Tupras to Complete $2.2 Billion Upgrade Borrowing End-July

Tupras Turkiye Petrol Rafinerileri AS, Turkey’s sole oil refiner, expects to complete $2.2 billion in borrowing by the end of July to fund an upgrade that will reduce the sulphur content of its production in response to new environmental standards.

Tupras is working with Spanish Eximbank to secure the borrowing, Chief Executive Officer Yavuz Erkut said in comments embargoed for today. The Izmit, Turkey-based company will also decide by the end of July who will build the six or seven units required for the residuum upgrade. Spain’s Tecnicas Reunidas SA has been hired by Tupras to lead the project and local builders may also be involved, he said.

Tupras expects dollar sales to rise 50 percent this year from 2010’s $17.5 billion, so long as oil remains in the region of $120 a barrel, Erkut said. Those levels would also allow “better profitability,” he said.

Net profit at the refiner fell 9 percent last year to 737.3 million liras ($465 million), partly because the company set aside provisions for back taxes and fines. Tupras is owned by Koc Holding AS, the country’s largest industrial group.

Tupras rose 70 kurus, or 1.5 percent, to 47.10 liras at 12:24 p.m. on the Istanbul Stock Exchange.

“Tupras is either first or second among its 25 peers in Europe and Mediterranean in terms of refinery margins,” Erkut said. “Although Mediterranean margins are in the negative now after the Libyan crisis, ours are positive.”

Tupras gets 45 percent of its crude from Iran and Saudi Arabia, Erkut said.

The company’s market share in Turkey will rise to more than 50 percent this year, he said.

Capacity utilization in Tupras refineries was 75 percent in 2010, growing almost 10 percentage points from 2009, he said. Tupras expects the same pace of growth this year, he added.

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