Shell & Turcas Petrol A.Ş.

Merger and Foundation

At present, the largest participation of Turcas is its 30% share in Shell & Turcas. Shell & Turcas is one of the leading companies in the Turkish fuel distribution sector with 1,006 fuel stations operating under the Shell brand, lube oil production facilities, retail and commercial sales.

The launch of Shell in the Turkish market dates back to 1923, the year of the establishment of the Turkish Republic. Shell, which has ever since introduced its customers to brand-new quality products and services, conducted a successful merger with Turcas Petrol, one of the long-established energy companies of Turkey, in 2006 in order to enlarge its current operations and distribution network. The partners have combined their business segments "Petroleum Products and Lubricants, Retail and Commercial Sales" under the umbrella of Shell & Turcas Petrol, in which Turcas has a 30% share and Shell has a 70% share. The company has expanded and become the 5th largest private company in Turkey as a superb example of a successful partnership between a domestic and an international company by 2008.

Officially founded on March 6, 2006, Shell & Turcas Petrol (STAŞ) obtained all regulatory approvals by June 12, 2006, and commenced operations on July 1 of that year.

Within the bigger picture of Turkey’s recent economic development and growth, STAŞ works towards the aim of fulfilling an important mission. This mission is to work towards sustainable growth, while implementing its work health and safety standards meticulously in Turkey, one of the world’s most dynamic and exciting markets.

As of the end of the year 2011, Shell & Turcas is the market leader in gasoline sales with a 26% share, second in the market in total white products, and third in the market in diesel and LPG (auto-gas) sales. Shell & Turcas, with a 19.4% market share in general automotive fuels, is again the market leader in differentiated products. Shell & Turcas succeeded in raising the number of registered vehicles in the Vehicle Identification System to 350,000, a threefold increase from

2006. The Company also runs Turkey's largest independent loyalty card programme in the fuel sector with 1.5 million active customers.

Turkey’s Most Admired Fuel and Lubricants Company Shell & Turcas

Shell & Turcas was chosen for the 9th time as “The Most Admired Company in the Fuel Distribution and Lubricants Sector” in the “Turkey’s Most Admired Companies” Survey conducted by the prominent economy magazine Capital. According to the same survey, Shell Gas, a wholly-owned subsidiary of Shell & Turcas, was chosen as one of the two most admired brands in the LPG sector. In another survey which was again conducted by the magazine Capital, Shell & Turcas was in the top 20 of the “CEO’s Favourite Companies” list in Turkey.

Shell & Turcas was also recognized in the international arena in 2010. In Royal Dutch Shell's “People Make the Difference Real” program which is conducted to identify which of the 14,000 Shell stations in 60 countries around the world abide by best practices from the standpoint of customer service and service quality, Shell and Turcas’ Shell Batman Boran Fuel Station became the European Champion in 2011. The previous world champion was 30 Ağustos Bulvar Fuel Station-Sompet Fuel from Kayseri.

Lubricants

Fuel stations are crucial for lubricant oil change. Lubricants and fuel distribution are related business activities. The sales & marketing organisation is based on consumer groups, and reaches more than 800 direct customers through 3 separate channels, B2B Corporate Sales, B2C Consumer Sales, and INS-Distributors. In addition to these channels, the company also carries out sales through fuel stations.

Lubricant sales consist primarily of sales made to the automotive sector, industrial sales, and marine lubricant sales. The most important sectors are automotive manufacturers and after-sales service providers, the energy, construction, and metalworking sectors, and other brand and value-focused consumer groups.

According to the 2011 data disclosed by the Turkish Petroleum Industry Association (PETDER), Shell & Turcas has retained its top position in the lubricants sector, repeating its success by becoming the market leader in total lubricant sales for the 5th time in a row, and has attained a market share of 25.2%. Among PETDER members, which represent 65% of the lubricants sector, Shell & Turcas claimed the highest lubricant sales in the market, with an annual 71.1 thousand tonnes. Shell & Turcas has become a model of success by showing the same market performance on a global scale as in Turkey. Shell has been named the “No.1 global lubricants supplier” for the fifth consecutive year in an annual research study carried out by the international consulting and research company, Kline & Company.

Shell & Turcas’ Lubricant and Grease Oil Production Plant in Derince currently exports oil products to approximately 48 countries. Products from the Derince plant are marketed domestically alongside imported products. Sales are made first to nearby markets, and then to other Shell countries in the network. 

New Products

Distinguishing itself by virtue of its trailblazing solutions in the area of fuel efficiency, Shell & Turcas introduced “Shell FuelSave Diesel” for diesel-powered vehicles last year. The first low-sulphur entry in its main product line-up, this new product went on sale all around Turkey in January 2011. Another feature that gives Shell FuelSave Unleaded 95 and Shell FuelSave Diesel an unchallenged advantage is that it contains an additive that enhances engine efficiency. This product, which helps prevent the accumulation of soot and residues that degrade engine efficiency, achieves fuel efficiency by ensuring that fuel is ignited and burned better.

Shell continues its studies in order to encourage its customers, business partners and employees 'to consume less and reduce emissions' within the context of the 'Smarter Mobility' approach applied worldwide. Over 200,000 people have been trained in the area of fuel efficiency by means of the 'Shell FuelSave Driver Training Programme' since 2009. Furthermore, a huge number of drivers in Turkey were given training in efficient driving after the creation of a 'Shell FuelSave Team' in 2011. Shell set a Guinness World Record for conducting the "Largest Fuel Efficiency Lesson" during its FuelSave Day on October 2011, when training sessions were simultaneously held in many countries, placing the concept of efficiency onto society’s agenda.

Commercial Sales

In order to better serve the customers and bring their satisfaction to a higher level even after the distribution of fuel, the commercial sales department conducts activities such as card sales, Vehicle Recognition System (the sector leader with 350,000 vehicles registered), bulk fuel and home base (supplying large companies’ storage facilities).

Terminals

PLANT  Capacity Belonging to Shell & Turcas (m3)

Çekisan Çekmece                         33,869

Çekisan Antalya                           15,908

Ambarlı Ltd.                                 26,784

ATAŞ                                           182,506

SADAŞ Samsun                            19,180

SADAŞ Gebze                               46,652

Shell Ambarlı                               54,135

Shell & Turcas Körfez                    25,400

Shell & Turcas Derince                  51,250

Shell & Turcas Kırıkkale                 20,100

Shell & Turcas Antalya                  30,342

Gebze SADAŞ JV Terminal

The Gebze SADAŞ Terminal was originally built by Total Oil Türkiye A.Ş. in 1989, and has an overall storage capacity of 98,000 m³. Under an agreement concluded between Total and Shell & Turcas, 46,000 m³ of this facility’s capacity was made available for Shell & Turcas’ use as of November 15, 2010. As a result of this agreement, Shell & Turcas has boosted both its mandatory stock reserve capacity and its total stock reserve capacity in one of Turkey’s most concentrated industrial regions.

The facility is supplied with products brought by ships from refineries in Turkey and imported from abroad. All tanks and equipment must comply with Shell Health, Safety, & Environment Standards (HSE). The terminal will be operated jointly together with Total through a Board of Directors and Executive Committee. It will continue to conduct its activities by serving other companies operating in the region as well.

Ataş Anadolu Refining

Turcas Petrol owns 5% of Ataş, which originally started operating in 1962 in Mersin. Turcas Petrol’s partners in Ataş are BP (68%) and Shell (27%).

As a result of investments made after the decision to close the ATAŞ Refinery and transform it into a large-scale oil products terminal on the Mediterranean in 2004, ATAŞ Terminal today performs licensed storage activities.

The Terminal has an oil products storage capacity of 570,000 m3 and its own pier, where high-capacity ships can dock.

As 27% and 5% owners respectively, 32% of Ataş’s total storage capacity has been allocated to Shell and Turcas, and consequently to Shell & Turcas.

Market and Operational Risks

Price changes resulting from high volatility in demand/supply conditions represent a risk for oil companies and for companies that have a large share of oil in their cost structures. Rapid rises in crude oil prices were observed in late 2010 and the early quarters of 2011 as a result of the revolutionary wave of demonstrations and protests that began in Tunisia and subsequently spread to other Middle Eastern and North African countries such as Egypt, Libya, Bahrain, and Yemen. The price of a barrel of Brent crude, which was averaging $ 83 in October 2010, rose 11% to a $ 92 / barrel average by December. During the same period however, pump prices were unable to rise by more than 4%. Because consumer prices are unable to keep pace with hikes in world oil prices, profit margins naturally shrink whenever rapid price rises take place.

Besides demand and price risks, there are also operational risks embedded in the sector. All preventive and safety measures should be implemented regarding the transportation and storage of flammable materials, in order to prevent potential damage to the environment and society. Accordingly, it is essential that there be full technical support, that due precautions be taken, and that risks be insured.

In March 2009, the Competition Authority published a ruling that imposes a five-year limit on the duration of long-term agreements that are entered into with fuel and LPG stations. As a result of this ruling, distribution companies engaged in an intensive process of contract renewal negotiations with their dealers, and found themselves obliged to make substantial prepayments that resulted in their having to incur investment outlays two or three times normal levels. Despite this, it was observed that the market shares of the sector’s five major players remained essentially the same. Petrol Ofisi, Shell & Turcas, BP, Opet, and Total’s combined market share amounted to 83% at year-end 2010, compared to 84% in 2009, and finally 82% in 2011.

 

Shell & Turcas corporate web site:
www.shellandturcas.com.tr