Abstract
Economic recession will weigh heavy on Turkey' s relatively small petrochemical
industry in 2009, but
expansion in crude and refined oil production
provides the basis for long-term expansion by providing
access to more
local naphtha feedstock sources, according to BMI' s latest Turkey
Petrochemicals Report.
Crucial to the development of the Turkish
petrochemical industry is access to feedstock, which is likely to
come
from the expansion of oil production in the Black Sea. Newly discovered
reserves in the region
could potentially make Turkey self-sufficient in
oil. By Q209, Petkim' s plans for a number of projects
were pending
approval from the Energy Market Regulatory Agency. These include a US$3bn
refinery
that will help the company meet its feedstock requirements,
reducing dependency on imports. Studies
required to obtain the
Environmental Impact Assessment (EIA) are being conducted along with
engineering studies for feasibility and configurations. The refinery will have
200,000 barrels per day (b/d)
capacity and will open in the city of
Aligaha in 2012, according to plans. However, the economic
downturn and
the lack of financial capital are already weighing heavily on industrial
ambition. Turcas
announced in March 2009 that it was postponing its
refinery project in Ceyhan, although the company is
looking to restart
development when financing can be secured. Other planned refinery and
petrochemicals
projects are being spearheaded by Tüpras with capacity of
763,000b/d by 2011, Indian Oil Corporation
and Calik Enerji of Turkey with
410,000b/d capacity and Cevahir Group' s planned 200,000b/d
refinery. Were
all of the projects to proceed, overall Turkish refining capacity could reach
1.5mn b/d by
around 2013. BMI is assuming there will be delays and
cancellations, and forecasting a maximum
capacity of 800,000b/d by
2013.
As there have been no firm new project announcements, BMI has not
changed its forecasts for the
petrochemicals sector. By the end of 2009,
petrochemical capacities are forecast to include 420,000
tonnes per annum
(tpa) of PE, 150,000tpa of PP, 150,000tpa of PVC and 520,000tpa of ethylene.
The
economic downturn will have a highly negative impact on petrochemicals
output in 2009, particularly
given the importance of the automotive
industry as one of its chief consumers. BMI believes the days of
15%+
annual growth in polymer demand seen in recent years will come to an end, with
a contraction in
the market expected. Plastics production capacity reached
around 5.6mn tpa in 2008 and was forecast to
reach 6.5mn tpa in 2009,
11.3mn tpa in 2013 and 13mn tpa by 2014. However, the plastics industry
will
be impacted by the raising of import tariffs on petrochemicals from
3% to 6.5%. Although providing local
producer Petkim with some protection
from foreign competition, the new taxes will make it more
expensive to
import the raw materials needed for plastic production. Turkey is dependent on
foreign raw
materials for its needs, with 84% imported in 2007. On a
positive note the Turkish Plastics Industry
Association has reported that
plastics exports increased by 25% in 2008 to reach US$43.7bn. Plastics
accounted for roughly 27% of total chemicals exports, with the main export
markets being Russia,
Romania, Ukraine, Iraq and Germany. However, BMI
expects a slower rate of expansion in 2009, in line
with a slump in demand
and more restrictive lending terms in the financial sector. Consequently, by
2013,
BMI forecasts plastics production capacity not exceeding 9mn
tpa.
Turkey is in ninth place in BMI' s Middle East and Africa
Petrochemicals Business Environment
Rankings with 46.6 points, 0.6 points
behind Egypt and 11.4 points ahead of Algeria. Turkey' s strength
lies in
the improvements in market risks, particularly following Petkim' s
privatisation in 2008, but this
has been partly offset by a decline in its
country risk score amid economic recession and deteriorating
indicators.
Foreign investment is being encouraged into downstream sectors in order to
bolster the
country' s industrialisation. However, it is starting from a
very low base in regional terms and has a long
way to go to rise in the
regional rankings. While the gap between Turkey and Egypt may be small, we
see
more rapid expansion in the Egyptian petrochemical industry over the
near term, helping to maintain a
gap between the two countries' scores.
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