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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 20609 |
| Project name | OPET Petrolculuk |
| Country | Turkey |
| Sector | Chemicals |
| Department | Oil, Gas, Mining And Chemicals |
| Company name | Opet Petrolcülük A.S. |
| Environmental category | B |
| Date SPI disclosed | September 22, 2003 |
| Projected board date | October 23, 2003 |
| Status | Completed |
| Previous Events | Invested: July 30, 2004
Signed: April 6, 2004
Approved: February 5, 2004 |
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| Description of company and purpose of project |
Opet Petrolcülük A.S. (Opet or the company) is a retail distributor of petroleum products in Turkey, owned 50% by the Koç Group of Turkey and 50% by Opet’s founding shareholders, the Ozturk family. The project is aimed at strengthening the company’s position in the Turkish petroleum products distribution industry and enhancing its competitiveness in advance of further liberalization. The project is comprised of :
- the construction of a greenfield marine terminal and tank storage facility which will increase the company’s oil products storage capacity from 320,000 m3 to 766,000 m3; and,
- expansion of the company’s existing retail distribution network, with new stations primarily located in the larger cities of Turkey.
The distribution expansion network will enhance the company’s brand recognition in the lucrative Istanbul, Izmir and other larger retail markets. In addition, the project will enable Opet to import larger parcels of products, store in-house, reduce transportation costs and improve the reliability of supply, while simultaneously supporting growth in its fuel distribution business. Opet hopes to take advantage of its strategic location at the mouth of the Black Sea to offer bunkering facilities for Caspian oil products. The intense sea traffic in the region will also give Opet the opportunity to purchase low-cost petroleum products. |
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| Project sponsor and major shareholders of project company |
Opet Shareholder Structure:
From its inception in 1992 through November 2002, Opet was owned 100% by the Ozturk family, which had over 20 years trading experience in the Turkish petroleum sector. In December 2002, the Koç Group purchased 50% of Opet’s shares from the Ozturk family for $125 million. The Ozturk family collectively retained 50% of the outstanding shares. The Koç Group obtained its shares through Aygaz, its LPG distribution company, as well as through other affiliated companies. The current Opet shareholding structure is as follows: Öztürk Family Members (50%), Aygaz A.S. (40%) and other Koç Group Companies (10%).
Aygaz & Koç Group:
Aygaz is majority-controlled (52.5%) by the Koç Group, Turkey’s largest diversified conglomerate with operations in energy and numerous other sectors. The Koç Group is one of IFC’s most important global relationships. Aygaz is listed on the Istanbul Stock Exchange where 28.5% of its shares are publicly traded. |
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| Total project cost and proposed IFC investment |
| The project cost is estimated to be $150 million and Opet has requested IFC to provide a corporate loan consisting of a $25 million A Loan and a $35 million B Loan. |
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| Location of project and description of site |
| The marine terminal and storage facilities are to be located north of the Marmara Sea in Thrace (in a suburban area) and will consist of a marine terminal, tank farm, truck loading units, pipelines between the marine terminal and tank farm, sanitary waste treatment unit, ballast water treatment facilities, auxiliary systems, fire fighting, steam generation, water treatment unit, motor control center, diesel generator and compressed air system. The retail stations will be located all over Turkey, with special concentration in the largest cities. |
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| Project Development Impact and IFC's Role |
Development Impact:
The proposed project will have a number of beneficial impacts, including:
- enhancing the long-term viability of a Turkish company which operates in a cyclical industry; Opet will gain economies of scale, improve its operating efficiencies, and raise standards resulting in potentially lower fuel prices to consumers when the market liberalizes;
- increasing competition in the automotive LPG and retail petroleum and products sectors;
- enhancing existing retail distribution offerings and providing cleaner roadside facilities to consumers in the Istanbul and Marmara regions;
- enhancing investor confidence in working with a strong Turkish company;
- putting the company in a position to take advantage of the market liberalization anticipated under the New Petroleum Law;
- allowing oil products to be stored and distributed in compliance with EU quality standards;
- allowing Opet to demonstrate its commitment to sustainable business practices;
- allowing Opet to continue to be one of the more significant tax paying entities in Turkey.
IFC Role:
The IFC investment will enable the company to lower its funding cost and secure funding of longer maturities, thus stabilizing its cash flow through periods of cyclicality. Current market conditions in Turkey do not indicate that alternative sources of long-term finance will be available anytime soon. Under these conditions only larger multinational players such as BP and Shell have access to finance for the upgrading and modernization of their distribution networks. IFC has a key role to play in the mobilization of long-term capital under the IFC B Loan program and in assisting parallel lenders such as FMO and DEG. The proposed B Loan aims to provide reasonably priced long-term financing, which is important not only for ensuring profitability in an increasingly competitive domestic distribution market, but also for positioning the company to take advantage of changes in the market expected under the New Petroleum Law. IFC has provided in depth advice on marketing and technical issues pertaining to the proposed Marmara marine terminal, as well as an important role in ensuring proper environmental compliance. Finance facilities provided to the project will also help remove the need for petroleum product distributors in the Thrace region to transport supplies over the two Bosphorous bridges by tanker. |
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| Environmental and social issues - Category B |
This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical, environmental and social information submitted by Opet as well as visits to the proposed terminal site on the Sea of Marmara and the existing Opet terminal in Ismit. The following potential environment, health, safety and social impacts of the projects were analyzed.
- Site selection and land acquisition;
- Compliance of the marine terminal and storage facilities with IFC, international, and Turkish environmental,
health and safety (EHS) requirements; and
- Labor and community issues.
To view the environmental documents for this project, click here |
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| Location of environmental documents in locally affected community |
The Opet environmental documents will be posted in the following places for local disclosure:
- at the corporate headquarters in Istanbul; and
- at the site of the proposed terminal. |
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| To contact the project company, please write to: |
Mr. Yavuz Erkut, General Manager,
OPET Petrolculuk A.S.
Bulgurlu Mah, Sarigazi Cad. 47
81190 Uskudar
Istanbul, Turkey |
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