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strengthened in the second half of the month on lower competition as the US and Asian refiners reduced capacity utilisation following lockdowns in their domestic markets. Industrial consumption of fuels has been affected less than sales to retail customers. Correspondingly, diesel crack spreads were fairly strong while gasoline margins weak.”
Assessing a “difficult year ahead, Fitch concluded: “We expect the overall impact of the pandemic will be materially negative for the sector due to a severe drop in demand. However, supply-and-demand imbalances in the market for fuels and the overcapacity in the oil market widening the differentials between heavy crude oil and Brent may, to a limited extent, help European refiners navigate market difficulties in 2020. The expected wider heavy crude differentials is especially important for Tupras, which can benefit from access to a variety crude oil types being located on the Bosphorus Strait, an important transportation route for crude oil to Europe.”
Fitch also advised that Tupras has a policy of distributing large dividends, “but in light of the weaker results we do not expect the company to pay dividends in 2020 and 2021”.
S&P Global Platts on April 22 quoted trading sources as saying that Tupras’ Izmir refinery in Aliaga is likely to halt production due to weak demand.
In a statement to the Istanbul stock exchange, Tupras amended its 2020 refinery production expectation from 28mn tonnes to 24mn tonnes and its sales forecast from 29mn tonnes to 25mn tonnes.
Tupras added that it anticipated an 80-85% utilisation rate, compared with 95%-100% previously.
“The net refining margin expectation has been revised from 4.5$ – 5.5$/barrel to 3$ – 4$/barrel,” Tupras added in the filing.
The refiner also reduced its investment forecast to $125mn from $200mn. However, it did not provide any profit projection for this year.
The company said that it assumed that the pandemic’s negative impact on crude oil and petroleum product demand would start to decrease by June and that normal economic activity would resume starting from August.
Tupras operates four refineries in Turkey, namely Izmir, Izmit, Kirikkale and Batman, which produces mostly low grade non transport fuels.
Meanwhile, Socar is reportedly maintaining full production levels at its STAR refinery at Aliaga in Turkey on the Aegean coast, although with an altered product portfolio.
"For the time being production volumes are unchanged but we don't know how long that will continue, we'll have to see what happens," a Socar spokesman told S&P Global Platts. He confirmed that jet production has been halted and diesel production increased to compensate.
“In this difficult time due to the coronavirus pandemic, Petkim operates uninterruptedly to meet needs by focusing on the raw material production for medical supplies and packaging,” the company said on April 2, without detailing the production lines involved.
Petkim is also meeting raw material demand for the production of face mask and health worker wear fabric, the company added.
Petkim produces approximately 60 petrochemical products at its production
53 TURKEY Country Report May 2020 www.intellinews.com
