries with open
credit of around $200 million, while Vitol's presence has
diminished over the past months, several industry sources said.
With open credit options limited, Hellenic had to find other
avenues with cash payments being one of the main options.
"They are trying to use 100 percent of their cash
availability," one Greek oil executive said, "But they need to
buy more than they can handle with cash."
Swapping crude imports for product exports emerged as
BP engaged in such trade earlier this year, several
trading and shipping sources said. BP declined to comment.
Hellenic said it does not engage in barter trade, but said
that some deals on products sales and crude purchases are often
concluded between the same parties.
"With exports accounting for more than 50 percent of our
total sales... it often occurs that we are dealing with the same
counterparty on certain crude purchases and products sales," it
Trading and shipping sources said one firm was swapping
60,000 tonnes of ultra-low sulphur diesel per month against
crude supplies to Hellenic. A Russian trader has been swapping
straight-run fuel oil delivered to Hellenic for refining against
"Over the past two to three months, I have seen increased
activity from products-focused people who were saying they are
keen to get involved in crude to supply Greece because swaps are
getting attractive," one trading source said.
A trader at a small trading house, which used to sell to
Hellenic, said that he hoped to resume trade in the next few
months as banks are re-evaluating Greek risks.