Greece achieved its independence from the Ottoman Empire in 1829. During the second half of the 19th century and the first half of the 20th century, it gradually added neighboring islands and territories, most with Greek-speaking populations. In World War II, Greece was first invaded by Italy (1940) and subsequently occupied by Germany (1941-44); fighting endured in a protracted civil war between royalist supporters of the king and communist rebels. Following the latter's defeat in 1949, Greece was able to join NATO in 1952. A military dictatorship, which in 1967 suspended many political liberties and forced the king to flee the country, lasted seven years. The 1974 democratic elections and a referendum created a parliamentary republic and abolished the monarchy. Greece joined the European Community or EC in 1981 (which became the EU in 1992); it became the 12th member of the euro zone in 2001.

Greece has a capitalist economy with the public sector accounting for about 40% of GDP and with per capita GDP 70% of the leading euro-zone economies. Tourism provides 15% of GDP. Immigrants make up nearly one-fifth of the work force, mainly in menial jobs. Greece is a major beneficiary of EU aid, equal to about 3.3% of annual GDP. The Greek economy grew by about 4.0% for the past two years, largely because of an investment boom and infrastructure upgrades for the 2004 Athens Olympic Games. Despite strong growth, Greece has failed to meet the EU's Growth and Stability Pact budget deficit criteria of 3% of GDP since 2000; public debt, inflation, and unemployment are also above the eurozone average. Further restructuring of the economy will need to include privatizing of several state enterprises, undertaking pension and other reforms, and minimizing bureaucratic inefficiencies.

GDP (purchasing power parity): $226.4 billion (2004 est.)

GDP - real growth rate: 3.7% (2004 est.)

GDP - per capita (PPP): $21,300 (2004 est.)

GDP - composition by sector:
agriculture: 7%
industry: 22%
services: 71% (2004 est.)

Labor force: 4.4 million (2004 est.)

Labor force - by occupation: agriculture 12%, industry 20%, services 68% (2004 est.)

Unemployment rate:10% (2004 est.)

Population below poverty line: NA

Household income or consumption by percentage share:
lowest 10%:3% highest 10%:28.3% (1998 est.)

Distribution of family income - Gini index: 35.4 (1998)

Inflation rate (consumer prices): 2.9% (2004 est.)

Budget:
revenues: $54.39 billion
expenditures: $64.4 billion, including capital expenditures of NA (2004 est.)

Agriculture - products: wheat, corn, barley, sugar beets, olives, tomatoes, wine, tobacco, potatoes; beef, dairy products

Industries:
tourism; food and tobacco processing, textiles; chemicals, metal products; mining, petroleum

Industrial production growth rate: 4.1% (2002 est.)

Electricity - production: 47.22 billion kWh (2002)

Electricity - consumption: 47.42 billion kWh (2002)

Electricity - exports: 1.1 billion kWh (2002)

Electricity - imports: 4.6 billion kWh (2002)

Oil - production: 5,992 bbl/day (2001 est.)

Oil - consumption: 405,700 bbl/day (2001 est.)

Oil - exports: 84,720 bbl/day (2001 est.)

Oil - imports: 468,300 (2001 est.) bbl/day

Oil - proved reserves:4.5 million bbl (1 January 2002)

Natural gas - proved reserves:254.9 million cu m (1 January 2002

Current account balance: (2005 est.)

Exports: $15.5 billion f.o.b. (2004 est.)

Exports - commodities: food and beverages, manufactured goods, petroleum products, chemicals, textiles

Exports - partners:
Germany 13.2%, Italy 10.3%, UK 7.5%, Bulgaria 6.3%, US 5.3%, Cyprus 4.6%, Turkey 4.5%, France 4.2% (2004)

Imports:$54.28 billion f.o.b. (2004 est.)

Imports - commodities: machinery, transport equipment, fuels, chemicals

Imports - partners:
Germany 13.3%, Italy 12.8%, France 6.4%, Netherlands 5.5%, Russia 5.5%, US 4.4%, UK 4.2%, South Korea 4.1% (2004)

Reserves of foreign exchange and gold: billion (2005 est.)

Debt - external: $67.23 billion (2004 est.)

Economic aid - recipient: $8 billion from EU (2000-06)

Currency (code): euro (EUR)

Exchange rates:
euros per US dollar - 0.8054 (2004), 0.886 (2003), 1.0626 (2002), 1.1175 (2001), 1.0854 (2000)

Fiscal year: calendar year

OIL

According to January 1, 2005 estimates by the Oil and Gas Journal, Greece has oil reserves of just 7 million barrels. With domestic production of 6,411 barrels per day (bbl/d) in 2004, Greece relies heavily on imports -- primarily from Iran, Saudi Arabia, Russia, Libya and Egypt -- to meet its 429,000 bbl/d oil consumption. Oil is Greece's most important fuel source, accounting for approximately 63 percent of total energy consumption in 2003. Oil's market share is declining slowly, as natural gas becomes more important. By 2025, oil is expected to account for 57 percent of Greece's energy demand. Although the Middle East is expected to remain Greece's major oil supplier, oil from Russia and the Caspian Sea region will become more important as new pipelines are constructed.

Exploration and Production

Greece's oil industry is dominated by Hellenic Petroleum (HP), formed in 1998 from the state-owned Public Petroleum Corporation (PPC). HP conducts oil exploration, imports crude and petroleum products, operates four refineries, and distributes and markets petroleum products throughout Greece. The Greek state currently has a 27.48 percent holding in HP.

The Prinos fields in the Aegean Sea are Greece's main oil production area. The Prinos fields, which began production in 1986, were operated by the North Aegean Petroleum Company (NAPC) until the Greek firm, Kavala Oil, took over production in February 2001. In January 2004, UK-based Regal Petroleum found "considerable potential" for reserves to exceed estimates of 227 million barrels. Regal made plans to raise the field's production from 4,000 bbl/d to 15,000 bbl/d. In September 2004, Regal announced that the Greater Kallirachi field in the North Aegean Sea holds up to one billion barrels of light crude. In June 2005, however, Regal announced that its Kallirachi 2 exploration well had failed to produce commercial flows of oil. The company currently is working to target new well locations.

Burgas-Alexandroupolis Pipeline

In January 1997, Greece, Bulgaria and Russia agreed on plans to build a 178-mile, 700,000-bbl/d pipeline between the Bulgarian Black Sea port of Burgas and Alexandroupolis, Greece, allowing Russian and Caspian oil to bypass Turkey's congested Bosporus Straits. After years of stalling over technical and economic issues, an intergovernmental memorandum of understanding was signed in April 2005. According to Greece's development ministry, Greece could profit between $30 and $50 million from the pipeline.

Other Pipelines

Since 2002, HP has operated a 143-mile pipeline from Thessaloniki to HP's Okta refinery near Skopje, Macedonia. The pipeline is managed by a Greek-Macedonian consortium.

NATURAL GAS

With reserves of only 35 billion cubic feet (Bcf), Greece produces negligible amounts of natural gas. Consumption, however, has increased significantly, from only 1 Bcf in 1996 to 86 Bcf in 2003, and is expected to continue to increase -- possibly tripling over the next ten years. Greece receives over two-thirds of its natural gas imports from Russia, with the remainder coming from Algeria. Greece would like to diversify its natural gas sources to countries such as Iran and Azerbaijan through new pipeline projects, including the South Caucasus Gas Pipeline and the planned Interconnector Turkey and Greece (ITG).

In June 2005, the governments of Greece and Italy signed an agreement to construct an undersea natural gas pipeline between the two countries. The 497-mile pipeline with a capacity of 253 Bcf per year could enter into service in 2010. It is to be built by Poseidon, a joint venture of Greece's state-owned energy group DEPA and the Italian energy group Edison.

Market Liberalization

The Greek natural gas industry is controlled by the state-owned Greek Public Gas Company (DEPA), which was created in 1988. HP and the Greek government currently own 35 percent and 65 percent of DEPA, respectively. In March 2004, Spain's Gas Natural (GN) agreed to purchase 35 percent of the government's share of DEPA, contingent on approval of the contract by Greece's new government. Such a move would reduce the state's holding in DEPA to a minority interest. DEPA's largest customer, Public Power Corporation, also has the option to acquire a 30 percent share of the company.

DEPA began importing natural gas from Russia via Bulgaria in July 1997. Greece has a 20-year contract with Russia's Gazexport (a subsidiary of Gazprom) to purchase approximately 99 Bcf of natural gas per year. It will expire in 2016. Prometheus Gas, which is jointly owned by Gazexport and Greece's Copelouzos Group, has a contract to import Russian gas in excess of what is imported by DEPA.

ELECTRICITY

In 2003, Greece generated 54.6 billion kilowatthours (Bkwh) of electricity, of which approximately 74 percent was thermal, 23 percent was hydroelectric and 3 percent was solar. Although most of the thermal energy is lignite-fired, some is oil-fired. The majority of new plants will be gas-fired. Electricity demand has grown nearly 50 percent over the last decade, which, according to the Energy Regulatory Authority, RAE, will require some 6,000 megawatts (MW) of additional capacity to guarantee adequate supply through 2015. Athens and parts of southern Greece experienced blackouts in July 2004.

Market Liberalization

The majority state-owned Public Power Corporation (PPC) controls Greece's electric production, transmission, and distribution. In compliance with an EU electricity directive, 35 percent of the Greek power market was opened to competition in February 2001, with shares of PPC offered on the Athens stock exchange in December 2001, December 2002 and October 2003. As of December 12, 2004, the Greek state's share in PPC has been reduced to approximately 51 percent.

Since PPC lost its legal monopoly, the Greek government has issued licenses for over 2,750 MW of private thermal generating plants. However, most private producers have been unable to finance plants. As a result, PPC still produced 96 percent of Greece's electricity in 2004. Greece is not expected to have a liberalized electricity market until 2006 or 2007.