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OIL & ENERGY INDUSTRY IN TURKEY

OIL & ENERGY INDUSTRY IN TURKEY. PROCESS OF LIBERALISATION MAY 2009. PETDER MEMBERS. FIELD OF OPERATION FUELS (Black and white products) LPG, (Bulk, bottled and auto gas) LUBES AVIATION FUELS MARINE FUELS. Altınbaş Petrol ve Ticaret A.Ş. PETROL OFİSİ A.Ş.

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OIL & ENERGY INDUSTRY IN TURKEY

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  1. OIL & ENERGY INDUSTRY IN TURKEY PROCESS OF LIBERALISATION MAY 2009

  2. PETDER MEMBERS • FIELD OF OPERATION • FUELS • (Black and white products) • LPG, (Bulk, bottled and auto gas) • LUBES • AVIATION FUELS • MARINE FUELS Altınbaş Petrol ve Ticaret A.Ş. PETROL OFİSİ A.Ş. Shell & Turcas Petrol A.Ş. Belgin Madeni Yağlar BP Petrolleri A.Ş. The SHELL Company of TURKEY Ltd. BP Gaz A.Ş. Shell Gaz Ticaret ve Sanayi A.Ş. DELTA Akaryakıt Tic. A.Ş. TOTAL Oil Türkiye A.Ş. ERK Petrol Yatırımları A.Ş. TURCAS Petrol A.Ş. MOBIL Oil Türk A.Ş.

  3. OUTLINE • GENERAL OVERVIEW OF ENERGY SECTOR IN TURKEY • Legislative structure • Market Review • TURKISH OIL INDUSTRY • Demand & Supply • Refining, Logistics &Marketing

  4. TURKEY – Energy Market Legislation • Turkey has incorporated numerous Laws and Regulations in line with EU accession programme. • Electricity and Natural Gas Market Laws (2001) • Petroleum Market Law (December 2003) • LPG Market Law (April 2004) • Petroleum Law ( in the parliament). These laws essentially drives the energy sector towards a fully liberalized market structure • Energy Market Regulatory Authority (EMRA) has been established at the end of 2001 to regulate all activities in the Gas, Power and Oil Products Markets.

  5. PRIMARY ENERGY CONSUMPTION Primary Energy Consumption Of Turkey (Million Tons of Oil Equivalent) Natural gas is the fastest growing fuel in Turkey’s energy supply and has taken lead from oil as of 2008 Source: EMRA 2007 Report Source: BP Statistical Review

  6. TURKEY – Energy in brief • Turkey is aiming to reduce its high dependency on energy imports by diversification and through increasing utilization of domestic resources. Exploration efforts in the Black Sea have increased; hydro and coal consumption is further encouraged. • New Petroleum Law to encourage new exploration incentives • Turkey’s aspiration is to become an energy bridge between major oil and gas producing countries of the Middle East and Caspian, and the consumer markets in Europe. • Turkey's port of Ceyhan is an important outlet for current Iraqi oil exports. Azeri oil throughBaku-Tbilisi-Ceyhan (BTC) has been active in operation since late 2006. • Samsun – Ceyhan pipeline project aims to connect oil sources in Black Sea to Ceyhan area. • Nabucco pipe line project aims to deliver Caspian natural gas to Europe through Turkey..

  7. OIL DEMAND & TRENDS Total size of oil industry in Turkey is 60 Billion $ 5-7% Source : Tüpraş

  8. TRENDS IN WHITE PRODUCTS In 2008 total white products consumption decreased by 1% to 18.44 million m3. % 5,9 % - 1,0 % 5,8 % 0

  9. Trends in consumption of oil products DIESEL CONSUMPTION • Diesel consumption increasing • Gasoline consumption decreasing • Auto LPG strong substitution • in gasoline market GASOLINE & Auto LPG CONSUMPTION Source: GDPA & PETDER

  10. Black Products & Lubes BLACK PRODUCTS & LUBRICANTS CONSUMPTION BLACK PRODUCTS LUBRICANTS Source: GDPA & PETDER

  11. LOGISTICS –Refineries, Storage Facilities &Crude Oil Pipelines • 4 Refineries, • 84 Licensed Storage Facilities • Distributors Fuel Storage Capacity 4.24 M.m3

  12. Licensed Players in Petroleum Market Licenses As of 20th May 2009 • REFINERY LICENSE 4 • DISTRIBUTORS 51 • DEPOTS 84 • FUEL STATIONS 12439 • LUBE 208 • INDEPENTENT CONSUMERS 71 • MARINE & AVIATION 58

  13. Licensed Players in LPG Market Licenses As of 20th May 2009 • DISTRIBUTORS 63 • DEPOTS 81 • AUTOGAS STATIONS 7705 • LPG TRANSPORT 38 • LPG BOTTLE PRODUCERS 11

  14. Turkey- Natural Gas Pipelines 14 BCM Russia WCBS 1&2 Azeri Gas (Shah Deniz) Russia - Blue Stream Turkmeni Gas * No field development yet for Turkmeni gas Algeria LNG + Nigeria LNG Iran Natural Gas Supply- Operational Natural Gas Supply- Contracted Natural Gas Supply- Under Discussion Source: BOTAS

  15. OUTCOME OF LIBERILASATION PROCESS OIL INDUSTRY • OIL INDUSTRY IN TURKEY HAS SUCCESFULLY ADAPTED NEW PRICING SYSTEM • January 1st 2005 / Oil products / LPG distribution companies assign “ceiling” or “suggested” prices • Pump prices are being published at EMRA web sites • RESTRICTIONS ON OIL IMPROTS HAVE BEEN REMOVED. • LICENSING PERIOD HAS BEEN SUCCESSFULLY COMPLETED. • 4 Refineries, 51 distributors, 14845 dealers, 136 lube oil licenses • All non-licensed players have been pushed out of market • IMPORTANT STEPS TOWARDS ALIGNMENT WITH EU REGULATIONS • Market liberalization (free movement of goods) • Fuels specifications adopted • Full harmonization expected in 2009 • Compulsory Oil Stocks (90 Days)

  16. OUTCOMES / RESULTS OF NEW LEGISLATIVE PROGRESS • SUCCESSFULL PRIVATISATION AND INCREASED FOREIGN INVESTMENTS • Successful privatization of refineries, price for 51% ownership doubled in two years • Increasing foreign investment/interest in Turkish oil market • Shell – Turcas JV • POAŞ – OMV (34% share sales to OMV) • LUKOIL bought all shares of AKPET company, • Interest in new large scale projects (Plans for a new refinery , new pipeline) • IMPROVED COMPETETIVENESS & TRANSPARENCY • 51 Distribution companies • Higher quality of service at the pump stations • New products in market (98 octane, low sulfur diesel, fully unleaded gasoline, Biofuels) • Highly competitive industry (campaigns, promotions etc) • IMPROVED OPERATIONAL SAFETY, IMPROVED TECHNICAL STANDARDS AT STATIONS AND TERMINALS • GSM (Regulation for operational health & safety) • HIGHER LEVEL PARTICIPATION OF INDUSTRY ORGANISATIONS IN LEGISLATIVE PROCESS

  17. Thank you…

  18. Influence of taxation on pump price Special Consumption Tax & VAT on Fuel products constittue an important part of pump price. More than 50 % of pump price is taxation. Average taxation (VAT+S.C.T) on pump prices (year average for 2008) Gasoline RON 95 Low Sulphide Gasoil Gasoil Fuel Oil No: 6 LPG Auto gas

  19. ISSUES & OIL INDUSTRY CONCERNS IN TURKEY High level of taxation in oil products: pricing structure of gasoline Distr. Margin 10% Tax 61% Tax component Product 29%

  20. Turkey is one of the highest oil taxing country TOTAL TAX IN PUMP PRICE: € cents/lt Unleaded gasoline Diesel * Calorific Efficiency is included

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