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TÜPRAŞ to invest $2 billion to increase diesel production
TÜPRAŞ General Manager Yavuz Erkut said the investment envisages the construction of a new refinery that will focus on fuel production rather than being a facility for crude oil processing.
Speaking to the Anatolia news agency yesterday, Erkut gave details regarding their new investment projection and figures about future diesel consumption. Diesel consumption has been on the rise recently, largely owing to tax policies, he asserted. Turkey, whose diesel production is far from meeting its own demand as in many countries in the Mediterranean basin, imports 8 million tons of diesel every year, Erkut added. “In the 2020s, it is estimated that gasoline consumption will remain at its current levels of around 2.5 million tons per year. However, it is likely that diesel consumption will rise from 13.9 million tons per year to 18.3 million tons per year,” he said. The new refinery will be able to transform 4.2 million tons of crude oil into 2.5 million tons of diesel and 700,000 tons of gas, Erkut noted.
The tender for the investment project will be completed in a few weeks, Erkut said, adding: “We will sign an agreement with an international company for this. It seems that the project will be finished in the first quarter of 2014.”
“Because diesel can be utilized more productively now thanks to developing technologies, its position in the market is already on the rise. Adding the tax advantage to this, diesel is becoming increasingly more attractive for consumers,” he said. The total private consumption tax (ÖTV) and value-added tax (KDV) for a liter of diesel is TL 1.49, whereas it is TL 2.2 per a liter of gas. The price of a liter of gas is TL 3.35. However, motorists are paying only TL 2.66 for a liter of diesel.
Erkut called on the government to stop protecting the diesel with such a segmented and unfair taxation policy, asserting that the market would improve more healthily if the state applied the same tax rates for both products.
Upon a question about the refinery investments in Adana’s Ceyhan district, Erkut said investing in the refinery business requires diffusive analyses since these investments are large and upscale strategic industrial investments. The demand for fuel products has declined considerably since October 2008 due to the global economic crisis, decreasing TÜPRAŞ’s exports, he said.
“The profit margins for refineries were quite high before the fourth quarter of 2008 and thus refinery investments were appealing. But considering that the profits for a barrel of oil are in the ballpark of $1 in the Mediterranean basin, a $5 billion to $10 billion refinery investment will only pay off in 20 to 30 years,” Erkut argued and pointed out that the establishment of a refinery is unlikely in such an environment.
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