2. 2
Alper Paksoy is a director of research at TEB Investment / BNP Paribas. He has been working as an
equity research analyst since 1997. As an analyst, Mr. Paksoy currently covers downstream oil,
aviation and steel industries in addition to major listed Turkish investment holding companies. His
coverage included utilities, appliances, automotive and contracting industries in the past. He
worked previously at EFG Istanbul and Global Securities whose research teams have had been
frequently ranked within top three for Turkey by institutional investors.
Mr. Paksoy holds an MBA degree from the University of Georgia in addition to BS and MS degrees,
respectively, in Mechanical Engineering and Systems & Control Engineering from Bogazici
University. He has also studied towards a Ph.D. degree in Mechanical Engineering at the University
of Massachusetts Amherst.
BIOGRAPHY
3. TURKISH PRIMARY ENERGY DEMAND BREAKDOWN
3
• Oil competes for market share with other fuels
depending on the usage and relative prices
• Increase in efficiencies: Turkish primary energy
demand growth was 4.2% per annum (51%
cumulative increase) vs 5.3% GDP growth (59%
from 2002 through 2011)
• Product substitution: Oil’s share in primary
energy demand has declined to 26% in 2011
from 38% in 2003 while natural gas’s share has
increased from 23% to 34%
Organic
3%
Coal
30%
Oil
26%
Natural gas
34%
Electricity
5%
Other
2%
2011 (118 MM tonnes of oil equivalent)
Sources: Ministry of Energy
4. TURKISH PRIMARY ENERGY DEMAND VS GDP GROWTH
4
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
(%)
Primary energy demand growth (%) GDP growth (%)
(1980 through 2011)
Growth correlation: 75%
Growth multiplier: 97% (energy/GDP)
(1995 through 2011)
Growth correlation: 78%
Growth multiplier: 90% (energy/GDP)
Sources: Ministry of Energy, Turkstat
5. TURKISH REFINED OIL PRODUCTS DEMAND BREAKDOWN
5
• 80% of oil products in Turkey are used in energy
production, mostly as transportation fuels that
enable mobility and the rest of those used in
energy for direct heat production
• Motor vehicle plus aviation fuels, i.e.
transportation fuels, account for c70%
• Motor vehicle fuels are diesel, gasoline, and
auto-LPG (two thirds of LPG). Aviation fuel is jet
fuel. Motor vehicle fuels are substitutes. Motor
vehicle fuels’ share has risen to 70% in 2012
from 52% in 2001, to 9% from 5% for aviation.
• Fuel oil is used mostly for heat generation at
plants and one-third of LPG for the same
purpose by households. Combined share down
to 7% from 35% in 2003.
• Asphalt is used in highway construction.
Naphtha is used as a feedstock in
petrochemicals
LPG
12%
Naptha
5%
Gasoline
6%
Jet fuel
9%
Diesel oil
45%
Fuel oil
5%
Asphalt
9%
Others
9%
2011 (32.6 MM tonnes)
Sources: Tupras
6. TURKISH REFINED OIL PRODUCTS DEMAND VS GDP GROWTH
6
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(%)
Oil products demand growth GDP growth
(1995 through 2012)
• Growth correlation: 61%
• Growth multiplier: 22% (oil products/GDP), low due to competition from natural gas
(1.2% growth per annum vs 4.2% per annum GDP growth)
Sources: Tupras, Turkstat
7. TURKISH TRANSP. FUELS DEMAND – MOTOR VEHICLE FUELS
7
-10.0
-5.0
0.0
5.0
10.0
15.0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(%)
Motor vehicle fuels demand growth GDP growth
(1995 through 2012)
• Growth correlation: 19%, low on i) defensive demand, and ii) smaller black markets
• Growth multiplier: 65% (oil products/GDP), (3.0% p.a.) higher than avg but still low
on high taxes on both oil products and motor vehicles and rising prices
Sources: Tupras, Turkstat
8. TURKISH TRANSPORTATION FUELS DEMAND – AVIATION FUELS
8
(1995 through 2012)
• Growth correlation: 15%, low on robust growth of aviation in Turkey
• Growth multiplier: 138% (aviation fuels/GDP), very high (5.2% p.a.) on aviation
growth, government partly liberalised industry in 2003, no excise tax on jet fuel
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(%)
Aviation fuels demand growth GDP growth
Sources: Tupras, Turkstat
9. TAXATION OF REFINED OIL PRODUCTS IN TURKEY
9
• Flat excise taxes (special consumption tax) applied on refined oil products
• Motor vehicle fuels in Turkey bear very high taxes, damping growth
• Government has been increasing taxes faster than inflation in the last decade
Sources: Bloomberg, Official Gazette
0
20
40
60
80
100
120
140
160
180
0
500
1,000
1,500
2,000
2,500
3,000
Gasoline Diesel Auto-LPG Fuel Oil Natural Gas Jet Fuel Asphalt
(%)
(TRY/tonne)
Excise tax (LHS) Tax imposed (RHS)
10. TAXATION OF MOTOR VEHICLES IN TURKEY
10
0
20
40
60
80
100
120
140
< 1600 CC 1600 CC < ... < 2000 CC > 2000 CC
(%)
Passenger cars
0
5
10
15
20
Small cargo van Small van Minibus Trucks
(%)
Commercial vehicles
• New motor vehicle sales applied value-based
(ad valorem) excise taxes in Turkey
• Passenger cars are heavily taxed while
commercial vehicles are lightly taxed.
• Tax rates have been being increased to
discourage excessive growth in automotive
market in Turkey given the import dependence
Sources: Official Gazette
Sources: Official Gazette
11. TURKISH MOTOR VEHICLE PARK
11
(1995 through 2012)
• Growth correlation: 49%, low on low base and low scrapping rates in Turkey
• Growth multiplier: 130% (light motor vehicle park/GDP), very high (7.2% p.a.) on
low base and low scrapping rates in Turkey
Sources: Turkstat
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
(%)
Light vehicle motor vehicl park growth GDP growth
12. ENGINE TECHNOLOGIES
12
(1981 through 2012)
• Gradual but steady improvement in fuel efficiencies: 1.1% per annum, c30%
cumulatively
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
(lt/100 km)
Fuel efficiencies for newly sold US Shortwheelbase light vehicles
Sources: EIA
13. TURKISH FUEL (GASOLINE) RETAIL PRICES
13
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
(TRY/lt)
Sources: Petrol Ofisi, Opet
(2002 through mid-2013)
• Gasoline prices have increased about 12% per annum since 2002, about 1.5ppt
above consumer price inflation
• Such increases have been due to rising oil prices in international markets in last
decade and taxes increasing roughly in line with inflation at 10.2% p.a.
14. FORECAST OIL PRODUCTS DEMAND
14
Sources: Tupras, TEB Investment / BNP Paribas estimates
• Avg demand growth of 2.4% foreseen from 2012 onwards on GDP growth of 3.4%
• Jet fuel expected to continue growing fastest at 6% p.a. followed by asphalt at 3.8%
p.a.. Diesel will maintain weight growing at 2.5% p.a.. Gasoline and fuel oil expected
to continue contracting at 1% and 6% p.a.
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
(m tonnes)
LPG Naptha Gasoline Jet fuel Diesel oil Fuel oil Asphalt Others
