OIL & ENERGY INDUSTRY IN TURKEY  PROCESS OF LIBERALISATION  MAY 2009

PETDER MEMBERS FIELD OF OPERATION FUELS (Black and white products) LPG, (Bulk, bottled and auto gas) LUBES AVIATION FUELS MARINE FUELS Belgin Madeni Yağlar PETROL OFİSİ A.Ş. BP Petrolleri A.Ş. Shell & Turcas Petrol A.Ş. BP Gaz A.Ş. The SHELL Company of TURKEY Ltd. DELTA Akaryakıt Tic. A.Ş. TOTAL Oil Türkiye A.Ş. ERK Petrol Yatırımları A.Ş. TURCAS Petrol A.Ş. MOBIL Oil Türk A.Ş. Altınbaş Petrol ve Ticaret A.Ş. Shell Gaz Ticaret ve Sanayi A.Ş.

OUTLINE  GENERAL OVERVIEW OF ENERGY SECTOR IN TURKEY  Legislative structure  Market Review  TURKISH OIL INDUSTRY  Demand & Supply  Refining, Logistics &Marketing

 Turkey has incorporated numerous Laws and Regulations in line with EU accession programme.  Electricity and Natural Gas Market Laws (2001)  Petroleum Market Law (December 2003)  LPG Market Law (April 2004)  Petroleum Law ( in the parliament). These laws essentially drives the energy sector towards a fully liberalized market structure  Energy Market Regulatory Authority (EMRA) has been established at the end of 2001 to regulate all activities in the Gas, Power and Oil Products Markets. TURKEY – Energy Market Legislation

5 Source: BP Statistical Review PRIMARY ENERGY CONSUMPTION Natural gas is the fastest growing fuel in Turkey’s energy supply and has taken lead from oil as of 2008 Primary Energy Consumption Of Turkey (Million Tons of Oil Equivalent) Source: EMRA 2007 Report

 Turkey is aiming to reduce its high dependency on energy imports by diversification and through increasing utilization of domestic resources. Exploration efforts in the Black Sea have increased; hydro and coal consumption is further encouraged.  New Petroleum Law to encourage new exploration incentives  Turkey’s aspiration is to become an energy bridge between major oil and gas producing countries of the Middle East and Caspian, and the consumer markets in Europe.  Turkey's port of Ceyhan is an important outlet for current Iraqi oil exports. Azeri oil through Baku-Tbilisi-Ceyhan (BTC) has been active in operation since late  Samsun – Ceyhan pipeline project aims to connect oil sources in Black Sea to Ceyhan area.  Nabucco pipe line project aims to deliver Caspian natural gas to Europe through Turkey.. TURKEY – Energy in brief

Source : Tüpraş OIL DEMAND & TRENDS 5-7% Total size of oil industry in Turkey is 60 Billion $

TRENDS IN WHITE PRODUCTS In 2008 total white products consumption decreased by 1% to million m 3. % 0 % 5,8 % 5,9 % - 1,0

DIESEL CONSUMPTION Source: GDPA & PETDER GASOLINE & Auto LPG CONSUMPTION Trends in consumption of oil products Diesel consumption increasing Gasoline consumption decreasing Auto LPG strong substitution in gasoline market

BLACK PRODUCTS & LUBRICANTS CONSUMPTION LUBRICANTS Source: GDPA & PETDER BLACK PRODUCTS Black Products & Lubes

4 Refineries, 84 Licensed Storage Facilities Distributors Fuel Storage Capacity 4.24 M.m3 LOGISTICS –Refineries, Storage Facilities &Crude Oil Pipelines

Licensed Players in Petroleum Market  REFINERY LICENSE4  DISTRIBUTORS51  DEPOTS84  FUEL STATIONS  LUBE 208  INDEPENTENT CONSUMERS71  MARINE & AVIATION58 Licenses As of 20th May 2009

Licensed Players in LPG Market  DISTRIBUTORS63  DEPOTS81  AUTOGAS STATIONS 7705  LPG TRANSPORT 38  LPG BOTTLE PRODUCERS11 Licenses As of 20th May 2009

14 BCM Russia WCBS 1&2 Russia - Blue Stream Iran Algeria LNG + Nigeria LNG Natural Gas Supply- Operational Natural Gas Supply- Contracted Azeri Gas (Shah Deniz) Turkmeni Gas * No field development yet for Turkmeni gas Natural Gas Supply- Under Discussion Source: BOTAS Turkey- Natural Gas Pipelines

OUTCOME OF LIBERILASATION PROCESS OIL INDUSTRY  OIL INDUSTRY IN TURKEY HAS SUCCESFULLY ADAPTED NEW PRICING SYSTEM  January 1st 2005 / Oil products / LPG distribution companies assign “ceiling” or “suggested” prices Pump prices are being published at EMRA web sites  RESTRICTIONS ON OIL IMPROTS HAVE BEEN REMOVED.  LICENSING PERIOD HAS BEEN SUCCESSFULLY COMPLETED. √ 4 Refineries, 51 distributors, dealers, 136 lube oil licenses √ All non-licensed players have been pushed out of market  IMPORTANT STEPS TOWARDS ALIGNMENT WITH EU REGULATIONS √ Market liberalization (free movement of goods) √ Fuels specifications adopted Full harmonization expected in 2009 √ Compulsory Oil Stocks (90 Days)

 SUCCESSFULL PRIVATISATION AND INCREASED FOREIGN INVESTMENTS  Successful privatization of refineries, price for 51% ownership doubled in two years  Increasing foreign investment/interest in Turkish oil market Shell – Turcas JV POAŞ – OMV (34% share sales to OMV) LUKOIL bought all shares of AKPET company,  Interest in new large scale projects (Plans for a new refinery, new pipeline)  IMPROVED COMPETETIVENESS & TRANSPARENCY 51 Distribution companies Higher quality of service at the pump stations New products in market (98 octane, low sulfur diesel, fully unleaded gasoline, Biofuels) Highly competitive industry (campaigns, promotions etc)  IMPROVED OPERATIONAL SAFETY, IMPROVED TECHNICAL STANDARDS AT STATIONS AND TERMINALS GSM (Regulation for operational health & safety)  HIGHER LEVEL PARTICIPATION OF INDUSTRY ORGANISATIONS IN LEGISLATIVE PROCESS OUTCOMES / RESULTS OF NEW LEGISLATIVE PROGRESS

Thank you…

Influence of taxation on pump price Special Consumption Tax & VAT on Fuel products constittue an important part of pump price. More than 50 % of pump price is taxation. Average taxation (VAT+S.C.T) on pump prices (year average for 2008) LPG Auto gas Gasoil Low Sulphide Gasoil Gasoline RON 95 Fuel Oil No: 6

Tax component High level of taxation in oil products: pricing structure of gasoline ISSUES & OIL INDUSTRY CONCERNS IN TURKEY Distr. Margin 10% Tax 61% Product 29%

* Calorific Efficiency is included Turkey is one of the highest oil taxing country Unleaded gasoline Diesel TOTAL TAX IN PUMP PRICE: € cents/lt