Tupras Analiz

STRATEGIC MANAGEMENT

TERM ASSIGNMENT

Ela Pazvant110201028

Servet Halenur Karışık

130201068

Nisa Küçük110201041

Tüpraş’s History Informatıon About Tüpraş External Environment Scanning Task Environment Scanning Internal Environment Analysis Financial Information

CONTENTS

The roots of Tüpraş dates back to İPRAŞ (İstanbul

Petrol Rafinerisi A.Ş.) founded by the U.S. Caltex Company. In 1983, İPRAŞ and three other publicly owned refineries were brought under the Tüpraş umbrella by arrangements made for a more effective operation of State Economic Enterprises.

Operating four oil refineries, with a total of 28.1 million tons annual crude oil processing capacity

Tüpraş is Turkey’s largest industrial enterprise. A majority stake ( 79,98 %) in shipping company

DİTAŞ and 40% share ownership of petrol retailer Opet, creates synergies and adds value to the operations.

ABOUT TÜPRAŞ

July 10, 1990 was a turning point in the history of Tüpraş, which had served for many

years as a state economic enterprise, when it was handed over to the Privatization Administration.

The Initial Public Offering was carried out in 1991 within the framework of the privatization plan whereby Class A shares corresponding to 2.5% of Tüpraş' equity were offered to the public.

By the end of 1999, approximately 3.58% of Tüpraş shares were traded on the İstanbul Stock Exchange.

In April 2000, the secondary offering of Tüpraş was completed and the ratio of Class a shares traded on the İstanbul and London Stock Exchanges to total equity reached 34.24%.

Tüpraş shares totaling 14.76% were sold to international buyers on the ISE Wholesale Market on March 4, 2005. As a result, 49% of Tüpraş shares are now publicly traded.During 2005, events that held vital importance for the future of Tüpraş took place. The auction on September 12, 2005 by the Privatization Administration for the block sale of 51% of state-owned Tüpraş’s shares was granted to the Koç-Shell Joint Venture Group at a value of US$ 4.14 billion. Resolution No: 2005/1128 of the Supreme Board of Privatization on November 7, 2005 approved the result of the auction. Accordingly, a Share Purchase Agreement was signed with Koç Holding on January 26, 2006, endorsing the actual transfer of the shares.

A PROCESS ADDING VALUE TO THE COMPANY AND THE INDUSTRY

TÜPRAŞ

MISSION To guide the sector

through accomplished innovation, and to supply the nation’s petroleum products need.

VISION To be leader in

Turkey’s petroleum sector

To be a company admired for its performance

To be company in the world standards of petroleum sector

BOARD OF DIRECTORS OF

TÜPRAŞ

SHAREHOLDERS OF TÜPRAŞ

SOME PRODUCTS OF TÜPRAŞ

LPG DIESEL FUEL HEATING OIL FUEL OIL MARINE DIESEL (DMA) HEAVY NEUTRAL BASE OIL LIGHT NEUTRAL BASE OIL SPINDLE EXTRACT SULPHUR

The target is to Tüpraş’s maximum potential

through increasing efficiency in all areas and decreasing costs to the minimum level while taking operational excellence to the ultimate level.

Tüpraş’s strategy is to provide customer satisfaction at the ultimate level and to lead the sector with innovative practices while meeting the need for petroleum products in the country

Tüpraş aims to be positively differentiated from the sector in the process of decreasing its costs and in the operational level of development

STRATEGIES OF TÜPRAŞ

The primary way that politics can affect oil is in the regulatory

sense. Political risk generally increases when oil and gas companies are working on deposits abroad.

Oil and gas companies tend to prefer countries with stable political systems and a history of granting and enforcing long-term leases. However, some companies simply go where the oil and gas is, even if a particular country doesn't quite match their preferences. Numerous issues may arise from this, including sudden nationalization and/or shifting political winds that change the regulatory environment. Depending on what country the oil is being extracted from, the deal a company starts with is not always the deal it ends up with, as the government may change its mind after the capital is invested, in order to take more profit for itself.

EXTERNAL ENVIRONMENT

Political Environment

Supply and Demand Conditions Political Factors Financial Instruments and Speculation Crisis U.S. Dollars Value against Other Currencies Economic Growth R&D, Costs of Refinery and Investments

Sectoral Efficiency of Energy

Economic Environment

Technological developments can ensure these in energy sector Safety and the environment Exploiting changing markets and demand Competitive forces Increasing the efficiency of energy use and energy

products.

Technological advances affect all sectors of the energy market and all other regions in the world.

Technological Factors

Environment practices is determined and

controlled the risks in advance. For this purpose, the risks are defined in the refineries, ensuring that result-oriented and permanent preventive measures are taken.

Environmental risk such as emissions, noise, wastes, soil and water pollution, solid wastes, and sea pollution within the context of national and international standards to mitigate the effects of these risks on human-being and environment which is important.

ENVIRONMENTAL FORCES

Danger safety:Technical safety is at all times given

particular importance at Tüpraş, in order to minimize the effects of danger risks such as fire, power/water cuts, occupational accidents, earthquake, flood, terrorism and sabotage

Financial:Efforts are made to ensure that the effects of financial risks that may arise out of the variations and uncertainties in financial markets are minimized. These include currency, liquidity and interest risks.

Commercial:The most important commercial risk in the oil industry in which the crude oil prices and thus the prices of products are set in the international market is the rapid change in prices. Tüpraş’s prices are based on the price levels and foreign exchange rates

TÜPRAŞ’S PRIMARY RISKS

Operational Risk: Occupational Safety and

Health/ Environment, Supply/Transportation, Product Feature, Information Technology.

Strategic Risks:Most strategic risks, which Tüpraş may be exposed to, are composed of international trends influencing political, legal and customer preferences.

Petkim Socar Star Rafinery Technicas Reunidas Turcas Petrolium C.O.

COMPETITORS IN TURKEY

PETKIM: Petkim Petrokimya Holding A.Ş. was

established on April 3, 1965 under the leadership of TPAO, following the studies and evaluations performed. Petkim produces high quality petrochemical products in its integrated and high technology premises and it imports high quality petrochemical products, compatible with international standards. Petkim sells its products in domestic market and in international opportunity markets with a strong customer focus.


Technicas Reunidas:TR's origins date back to 1960, when

Lummus Española, S.A. was formed as a result of the association of various Spanish businessmen and the North American engineering company The Lummus Company……

Turcas Petrol: Türkpetrol and Lubricants Limited, founded in 1931 as Turkey’s first privately owned fuel distribution company, became a joint stock company in 1936, and teamed up with British Burmah Castrol in 1988 to establish Turcas Petroleum. The name “Turcas” came about by combining the first three letters of Türkpetrol and Castrol. Turcas is one of the rare integrated energy companies in Turkey that operates in the fields of oil and energy, power investments, renewable energy (with a focus on geothermal and wind), fuel retail and lubricants distribution, natural gas projects, power generation & trading.


SOCAR:SOCAR Turkey Enerji A.Ş. is the most important

representative of the ever-reinforcing economic collaboration between Azerbaijan and Turkey. Being one of the most powerful global oil companies, State Oil Company of Azerbaijan – SOCAR has been carrying out its activities in Turkey under the name of SOCAR Turkey Enerji A.S. since December 12th, 2011.

STAR REFINERY: Star Refinery is established on October 25th, 2011. Billions of dollars of foreign currency saving in goods provided by import.High Nelson complexity rate.Flexible to process different crude oil from Ural, Azerbaijan and Kirkuk.


THE WORLD FIVE BIGGEST

OIL COMPANY

1.Saudi Aramco: 12.5 million barrels per day Saudi

Aramco is by far the biggest energy company in the world, generating more than $1 billion a day in revenues

2.Gazprom: 9.7 million barrels per day Russia's Gazprom is the world's largest producer of natural gas

3.National Iranian Oil: 6.4 million barrels per day Iran has been forced to curtail oil production due to international sanctions, but remains a huge oil and gas producer

4.ExxonMobil: 5.3 million barrels per day Exxon's $40 billion in annual profits don't seem like a lot when you consider their $400 billion in sales

5.PetroChina: 4.4 million barrels per day The largest of China's three state-controlled oil giants.

Competence-Based Hiring and Placing: In keeping with the

TÜPRAŞ vision and mission, besides the common values we expect every employee to adopt, certain competencies that are determined in terms of our corporate culture and in view of our vacant positions are evaluated during the hiring process.

Salary Administration : TÜPRAŞ implements an evaluation system based on content-based job assessment that is independent of title and function

Performance Management: The aim of the performance management system used in the Group as a whole is to acknowledge excellent performance, evaluating and guiding this performance objectively in the light of common principles

Training: Our Company places great importance on personnel training, providing the necessary professional knowledge and skills and the means to develop personal talents

Human Resources Policy

Tüpraş focuses on projects in education,

culture, arts and environment to create long-lasting values and transfers its social awareness to coming generations. Tüpraş also contributes to the similar activities of other institutions and agencies via donations and sponsorships.

SOCIAL RESPONSIBILITIES

During the year, Tüpraş purchased 18 different types of crude oil from 11 countries, with gravities ranging between 19-46 API. The Company’s total import costs reached US$ 14.4 billion, with US$ 12.1 billion spent on 17.9 million tons of crude oil and the remaining US$ 2.3 billion on finished and semi-finished products. Tüpraş assumed a flexible approach by importing 1.23 million tons of semi-finished goods to be processed in order to cover domestic production gaps and meet seasonal demand peaks. Tüpraş imported 882 thousand tons of high-sulphur diesel, 532 thousand tons of diesel, 274 thousand tons of jet fuel, 692 thousand tons of low-sulphur fuel oil, 253 thousand tons of HVGO, 80 thousand tons of MTBE, 183 thousand tons of LCGO, and 24 thousand tons of naphtha. Tüpraş utilizes the excess capacity in its units, lowers the sulphur content of imported high-sulphur diesel down to EU standards, and produces higher quality 10 ppm diesel with lessened environmental impact. Because of decreasing import margin due to the global capacity increase, Tüpraş lowered the amount imported semi-finished product. The Company imported 882 thousand tons of high-sulphur diesels in 2014 while the refineries reduced the sulphur content to 10 ppm and generated additional EBITDA.

SALES (EXPORTS AND IMPORTS)

to provide employees that work in the name of

company a healthy and safe workplace, work safety,

to monitor technological developments and supplier’s performances closely,

to keep customer satisfaction at utmost level. to prevent environmental pollution to abide by the local and international

regulations and measures as published for environment, occupational health and safety; to minimize the hazards and risks exposed by the individuals working in the name of company, visitors and neighbours due to the operations in Tüpraş,

QUALITY

Tüpraş is aware of the fact that being able to keep up with

the rising global competition will only be possible by rapidly adapting to changing market conditions. Within this scope, the primary target is to improve product efficiency and to increase competition power by ensuring a permanent enhancement in the cost structure..

Being aware of the fact that the global competition conditions will rise even more particularly in the Middle East and Asia, Tüpraş will ensure the sustainability of its customer oriented sales strategy by improving its customer oriented sales strategy even more in 2013 and by improving its cost structure through operational excellence

MARKETING STRATEGY

Structuring its production by taking the domestic

market’s demand structure into account at the highest level,

Tüpraş aims to increase its competitive power in the domestic market through its existing infrastructure and customer relations while it aims to increase its market share in the imported products besides production. Furthermore, with the aim of using export as a cost decreasing component in periods when the price dynamics in the international markets make it possible,.

PRODUCTION

TÜPRAŞ’S REFINERIES

İZMİT REFINERY

İZMİR REFINERY

KIRIKKALE REFINERY

BATMAN REFINERY

Processing Capacity11,0 Mn Ton/year




Nelson Complexity7,78

Nelson Complexity 7,66

Nelson Complexity 6,32

Nelson Complexity1,83

Storage Capacity 2,91 mn m3



Storage Capacity 253 bin m3

Tüpraş purposes to improve its production and product quality to

the best available technologies level while undertaking activities in the global competitive environment in order to make difference against its competitors. In this context, Tüpraş plans and operates R&D activities and protects the outputs of these activities by its intellectual and industrial property rights policies in order to create and adapt the future technologies. For this purpose, R & D Center was established within the framework of Law No. 5746 on August 2, 2010.

Tüpraş aims at contributing to our country and the energy sector in each project which is conducted in the areas specified in the Tüpraş Technology Roadmap. The projects are produced according to the technology roadmap objectives while considering the benefits for the IT structure and its personnel.

R&D TECHNOLOGY INNOVATIONS

FINANCIAL BRIEF

CURRENT RATIO: is calculated by dividing

current assets by current liabilities

FINANCIAL INFORMATION

2014 2013 2012 2011 20100.82 0.94 1.13 1.08 1.05

QUICK RATIO:A liquidity ratio calculated as (cash plus

short-term marketable investments plus receivables) divided by current liabilities.


2014 2013 2012 2011 20100.54 0.60 0.74 0.064 0.82

NET WORKING CAPITAL: formula is calculated by subtracting the current liabilities from the current assets.(NWC= Current Assets - Current Liabilities)


2014 2013 2012 2011 2010-1.57 -0.63 1.17 0.68 0.44

CASH RATIO:A liquidity ratio calculated as (cash and

cash equivalent divided by current liabilities.


2014 2013 2012 2011 20100.45 0.35 0.39 0.15 0.67

Leadership & Management

Tupras Analiz