Demand for petroleum products has made a weak beginning to the year on the back of slowing global economy and mild weather conditions. With the implementation of containment measures against the Coronavirus (Covid-19) outbreak, which has become a global phenomenon, an unprecedented a wave of demand contraction has begun.
When global aviation activity nose-dived with the cancellation almost all of international flights and significant reduction in inland flights, the greatest negative impact was seen in jet fuel demand. Road transportation activity has also suffered its share on the back of voluntary and enforced lock-downs affecting more than half of the global population and product crack margins were pressured as a result of falling demand.
Historic Drop in Oil Prices after Demand Shock Followed by Supply Side Disagreement
In the light of demand side developments, Brent price, which had started the year at around 62$/bbl, came down by 21% to 52 $/bbl as of early March. When the OPEC meeting, which was held on March the 5th to balance oil prices, ended without an agreement on extension of production cuts, supply and demand crises occurred simultaneously for the first time ever causing Brent price to decrease to around 18 $/bbl by the end of March.
Significant Inventory Loss Recorded due to Sharp Oil Decline
In the first quarter of 2020, Tüpraş had a capacity utilization rate of 84.6% with 6.0 million tons of production while domestic and total sales of Tüpraş realized as 4.6 and 6.2 million tons for the same period, respectively. Tüpraş’ revenues decreased by 18% to 16.9 billion TL in the first quarter of 2020.
Tüpraş has recorded a net loss of 2,265 billion TL in the first quarter of 2020 as a result of weak refining profitability environment along with inventory loss due to decline in oil prices.
Tüpraş has maintained its strong balance sheet through these volatile times thanks to its solid and strict financial policies. The effective financial management that aims for the stability of its robust balance sheet will continue to support Tüpraş’ operations.
Tüpraş Continues to Meet Turkey’s Fuel Demand with its Safe Operation Approach
Since the early days of the outbreak, Tüpraş has been acting with priority of production safety and has been implementing the necessary measures based on the directives and recommendations of the competent authorities such as the World Health Organization and the Ministry of Health while successfully fulfilling the target for meeting Turkey’s fuel demand without any interruption.
Aware of its strategic importance for fulfilling of Turkey’s energy demand, Tüpraş has continued its investments on modernization and energy efficiency with 319 million TL in Q1 2020.
Tüpraş will continue to create added value for its shareholders, business partners and our country with its solid human resource and global competitive power.
|Operational and Financial Results||Q1 2020||Q1 2019||Diff (%)|
|Operational (Thousand tons)||Total Production||6,040||6,740||-10|
Financial (Million TL)
|Profit Before Tax||-2,798||-310|