Turkish Petrochemical Industry - Sem Plastik

1 October - 2011 Turkish Petrochemical IndustryAGENDACOMPANY SNAPSHOTWORLD & Turkish DOMESTIC Petrochemical SECTORTARGETS OF Turkish INDUSTRYTRADE RELATIONS WITH D-8 COUNTRIESSUPPORTING PROGRAMS OF GOVERNMENT FOR Turkish INDUSTRYSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY2 AGENDACOMPANY SNAPSHOTWORLD & Turkish DOMESTIC Petrochemical SECTORTARGETS OF Turkish INDUSTRYTRADE RELATIONS WITH D-8 COUNTR ESSUPPORTING PROGRAMS OF GOVERNMENT FOR Turkish INDUSTRYSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY3 Group StructureSOCAR&Turcas Enerji A.. STEASPETK M Petrochemical Holding CoSTRASSOCAR&Turcas Rafineri SUBSIDIARY COMPANIES4 COMPANY SNAPSHOTC ompany Overview Established in 1965/Second complex commissioned in 1985 The sole Petrochemical producer in Turkey 25% domestic market share and well positioned assets in an ever growing market 15 main plants, 8 auxiliary units Located in Alia anear Izmir Sits on a land of 19 mn sqm Harbour, water dam, power generation unit (226 MW) Adjacent to T pra Alia a RefineryPETK MFACILITIESMAIN FEEDSTOCKPRODUCTSPRODUCTION Naphtha, LPG, Main product goups.

2 Olefins, polyolefins, vinyl chain, aromatics and other basic chemicals Gross production about 3 mllion tons a year Capacity utilization rate (CUR) was about 98%5 AGENDACOMPANY SNAPSHOTWORLD & Turkish DOMESTIC Petrochemical SECTORTARGETS OF Turkish INDUSTRYTRADE RELATIONS WITH D-8 COUNTR ESSUPPORTING PROGRAMS OF GOVERNMENT FOR Turkish INDUSTRYSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY6 Source: Cefic Chemdata International, *Asia excluding China, Japan and IndiaPetrochemicals25%29%WORLD & Turkish DOMESTIC Petrochemical SECTORW orld chemicals sales : 1998: $ trilyon 2008: $ trilyon WORLD & Turkish DOMESTIC Petrochemical SECTORS ource: 2011 World Petrochemical Conference, CMAI8 WORLD & Turkish DOMESTIC Petrochemical SECTOR Increase on demand for petrochemicals after crisis Growth expectation with an annual rate of % between 2010-2015 Floating and upward price of raw materials/products Increasing feedstock costs caused depression of margins Globally, especially Asia and growing markets are driving forces Consolidation/rationalization of high cost, inefficient capacities Political & economical uncertainties Global Petrochemical Sector* Source: BMI Industry View Q1 2011 Strong demand on Petrochemical products.

3 Market reached to the condition as in the times before crisis Strong growth domestically (In 2010, market grew by 15 % compared to previous year) Expectation for sector volume to rise over 8 billion $ by the end of 2011 Turkish Petrochemical Sector9* Renewed gulf reemerges (Gulf of Mexico)* New gulf (ME) advantage is keptDeveloped countries tend to produce value-added productsMiddle East Market Advantage goes towards AsiaPETROCHEMICALS GLOBAL PERSPECTIVES1011 TuprasBLACK SEAMEDITERRANEAN IZMIRANKARAREFINERIES AND Petrochemical INDUSTRIES IN TURKEY-LOCATIONSP etrochemical ComplexAdvanSA/Artensa Basic Ind.(Baser)AksaTuprasPetkimFiber ProducerRefineryKorteks12 Overview Plastic Processing in TurkeyAnnual Production Capacity4th biggest country in Europe in 2004, with Spain2010 : million tonsCompany Number ( Included Plastic Processing Machine ManufacturerCompany Number whit foreign (necessities educated personnel each year) valueValue added in economy2009: Billion $2010: Billion $2009: Billion $2010: Billion $Plastics Production Value/GDP3 %Total Export -2010 (E)8 Billion $Number of Company in the biggest 1000th.)

4 4713 COMPARISON OF PLASTICS PROCESSING CAPACITY(TURKEY & EUROPEAN COUNTRIES)024681012 Million Turkey:With approx. 5 million tons plastics processing capacity, the 4th biggest country in Europe , with : 37 INDIA: 12 BRAZIL : TONS/YEARS ector Vision: To Be The Biggest In EuropeAGENDACOMPANY SNAPSHOTWORLD & Turkish DOMESTIC Petrochemical SECTORTARGETS OF Turkish INDUSTRYTRADE RELATIONS WITH D-8 COUNTR ESSUPPORTING PROGRAMS OF GOVERNMENT FOR Turkish INDUSTRYSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY14 Biggest World Economies With Respect to Purchase Power IndexGDP, Tril. Dolar, 2009 THE WORLD Source: IMF, World Economic Outlook, October 2010T rkiyeWorld s 16. biggest economyWORLD & Turkish DOMESTIC Petrochemical SECTOREUROPET rkiyeEurope s 6. biggest economy1516 Country GDP: rate and per capitaTurkey is expected to be the fastest growing economy of the OECD members during 2011-2017, with an annual average growth rate of : OECD Economic Outlook No: 86 Criterion2009 2013 2018 2023T rkiye's Rank Among World Economies17151210 Export Share in GDP (%) % %22.

5 0 %25. 0 %Export to Import Ratio (%) %65%75%80%Import (billion $)140245378625 Export (billion $)102160284500 Annual Export Growth Rate (%) % % % %T rkiye's Share in Total World's Export (%) % % % %TARGETS OF Turkish INDUSTRYS ource: TIM, 2023 Export Strategic Report17 TARGETS OF Turkish INDUSTRYS ource: TIM, 2023 Export Strategic Report2008200920102023132102114500 Annually Average 12 % Export Increase(billion $)18 TARGETS OF Turkish INDUSTRYS ource: TIM, 2023 Export Strategic IndustryExport, billion $(World 2023 trillion $)Annual Average Growth Chemistry Export Share in Total World % %T rkiye, by its planned investments, foreseesthat it will have an export share of % in World s Total Export19 TARGETS OF Turkish INDUSTRYS ource: TIM, 2023 Export Strategic Report20 AGENDACOMPANY SNAPSHOTWORLD & Turkish DOMESTIC Petrochemical SECTORTARGETS OF Turkish INDUSTRYTRADE RELATIONS WITH D-8 COUNTR ESSUPPORTING PROGRAMS OF GOVERNMENT FOR Turkish INDUSTRYSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY2122 Export & Import(*) Annualized as of July 2010(*) Source: TURKSTATC hemicals (Billion USD)Plastics& Rubber (Billion USD)Turkey mport from D8 Countries7%93%Turkey import from D8D8 Other236%5%8%57%11%7%6%Brackdown of ImportPakistanNigeriaMalaysiaIranIndones iaEgyptBangladeshTotal: billion US$D8 Countries billion US$ Source: ITC5,6694%Turkey Export to D8D8 Other244%4%3%47%4%35%3%Brackdown of ExportPakistanNigeriaMalaysiaIranIndones iaEgyptBangladeshTotal: 114 billion US$D8 Countries billion US$ Turkey Export to D8 CountriesSource.

6 ITCC hemicals Imports11%89%Turkey Chemical importfrom D8 Chemicals Other2543%23%12%8%5%5%4%39 Plastics40 Rubber39 Miscellaneouschemical28 Inorganic chemicals,31 Fertilizers29 Organic chemicalsOthersBreakdown of Chemicals importTotal: billion US$D8 Countries billion US$ Source: ITC12%88%Turkey Chemical exportto D8 Chemicals Other2635%13%13%8%7%6%6%5%7%39 Plastics40 Rubber28 Inorganic chemicals,32 Tanning, dyeing ,pigments etc29 Organic chemicals39 Miscellaneous chemicalproducts33 Essential oils, perfumes,34 Soaps, lubricants, waxes,OthersBreakdown of Chemicals ExportTotal: billion US$D8 Countries : billion US$ Chemicals ExportsSource: ITCT rade Balance by Products Between D-8 and TurkeyProduct codeProduct labelTrade Balance between D-8 and Turkey200820092010 TOTALAll '39 Plastics and articles '40 Rubber and articles '38 Miscellaneous chemical ' '28 Inorganic chemicals, '29 Organic '37 Photographic or cinematographic '30 Pharmaceutical '36 Explosives, pyrotechnics, matches, '35 Albuminoids, modified starches, glues, '34 Soaps, lubricants, waxes, candles, '33 Essential oils, perfumes, cosmetics, '32 Tanning, dyeing extracts, tannins, pigments Chemicals mineral oil codeProduct labelTrade Balance between D-8 and Turkey200820092010'3901 Polymers of ethylene, HDPE, '3907 Polyether, '3902 Polymers of '3904 Polymers of vinyl '3903 Polymers of.

7 ITC28 Global foreign direct investment (FDI)FDI flows, by region and economy (2010)(Millions of dollars)FDI InflowsFDI stock, by region and economy, 2010 (Millions of dollars)FDI inward World Investment Report 2011 AGENDACOMPANY SNAPSHOTWORLD & Turkish DOMESTIC Petrochemical SECTORTARGETS OF Turkish INDUSTRYTRADE RELATIONS WITH D-8 COUNTR ESSUPPORTING PROGRAMS OF GOVERNMENT FOR Turkish INDUSTRYSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY2930 SUPPORTING PROGRAMS OF GOVERNMENT FOR Turkish Industry The New Incentive Regulation The new investment regulation was enforcement in 2009 Regulation was revised in 2011 Input Supply Strategy in Chemical Industry Coordinated by Ministry of Economy Aim: Support to increase basic raw material production Document of Strategy and Action Plan in Turkish Chemical Industry Coordinated by Ministry of Science Industry and Technology Aim: Become a center in invest in Turkey, by producing high value-added products, SUPPORTING PROGRAMS OF GOVERNMENT FOR Turkish INDUSTRYD ocument of Strategy and Action Plan in Turkish Chemical IndustryClustering should be supported and widespread Special Chemical Industry Zones should be established on coastal regions By the end of 2012, export share should be increased from 10% to 15%Domestic production is planned to be supported in Public TendersChemistry downstream sectors competitive with world should be determined Source.

8 Turkish Chemistry Sector and Strategic Action Plan Paper (2011-2015)31 Research & Development for Domestic Raw Material Source Based ProductionProduction of special and value-added products should be promotedNew technoparks should be built wherein chemistry sector has a predominance Prior investment fields should be determined about petrochemicalsChemistry Sector Development Commission should be established Supports should be provided to direct foreign investments within frame of Incentive RegulationSUPPORTING PROGRAMS OF GOVERNMENT FOR Turkish INDUSTRYS ource: Turkish Chemistry Sector and Strategic Action Plan Paper (2011-2015)32 AGENDACOMPANY SNAPSHOTWORLD & Turkish DOMESTIC Petrochemical SECTORTARGETS OF Turkish INDUSTRYTRADE RELATIONS WITH D-8 COUNTR ESSUPPORTING PROGRAMS OF GOVERNMENT FOR Turkish INDUSTRYSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY33 PETK M LAND WIDE PRODUCT RANGE VALUE-ADDED SPEACIAL/FINE CHEMICALS CLUSTER MODEL (PETK M VALUE-SITE )ENERGY GENERATIONLOGISTICS & TRADEUPSTREAMSOCAR&TURCAS AEGEAN REFINERY (STAR)

9 DOWNSTREAM4 MAIN GROWTH STRATEGIESSOCAR&Turcas Group targets to be the biggest power generation and production facility by realizing Petkim Value Site Cluster Project within frame of Refinery- Petrochemical -Energy-Logistics Integration on Petkim PeninsulaSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY34 STRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY25 new potential productsPPPVCHDPEPSLDPEPETACNLDPEPTAMEGC ARBON BLACKSBRABSPA2- ETHYL HEXANOLLABTDICBRPOLYCARBONATESPROPYLENE GLYCOLMALEIC ANHYDRIDEISO-PROPANOLACRYLIC ACIDACRYLATESPOLYETHER ALCOHOLS(POLYOL)With respect to market survey and import amounts, 25 potential new productsare prioritized; 35 Import Data for the chosen 25 products (2010 year prices)Amount: 5 000 000 tons7 250 000 000 $ Imports if any other investmentsare not realizedAmount: 7 750 000 tons11 500 000 000 $ Annually average % growthSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY36T rkiye s import amount will significantly be decreased by the planned capacity expansion and new plant investments till 2023 With foreseen increasing capacity of sellable products, T rkiye s import amount will decrease from 7 mn.

10 Tons/yr. to approximately 4 mn. tons/yr. as of 2023 Drop about 3 mn tons/yr. of T rkiye s import amountSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY37 Even though in case Naphtha Cracker producing ethylene with a capacity of 2,700,000 tons/year is established by the year 2020, T rkiye will still need nearly 1,300,000 tons/year propylene So, T rkiye Petrochemical Industry should focus on on- purpose propylene production and make plan STRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY38 FOR AN EFFICIENT CLUSTERING;World scale production,Vertical integration with refinery for basic raw materials production,Integrated structure with downstream sectors as automative, packaging, construction and other chemistry related downstream areas, A synergetic structure equipped with its energy/utility supply, warehouse/logistics capabilities and various service companies,An infrastructure with at least 3 different types of transportations (sea, river, road,railway, pipeline, ),A big potential for manpower,PLUG&PLAY management system is an attractive model for M CLUSTER MODEL & JURONG ISLANDSTRATEGIC PLANS & INVESTMENTS FOR Petrochemical INDUSTRY3940 THANK