Investor Presentation May 2018

Transcription

1 May 218

2 Disclaimer This presentation contains forward-looking statements that reflect the Company management s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by a variety of variables and changes in underlying assumptions that could cause actual results to differ materially. Neither Tüpraş nor any of its directors, managers or employees nor any other person shall have any liability whatsoever for any loss arising from use of this presentation.

3 Content Refining Market Slides 4-1 Turkish Market Slides Company Overview Slides Operations Slides Key Financials Slides Outlook Slides Appendix Slides

4 REFINING MARKET

5 Brent Crude Oil Prices ($/bbl) PROS OPEC & non OPEC supply cut Political instabilities in Middle East Future of nuclear agreement Healthy PMI data in developing countries Expectation of high global GDP 47 CONS Increase in number of rigs & production in US 36 Concerns about future of OPEC & non OPEC product cuts Inventory Levels , High crude exports of OPEC Source : Platts As of May 3th REFINING INDUSTRY 5

6 Refinery Capacity Change Thousand Barrels/Day ,8 1,4,9,5, ,7 1, Net Capacity Additions (mb/d) ,8 1,5 1,3 1,3 1,1,6,6, China India Middle East Other Asia Other Japan North America Europe , , Source:, Reuters, International Energy Agency, Tüpraş, sector reports and news REFINING INDUSTRY 6

7 Middle Distillate Cracks ($/bbl) Diesel 2 Jet Fuel ,8 13, ,1 12,2 12,6 1,4 14,3 11,5 1, 15, ,9 14,4 13,7 14,4 13,8 11,4 9,1 8 7,2 7,6 8 9,5 6,6 8, 4 4 Jan Feb Mar Apr *May Jun July Aug Sep Oct Nov Dec Jan Feb Mar Apr *May Jun July Aug Sep Oct Nov Dec Source : Platts As of May 3th REFINING INDUSTRY 7

8 Gasoline and High Sulphur Fuel Oil Cracks ($/bbl) 24 Gasoline High Sulphur Fuel Oil 18, ,7-8,7-11,9-1,2 121,4 12, 12,1 9,8 1,2 1,6 13, 11,9 9,7-12, ,2-11,9-12,7-13,1-12, ,2-16,7 Jan Feb Mar Apr *May Jun July Aug Sep Oct Nov Dec -2 Jan Feb Mar Apr *May Jun July Aug Sep Oct Nov Dec Source : Platts As of May 3th REFINING INDUSTRY 8

9 Quarterly Product Crack Margins ($/bbl) While diesel & jet cracks outperformed in Q1 218 compared to a year ago, gasoline & fuel oil cracks declined significantly during the same time frame. 1615, , ,2 1,5 1,7 19,4 Diesel 9,2 8 8,9 7,9 6 Q1 Q2 Q3 Q4 Gasoline 14,6 13,1 18,9 12,4 1,8 11,2 1615,2 14,5 15, 14 14,3 13,5 13,3 13, 12,8 12 1,9 1,9 1,9 1 Q1 Q2 Q3 Q Jet Fuel 16 14, ,5 13,3 11,2 9,9 12,4 1,5 12, 8 7,3 7,7 8 6 Q1 Q2 Q3 Q ,1-11,6-12, ,6-13,2 High Sulphur Fuel Oil -7, -6, ,1-1,6-2 Q1 Q2 Q3 Q4 9,4 1,2-1, -9,4-15,5 REFINING INDUSTRY 9

10 Crude Price Differentials ($/bbl) Ural Differentials Heavy Crude Price Differentials 1 Brent Brent -,6-1 -1,2-1,6-2 -2,1-2,3-2,4-1,8 -,3-1, Jan Feb Mar Apr *May Jun Jul Aug Sep Oct Nov Dec Min Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 *18Q2 Iran Heavy Kirkuk Kuwait Basra Heavy Arab Heavy *18Q2: April and May data REFINING INDUSTRY 1

11 TURKISH MARKET

12 Turkish Economy Strengths Population (mn) 1 GDP (%) % growth in last 5 yrs -4 yrs >65% 7,5 9,2 8, % % 7, ,5 4,2 4, 3, 2,9 2, Source: EMRA, TSI 22,3 Diesel Consumption (mn ton) 8.8% average growth in last 5 yrs 24,2 25,1 26,1 4% annual growth 27, REFINING INDUSTRY Car ownership per thousand people %

13 Turkish Consumption (Milyon ton) Diesel Jet Fuel ,17 22, % ,52 4,4 +2.7% -4% 215 2, % 215 4, Gasoline Fuel Oil* 217 2,3 +3.1% 217, % ,23 2,1 +6.5% ,58,6-3.5% Kaynak: EMRA *Bunker excluded REFINING INDUSTRY 1 13

14 Strong Turkish Market, 3M 218 (Million tons) Tüpraş is well positioned in a growing, short market. Diesel and jet fuel consumption in Turkey in the first 3 months of 218 grew significantly driven by infrastructure projects, aviation growth and consumption of heavy duty vehicles. Diesel Jet Fuel 218 5, % 218, % 217 4,95 217, Gasoline Fuel Oil* 218, %, % 217,48 217,19 *Bunker excluded Source: EMRA REFINING INDUSTRY 14

15 Turkey s Import / Export Balance (Net) (Million Ton) 4 Export 2,4 3,2 1,,7,,3-4 -3,1-3,1-8 Import , -13, LPG Gasoline Diesel Fuel Oil Jet Source EMRA REFINING INDUSTRY 15

16 COMPANY OVERVIEW

17 Tüpraş Shareholder Structure %77 %2 %3 Publicly Traded Energy Investments Inc. (SPV) %51 *Distribution of Domestic/ Foreign Ownership of Tüpraş Shares Foreign Ownership %18 %79,98 Free Float %4 %49 %1 Domestic Ownership %83 *As of December 31th, 217 COMPANY OVERVIEW 17

18 Tüpraş Refining Assets & Distribution Network Baku OPET Marmara Terminal 721, m3 İstanbul İzmit OPET Giresun Terminal 43,13 m3 Turkey Storage Ankara Kırıkkale Capacity İzmir Batman Tüpraş : 58% Opet : 9% Other Companies : 33% Total Capacity : 28.1 mn ton OPET Antalya Terminal OPET Mersin Terminal 19,392 m3 24, m3 Nelson Complexity : 9.5 Tüpraş Storage Cap. : 7.2 mn m 3 OPET Storage Cap. : 1.1 mn m3 Crude Pipeline Terminal Kirkuk Refinery İzmit 11. MT Capacity NC: 14.5 Storage Capacity: 3.3 mn m 3 İzmir 11. MT Capacity NC: 7.66 Storage Capacity:2.51 mn m 3 Base oil 4 k tons Kırıkkale 5. MT Capacity NC: 6.32 Storage Capacity: 1.41 mn m 3 Batman 1.1 MT Capacity NC: 1.83 Storage Capacity:.25 mn m 3 COMPANY OVERVIEW 18

19 High Complexity (Nelson Complexity of Refinining Companies) İzmit After RUP ,5 14,5 Tüpraş After RUP 13, 12,6 11,8 11,6 11,5 11, 1,4 9,9 9,8 9,6 9,5 9,5 9,4 9,2 9,2 9, 8,8 8,7 8,4 Tüpraş Before RUP 8, 7,3 7,3 7,1 7,1 7,1 7,1 6,8 6,5 5,9 5,8 5,8 İzmit Ref. Valero Reliance Essar Marathon Oil Holly-Frontier Neste BP Tesoro Thai Oil IOCL Tüpraş-215 Hellenic PKN MOL SHELL Petrom Galp Saras Petrobras Tüpraş Lukoil HPCL CPCL BCP Esso(Thai) S-Oil MRPL SK Energy BPCL COMPANY OVERVIEW 19

20 Crude Suppliers of TÜPRAŞ (Million Tons) In 217, Tüpraş purchased 25 different types of crude oil from 14 countries, with gravities ranging between API. 9 Africa America Europe CIS Middle East Crude Type %5,3 3 %36 %58,8 >34 3> COMPANY OVERVIEW 2

21 Sales By Customer (217) Customer Groups Sales to Distributors Bitumen %11 Military %1 LUKOIL %4 TP %3 OTHER %13 POAŞ %26 Export %18 Dist. %45 BP %15 Other %6 Petkim %1LPG %4 Jet %5 THY Opet %9 SHELL %15 OPET %25 Total : 31.5 mn ton Distributors : 14.3 mn ton COMPANY OVERVIEW 21

22 Competitive Advantages of Tüpraş Added Value Created by Tüpraş Local Market Dynamics Cost Base of Tüpraş Best Fit for the Market with high diesel yield High Economic Growth Energy Efficient High Complexity of Tüpraş Short on Diesel Crude Oil & Feedstock Cost Advantage Presence in all over Turkey through refineries and terminals Import Parity Pricing (Freight advantage of Tüpraş) Economies of Scale COMPANY OVERVIEW 22

23 OPET Opet Sunpet Opet expanded its retail footprint from 1.56 stations in December 217 to stations in February 218. Market share as of February White Product: 18.3% Black Product: 15.31% Q 218 COMPANY OVERVIEW 23

24 DİTAŞ, Marine Transport -Tüpraş Share 79.98% 3 Crude Oil Tanker : DWT 1 Crude Oil - Product Tanker : DWT 7 Product Tanker : DWT 11 tugboats 8 mooring boats 2 service boats 1 pilot boat One of the biggest Turkish marine transportation companies of crude oil and petroleum products Carries mainly Tüpraş crude oil purchases and makes the transfer operations of product and semi-products 3 Crude Oil Product ,9 23, , , ,6 8, ,7 mn $ Net Sales 49,6 mn $ Op. Profit COMPANY OVERVIEW 24

25 Körfez Ulaştırma A.Ş.- Tüpraş Share 1% Körfez Ulaştırma A.Ş. Turkey's First Private Railway Operator On June 16th, Freight Train Operator Certificate, On September 2th, Safety Management Certificate received Operates with 491 cistern wagons and 5 diesel locomotives 2,5 mn tons/ 218 Target year transport % 1 Market share COMPANY OVERVIEW 25

26 OPERATIONS

27 Lower Capacity Utilization and Quarterly Production Volume Capacity utilization and production decline in Q1 218 was due to maintenances in İzmir, Kırıkkale and Batman refineries. Our year-end guidances for capacity utilization and production have not been revised. Capacity Utilization* (%) Quarterly Production (Million Tons) 12 Crude Oil Other 99,7 16, , 65,1 84,1 8,7 94,5 99,9 78, 67, ,1 6,6 6,7 5,6 7,8 7,7 7,3 7,4 6,9 7,4 7,2 6, ,2 5,4 5,5 Q1 214 Q1 215 Q1 216 Q1 217 Q ,5 4,6 4 Q1 Q2 Q3 Q4 *Nameplate capacity calculated by standard 33 days of operations. OPERATIONS 27

28 Q1 Product Yields Bitumen %5 LPG %4 Bitumen %1 LPG %4 Coke %3 Other %2 Fuel Oil %12 Other %1,6 Black Prod. %2,9 Light Distil. %25,7 Gasoline %21 Naphtha %1 Coke %4 Other % Fuel Oil %7 Black Prod. %2,4 Light Distil. %25,9 Gasoline %22 Naphtha % Mid. Distil. %51,7 Mid. Distil. %53,7 ULSD %36 Jet %16 ULSD %34 Jet %19 White Products %78 White Products %79 Production 7. mn tons Production 5.2 mn tons API 31.8 API OPERATIONS 28

29 Increase in Domestic Sales (Million Tons) We generated 6.2 million tons of total sales in Q Domestic diesel sales were 2.5 million tons, 8.6% higher than Q Total Sales in Q1 Domestic Sales of Key Products in Q1 Domestic Sales Export Diesel Jet Fuel Gasoline Bitumen ,7 1,1 3,6 5,6 1,7 3,9 6,9 1,8 5,1 7,2 2,3 5, 6,2 1, 5, ,9,2,4,8 3,3,3,4,9 4,1,4,5 1, 3,9,3,4,8 4,4,3,5 1, 2 1 1,5 1,7 2,3 2,3 2,5 1Q 214 1Q 215 1Q 216 1Q 217 1Q 218 1Q 214 1Q 215 1Q 216 1Q 217 1Q 218 OPERATIONS 29

30 Investments (Million $) 9.5 Nelson complexity High white product yield Process more heavier and sour crudes Run all refineries with 1% capacity utilization Avg. 278 mn$ Avg. 943 mn$ Avg. 247 mn$ Q1 218 Ongoing Projects New Power Plant Revamp of Crude Unit FCC Modernization New Sulphur Units Energy Saving Projects Optimization of conversion units OPERATIONS 3

31 218 Expectations vs Q1 218 Results Brent Price ($/bbl) Capacity Utiliation (%) ,2 65,2 65,9 Revised Average Brent Price Expectation for Full Year 218 from 55-6 $/bbl to 65-7 $/bbl 66.8 $/bbl Brent Price average in Q ,1 99,7 16,4 78 Full Capacity Utilization target for Full Year % Capacity Utilization in Q1 2 5 J-18 F-18 M-18 15'Q1 16'Q1 17'Q1 18'Q1 Margins ($/bbl) Capex (mn $) 1 Tüpraş Net Margin Med Margin ,8 Q , $/bbl Expected Net Refining Margin for Full Year $/bbl Net Refining Margin in Q , 25 mn $ CAPEX for 185, Full Year mn $ CAPEX in Q1 63, Q1 218 OPERATIONS 31

32 KEY FINANCIALS

33 Margin Environment ($/bbl) Tüpraş 4.8 $/bbl Net Refining Margin in Q1 218 was higher than 4 $/bbl Med Complex margin. Premium to the benchmark Mediterranean peers refining margin due to: Refined products deficit characteristic to the Turkish market Access to cheaper sources of crude oil Ability to use heavier and sour crudes Proximity to major suppliers Reduces transport costs Implemented cost reduction measures Energy efficiency programs Capacity to produce higher value added range of refined products Direct pipeline connections with domestic clients High export capability J-8 J-8 J-9 J-9 J-1 J-1 J-11 J-11 J-12 J-12 J-13 J-13 J-14 J-14 J-15 J-15 J-16 J-16 J-17 J-17 O ,54 9,6 2,5 1,95 2,89 1,17 Med Complex 4,21 1,67 Tüpraş Gross Margin Tüpraş Net Margin Mediterranean 1,7 1,6 3,2 2, 11,9 6,5 4, Q ,2 1,95 6, 4, 4,83 12,9 8,1 3,97 5,3 11,6 5,3 4,8 Month Annual 4,1 4, OPERATIONS 33

34 Financial Highlights (Million $) Tüpraş generated 271 mn USD in EBITDA in Q EBITDA Net Income* th Q 3rd Q 2nd Q 1st Q Net Debt- Net Debt/ *Rolling EBITDA Return of Average Equity (%) , R 2, ,5 3, H1 Net Debt/Rolling EBITDA was calculated with USD figures *Excluding minority interest M 4, ,3 2, H1 KEY FINANCIALS M H M Net Debt Net Debt/*R. EBITDA 1,7 2, 1,6 1,5 1,1 1,,7 1,1 1, Q H M ,3 211,32 212,24 213,26 214,35 215,4 216 Q1, H1, M,22 216, Q1, H1, M,41 217,

35 Balance Sheet Analysis (Billion $) Given our strong liquidity management and cash generation capabilities, our cash position funded the highest dividend payout in our history. Cash & Cash Equivalents Trade Receivables 3, 2,4 1,8 1,2,6, 1,7 Mar.14 1,3 Jun.14 1,6 Sep.14 1,7 Dec.14 1,2 Mar.15 1, Jun.15,8 Sep.15 1, Dec.15 1,6 Mar.16 1,6 Jun.16 2,5 Sep.16 1,7 Dec.16 2, Mar.17 1,6 Jun.17 2,2 Sep.17 2,3 Dec.17 1,7 1,7 Mar.18 2, 1,6 1,2,8,4,71 Mar.14,52 Jun.14,51 Sep.14,9 Dec.14,2 Mar.15,66 Jun.15 1,7 Sep.15,88 Dec.15,7 Mar.16,91 Jun.16,75 Sep.16,91 Dec.16 1,9 Mar.17 1,15 Jun.17 1,57 Sep.17 1,36 Dec.17 1,42 1,42 Mar.18 Financial Loans Trade Payables 5, 4,3 3,6 2,9 2,1 1,4,7, LT Loans ST Loans 3,7 3,7 3,2 3,2 3,3,4,3,3,3,9 3, 3,3 2,8 2,9 2,9 Mar h 214 9M Dec 14 Mar.15 3,6 3,6,5,6 3,1 3, Jun.15 Sep.15 3,4,6 2,8 Dec.15 3,9 1, 2,9 Mar-16 4, 1,2 2,8 Jun-16 4,2 1,1 3,1 Sep-16 3,4 3,6,6,6 2,9 3, Dec.16 Mar.17 3,2 3,4 1,1 1,3 2,1 2,1 Jun.17 Sep.17 4, 4, 1,4 1,6 2,6 2,4 Dec.17 Mar ,91 Mar.14 3,26 Jun.14 3,3 Sep.14 2,42 Dec.14 1,72 Mar.15 1,69 Jun.15 1,58 Sep.15 1,33 Dec.15 1,21 Mar-16 1,67 Jun-16 1,96 Sep-16 1,99 Dec.16 2,18 Mar.17 2,17 Jun.17 2,68 Sep.17 2,18 Dec.17 2,19 2,19 Mar.18 KEY FINANCIALS 35

36 Q1 Profit Before Tax Bridge ( ) Decline in Profit Before Tax was driven by narrowing of crude oil differentials and impact of maintenances. Million TL 33,4 58,6 28,7 151,7 199,1 9,8 471,8 217 Crude Oil Differentials Crack Margin Effect Inventory Effect Maintenance Effect Other 218 KEY FINANCIALS 36

37 Dividend (TL) 16 Earings per Share Gross Dividend Total Payout One of the highest dividend yield in BIST 15,22 13, , ,16 6,5 6,2 5,83 4,96 4,78 3,93 3,85 3,24 2,94 2,98 2,31 2,5 1,73 1, /213 EPS includes the tax incentive KEY FINANCIALS 37

38 Tüpraş Balance Sheet Million USD Difference % Current Assets Cash & C. Equivalents Receivables Derivatives Inventories Pre-paid expenses Other Current Assets Long Term Assets Financial Assets & Subsidiaries Fixed Assets Derivatives Pre-paid expenses Deferred Tax Other Long Term Assets Total Assets Short Term Liabilities Financial Loans Payables Derivatives Deferred Incomes Provisions Other ST Liabilities Long Term Liabilities Financial Loans Payables & Provisions Derivatives Other LT Liabilities Equity Minority Interests Total Liabilities KEY FINANCIALS 38

39 Creating Competitive & Sustainable Shareholder Value Tüpraş has one of the highest Corporate Governance Ratings Foreign Currency Long Term Board 92,9 Tüpraş BBB-(Stable) Ba1 (Stable) Türkiye BB+ (Stable) Ba2 (Stable) BB- (Stable) Stakeholders 98,6 Koç Holding Ba1 (Stable) BBB- (Negative) Transparency 94, Analyst Recommendations Shareholders 95,5 %38 Overall 94,7 %62 Buy Hold KEY FINANCIALS 39

40 Financial Policy Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counter party risk, interest rate, commodity and currency exposure Threshold and limits Net financial debt/ebitda Net foreign currency position/shareholders' equity Inventory and crack margin exposure Current ratio The fixed/floating profile of financial debt Liquidity: share of long term debt Counter party risk limits Counter party Risk Policy Deposit is kept, within certain limits, by banks that comply with the criteria determined in our policy Credit rating and strong capital base Cap on the maximum deposit allocated to a single bank Threshold for deposits subject to banks shareholders equity KEY FINANCIALS 4

41 Inventory & Crack Margin Hedge Inventory Hedging Policy Operational Hedge: Maintaining minimum amount of stock required for the refining activities Forward Pricing: Purchasing crude oil through forward-priced contracts Financial Hedge: Proxy Hedging (both crude oil and refined product inventories) Expected inventory exposure for the year end is hedged Derivative transactions: Asian swap, Zero Cost Collar Hedging ratio increasing throughout the year Crack margins: Gasoline, Diesel and Jet Fuel Cracks Margin Hedging Policy Derivative transactions: Asian Swaps Hedging Parameters: Budget figures, historical average prices of the cracks + standard deviations, market expectations Maximum hedge ratio: 5%, Tenor: up to next 4 quarters KEY FINANCIALS 41

42 FX Exposure Management (31 March 218) Active management of FX exposure kept the risk level within our limits. Consolidated Assets Consolidated Liabilities Million $ A significant portion of the Group's crude oil and refined product purchases are denominated in US Dollars. In addition, the Group finances its capital expenditures mostly through borrowings denominated in US Dollars. Natural Hedge: The Group is able to mitigate some of the impact of volatility in exchange rates through natural hedges: crude oil and refined product inventories are US Dollar denominated assets. Cash flow Hedge: RUP Facility financing loans designated as hedging instruments of highly probable export revenues. As a general Koç Holding financial policy, Group companies are allowed to keep foreign exchange positions within certain limits. Cash 1,393 Receivables & other assets 43 Stock 1,647 Forward & CFH 2, mn $ Payables 1,86 ST Financial 1,254 RUP : 311 Eurobond : 7 LT Financial 2,417 RUP : 949 Eurobond 7 Other Loans : 768 * Cash flow hedge accounting : 1 1,194 mn $ KEY FINANCIALS 42

43 OUTLOOK

44 218 Refinery Maintenance Schedule & Capacity Utilization Our year-end total capacity utilization target has not changed. We expect full year-end total capacity utilization. Unit Quarter Duration (weeks) Reason *Plt 7 Crude Oil Unit Q Q in 218 Revamp İzmir İzmit *Hydrocracker, DHP & Platformer Q1 5-6 Plt 4 FCC Q2 5-6 Plt 2 Crude Oil & Vacuum Unit Q4 5-6 Plt 5 Crude Oil & Vacuum Unit Q2 5-6 Plt 25 Crude Oil & Vacuum Unit Q4 5-6 Plt 47 Hydrocracker Complex Q2 4-5 Plt 63 CCR & DHP Q4 5-6 Periodic Maintenance Periodic Maintenance Kırıkkale *All Units Q1- Q2 9 Battery Shutdown Batman *Plt. 1/Crude Oil & Vacuum Q1 4-5 Periodic Maintenance 218 Crude Capacity Utilization 95,4 % 218 Total Capacity Utilization Full * Completed Maintenances OUTLOOK 44

45 Future Expectations We only updated our average Brent Price expectation. The rest of our expectations remains the same as before. Brent Price The average Brent price in 218 is expected to be 65-7 $/dollars per barrel Estimation Med Complex Margin We expect Med Complex margins to be between 4,75-5, dollars per barrel band in 218 Tüpraş Net Margin Net Tüpraş refinery margin is expected to be in the region of 7,5-8, dollars per barrel Operations Full Total Capacity Utilization using imported semi-products such as ASRFO and HVGO Production: approximately 28.3 million tons Total sales: 31. million tons Investment Refining investments is expected to be around 25 Million dollars. OUTLOOK 45

46 Competition # 1 (SOCAR-STAR Refinery) STAR Refinery (Total Cap. 1 mn ton) Goldman Sachs has acquired a 13 percent stake in SOCAR Turkey for $1.3 billion. Goldman Sachs has the right to resell 1 percent of its stakes to Socar, and the remaining 3 percent to Sermaye Investments Limited owned by SOCAR within 6 year at the same price. 219 mn ton Production Tüpraş Star Total Turkish Demand Balance LPG 1,1,3 1,4 4,1-2,7 Credit : 3.3 Billion $ Equity : 2.4 Billion $ Total Investment : 5.7 Billion $ 3,3 billion dollar credit agreement. First 4 year grace period total year term. Project finance is supplied to company (US$ 1.5 billion) It is planned to be commissioned in 218. Petchem Feeds,2 2,6 2,8 Gasoline 6,1 6,1 2,4 3,7 Jet Fuel 5,2 1,6 6,8 5,2 1,6 Diesel 1,7 4,5 15,2 26,5-11,3 Star Refinery Production Numbers (K Ton) Coke,8,7 1,5 4,6-3,1 Fuels Petrochemical Feedstock Diesel 4.8 Jet Fuel 1.6 Sulphur 158 Petrocoke 698 LPG 26 Naptha 1.6 Mixed xylene 46 Reformate 524 Fuel Oil 1,8 1,8 1,3,5 Bitumen 3,1 3,1 3,1 OUTLOOK 46

47 Competition # 2 (Regional Competition) Tüpraş is competing with 71 refineries in the Mediterranean and Black Sea markets. Mediterranean regional product balance is also affected from Middle East, North West Europe and Asia. Mediterranean Black Sea Moldova Ukraine France Croatia Spain Portugal Italy Albania Greece Romania Russia Turkey Bulgaria Syria Tunisia Israel Morocco Algeria Libya 54 Refineries 7.8mn bpd OUTLOOK Georgia Turkey Egypt 17 Refineries 1.8mn bpd 47

48 Marine Bunker Specification Changes and Its Effects IMO, at the meeting held in October 216, lowered the sulphur emission cap from marine bunkers from 3.5% to.5% (5ppm): effective from 1 January 22. HS FO Scrubbed LS FO Diesel 2,1 LS Fuel Gap 1,8 LS Fuel Gap %19 Install Scrubber switch %5 to LNG %2 Other Mn b/d HS Fuel Oil %74 Buy Low Sulphur Fuel Requirements of spec change can be achieved through; Use of lower sulphur blend stocks like ULSD (Diesel) Low Sulfur Fuel Oil production with light crudes Sulphur Fuel Reduction Systems (Scrubber) LNG Ship Owners Intention Survey 8% of global trade is done via marine transportation. 5. vessels are in operation. Bunker fuels account for; ~5% of global oil demand 4% of oil related sulphur emissions. OUTLOOK 48

49 Appendix

50 12M Product Yields Bitumen %12 LPG %4 Bitumen %12 LPG %4 Coke %3 Other %2 Fuel Oil %7 Other %1,7 Black Prod. %22,3 Light Distil. %25,5 Gasoline %2 Naphtha %1 Coke %3 Other %2 Fuel Oil %7 Other %2,1 Black Prod. %22,6 Light Distil. %25, Gasoline %2 Naphtha %1 Mid. Distil. %5,4 Mid. Distil. %5,3 Jet %17 Jet %17 ULSD %33 White Product %76.56 ULSD %33 White Product %76.27 Production 27,93 mn tons Production 28,88 mn tons API 3,62 API 3,26 APPENDIX 5

51 Crack Margin Effect on Tüpraş in Q1 (FOB Italy Prices) Weighted average of total crack margin difference in Q1 218 over Q1 217 indicates a -,4 $/bbl, yielding 58.6 million TL. Product Price, $/ton Tüpraş Crack Margin, $/bbl Yield LPG 485, 455,8 3,89-23,6-13,2 Gasoline 63,5 544,2 2,31 1,9 13,3 Naphtha 552,3 466,6,17-4,4-1,1 Jet Fuel 629,6 497,5 18,27 13,3 9,5 Diesel 588,5 478,4 31, 12,3 1,5 Diesel 1 577,3 47,8 1,22 1,8 9,5 Fuel Oil 1% 366, 314,5 1,73-1,3-5,3 Fuel Oil 3.5% 351,1 289,9 5,51-12,6-9,1 Others 322,9 269,5 12,46-12,8-8,8 94,6 Total Crack Margin,$/bbl 5,2 5,6 Margin Difference, $/bbl -,4 Total Processed, mn bbl 39, Total Effect, mn $ -15,4 Total Effect, mn TL -58,6 APPENDIX 51

52 High Complexity (Resid Upgrading Units Production-(Thousand Tons) Raw Materials Products Doğal Gaz 246 Vakum Resid 1,214 Diesel Gasoline LPG Total Production Atm. Dip 3,36 PetroCoke Sulphur 4, Total Feed 4,496 APPENDIX 52

53 Flexibility & Reliability; Multiple routes to maksimum capacity Key units Number of units Capacity (m3/d) CRUDE OIL 8 97 LPG MEROX Flow Diagram LPG Yields (%) 3.5% Increased conversion capacity Strong integration among refineries VACUUM HYDROCRACKER ISOMERISATION UNIFINER REFORMER KERO/DIES EL (HDS) NAFTA SPLITTER CRUDE OIL VACUMM DİST. ISOMER. UNIFINER REFORMER KERO / DIESEL HDS FCC Benzen Saturation FCC Benzin HDS GASOLINE NAPHTHA JET FUELOİL DIESEL 22.% 16.5% 33.9% FCC 2 47 COKER 1 82 NAPHTHA SPLITTER 8 More than one distillation and production units HYDROC. COKER Lube Oil Bitumen LUBE OIL BITUMEN & FUEL OİL.5% 19.9% LPG MEROX 6 OTHER 3.8% APPENDIX 53

54 Competition (European Pump Price Comparison) Gasoline (Krş / Lt) Pump No Tax Distr. Marg. Tax Diesel 1 (Krş / Lt) TR Spa. UK Ger Eu19 Fra. Gre. Ita. TR Spa. Ger. EU19 Fra. Gre. UK Ita. Not: Prices valid on 21 May 218-Turkey pirice as of May 22th 218 APPENDIX 54

55 Tüpraş HSE KPI: Loss Time Incident Frequency and Severity Frequency Ratios 8 6 7,1 7,1 6,9 Incident Frequency 6,1 Including contractors Tüpraş Contractor Total 4 2 4,8 5, 3,6 3,4 3,5 3,6 1,9 1,7 1,8 1,9 1,3,8 2,, ,5 3,2 1,7 2,2 2,6 1,7 1,5 1,4 2,4 1,1 2,8 1,6 3,4 2,5 3,1 1,9 Loss Time Severity Frequency Rate Tüpraş Contractor Total loss time incident freaquency rate =number of incident *1/man hours loss severity frequency rate = loss time*1/man hours APPENDIX 55

56 Koç Holding Turkey s Leading Investment Holding Company Turkey s largest industrial and services group in terms of revenues, exports, employees, taxes paid and market capitalization. Turkey s Leading Investment Holding Company The only Turkish company in Fortuna % CARG in consolidated profit 2 the last five years Pioneer in its Sectors Leading positions with clear competitive advantages in sectors with long-term growth potential such as energy, automotive, consumer durables and finance. Combined Revenues / GDP Total Exports / Turkey s Exports Total MCap on Borsa İstanbul 7% 1% 19% Notes : Data as of YE17, 217 GDP reflects the projection of Turkish government s Medium Term Program (1)217 Report (2)In TL terms between APPENDIX 56

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