World Bunkering > News > Summer 2010 > Turkey - Business keeps going

While the world may have been going through an economic crisis, and Turkish waters may have been ‘home’ to a large fleet of laid up ships, the number of vessels transiting the Turkish Strait remained more or less stable in 2009, compared to 2008. Official figures put the number of ships passing through the Bosphorus at 51,422 while 49,453 vessels transited the Dardanelles, almost identical numbers to 2008. These vessels were carrying a total of 400 million tonnes of cargoes. Nearly 9,300 tankers went through the Istanbul Strait with over 144 million tonnes of oil and dangerous cargoes on board while almost 9,600 passed through the Dardanelles, carrying about 152 million oil, some 4 million tonnes up on 2008.

So not surprisingly Istanbul’s strategic location on the only route between the Black and Mediterranean Seas makes it the region’s obvious bunker and ship supply hub. Some 18,000 ships take bunkers and luboil at Istanbul, giving the city’s ports annual volume of about 1.5 million tonnes with five suppliers accounting for 95% of the total market who provide fueloil and gasoil. Two others are specialists in gasoil. The Istanbul ports and the anchorage account for 90% of Turkey’s bunker business.

Mustafa Muhtaroglu, the founder and head of physical supplier Energy Petrol, argues, however, that Istanbul could have been much more successful if opportunities to expand the industry, and especially to build up the supporting infrastructure, had not been missed over recent decades. He says: “Istanbul has grown so rapidly that all possible locations for such a bunker supply centre have gone. Any municipality with vision and shipping knowledge would have established a bunker centre in Istanbul to serve such international shipping. If that had happened, we would now sell over 10 million tonnes of bunkers and bring a very large income to Turkey from bunkering and other related services such as crew changes, luboil, fresh water and provision supplies etc. The income could be as high as $10 billion or almost 10% of Turkey’s total exports. In 2000 I wrote an article about our ‘exports at the door’. But the chance was missed.”

There are five or six major suppliers and a number of MGO supply specialists. Baytur maintains a strong position in the Istanbul bunker market and has the advantage of a floating storage facility located at port of Ambarli, close to the Istanbul anchorage area. Another long established strong player is Petrol Ofisi (PO), which has a terminal in the same area. Other suppliers include CYE Petrol, Energy Petrol and TBS. Lukoil and Oiltrade supply gasoil while Shell, Mobil and BP supply luboil only, and shipowner-backed Arkas Bunker is a relative newcomer to the market.

Apart from Baytur and PO, located near Istanbul, the other suppliers work from storage facilities located in the Gebze area, 35 miles sailing to Istanbul’s bunkering point. Gebze is the region’s new hub for oil and chemical products, with modern land-based storage facilities enabling suppliers to provide shore-blended bunkers of all grades of bunker fuels.

Gebze is close to the Tüpraş refinery, the main source for bunker suppliers working in Istanbul and the Marmarasea. Gebze and the neighbouring Izmit Bay ports of Diliskelesi, Hereke, Yarimca, and Derince provide a gateway to Turkey’s most industrialised area. About 20 private terminals receiving over 12,000 ships a year create strong additional bunker demand for suppliers based in the Gebze area. PO was established as a state enterprise in 1941 to purchase the petroleum and petroleum products needed by public and private enterprises and end-users, to import these and maintain stocks in the country for subsequent marketing. A private sector company since 2000, PO has a dedicated bunker arm, PO Marine. PO supplies from five terminals at Istanbul, Izmit, Trabzon, Mersin and Izmir.

Baytur says that there was limited competition in the Turkish bunkering market until the mid 1980s when it started business in Iskenderun Bay area, where the Ceyhan pipeline connects with shore storage and pumping facilities. The company later expanded its services to Istanbul, where it has a storage tanker and its main office.

Baytur’s fleet now comprises a floating storage tanker of 25,000 dwt and nine bunker delivery barges, of up to 1,200 tonnes. The company says that 40% of its total fuel oil supplies are straight run products and all are in accordance with international standard ISO 8217. CYE started bunker fuel trading in 1992 as a new branch of its exiting fuel-related business activities. The company supplies MGO and IFO grades and the CYE petrol bunker terminal is located in the Gulf of Izmit at Poliport from where it supports its bunker supply operation via Istanbul roads. The company uses in-tank and line blending facilities. In 2006/07 the company restructured its fleet, replacing its existing barges with fewer, but more technically advanced, vessels. In 2008 CYE Petrol brought into service the 3,300 tonnes capacity Bebek-E. Then last year it acquired a 670 dwt barge for MGO, the Tarabya-E, which can carry six segregated products.

The headline traffic figures may look good but in reality times are tough, according to Mr Muhtaroglu, who says: “The fact is shipping is down, freight rates are very low. Of special relevance to Turkey, the shipbuilding industry has been very badly affected. In our country’s case many shipowners are linked with shipbuilding while many shipbuilders went into the shipowning and managing business, so we have further negative effect. The slump in container shipping has had a knock-on effect in this area, with reduced frequencies resulting in lower demand for bunkers from that sector. “However,” says Mr Muhtaroglu, “as an industry we have been able to achieve almost the same volume in 2009 as in 2008. As a company, Energy Petrol, we actually increased our volume by 3%, despite several availability problems in 2009.”

“This year started with low demand,” he notes, “but I can definitely say Istanbul is again achieving volumes similar to last year without major problems.” There is, though, a downside that is familiar to suppliers worldwide at present. Mr Muhtaroglu, says: “It is a fact that margins are very thin. Nevertheless, Istanbul is maintaining its position as a bunker hub.”

Mr Muhtaroglu says: “We often supply ships just before they are fixed for Black Sea loadings.” MGO supplier says that it has just set up a Scotland-based branch of Oiltrade Marine but has also been actively increasing its sales, ranging from part-lots of 500 tonnes up to 3,000 tonne lots to both local physical suppliers and some Black Sea and Mediterranean suppliers. Recently it has been selling heavy fuel cargoes in up to 5,000 tonne lots.

Julia Krivosheeva tells World Bunkering: “In bunkering we have been maintaining our reputation as a gasoil expert. Our plans for the future are to proceed slowly but surely in developing our cargo trade, as well as being more active in the fuel oil business. The company’s general director Mr Mustafa Hepanil says: “The global economic downturn has not produced a negative effect on our company.” He adds: “I dare say it has been a most financially fruitful period of time.”

Regarding barge fleet modernisation, Ms Krivosheeva says: “We do not believe it to be a priority. All the key people in our company have been involved in operating self-owned barge fleets in other companies. While you should be taking care to supply high-quality product and boost sales volumes and income plus general marketing, to think of changing spare parts or managing barge personnel problems and education would impede and slow down the priorities in this business. When bunker suppliers take on secondary functions or roles it often ends up in a mess in terms of speed and quality, and moreover inevitably complicates the company structure, making it less and less dynamic and effective in daily transactions.”

Arkas Bunkering introduced two new bunker barges, Bornova and Urla 1, to serve the Marmara and the Aegean, increasing its barge fleet to seven. A statement said: “With the addition of these two barges, Arkas Bunkering has raised its capacity to 7,100 dwt and will be able to complete bunkering operations for passenger ships, ro-ro and container vessels more rapidly.” It added that Urla 1 was a newbuilding and the first double-hull barge to be deployed in the Turkish bunker market.

Meanwhile a new physical mgo supplier, AA Petrol Urunleri Ticaret, is operating in the Mediterranean ports of Mersin and Iskenderun, using trucks. Little low-sulphur fuel is currently supplied in Istanbul. Suppliers do offer low sulphur (max 0.1%) MGO as required at EU ports in any quantity and can deliver even very small quantities like 5 or 10 tonnes, enabling shipowners to get the required quality and quantity for efficient operations, which is very important at todays freight rates. However, Istanbul is not able to offer low-sulphur fuel oil so far.

The refineries supplying Istanbul do not produce low-sulphur fuel and it is not economic to bring it from distant refineries as the demand is not there. Passing traffic is mainly between the Black Sea and Mediterranean and North Africa, where low sulphur fuel is not required by the regulations. The situation regarding low sulphur demand in Turkey looks unlikely to change while the Mediterranean is not an ECA. On the other hand, low-sulphur gasoil is largely in demand and widely available in Turkish ports

Also as Deniz Eraydin of CYE Petrol explained last year, regulations have an effect on what can be offered. He said: “It is forbidden to sell fuel oil as a bunker product if the sulphur content is lower than 2%. So, if we want to obtain different grades with blending, we have to stock fuel oil with min 2.5% sulphur. Also, mgo with a sulphur content of less than 0.05% cannot be sold as bunker product.” He attributes the problem to diverging priorities of different government bodies, saying: “While one authority is trying to introduce regulations according to international environmental standards/concerns, another authority introduces the contrary. It takes some time to explain and make changes.”

From 1 May this year, physical bunker suppliers have been subject to a new regualtory requirement. They are now obliged to write analysis report numbers on bunker delivery notes/bunker delivery receipts.

Under a new Energy Market Regulatory Authority (EMRA) regulation, government approved International Survey companies obtain samples from shore tanks after each cargo discharge. Samples taken from shore tanks are analysed and a random ‘analysis report number’ given. This number must be written clearly on the bunker deliver note. A copy of the analysis report and samples will be kept by the survey company for one year. Although quality problems are not regarded as an issue, EMRA says that the new procedures aim to ensure customer safisfaction.

TBA looks ahead to Istanbul Bunker Conference 2011

Since its establishment in 2001, the Turkish Bunker Association as a non-profit, non-company-based organisation has aimed to bring more transparency to the country’s bunker business in Turkey. Among TBA’s goals are representing the industry at local and international level as a single body, increasing awareness of the bunker industry among the Turkish maritime sector’s main players, and forming a combined voice to support the local market and to increase the efficiency of services. It has become the main body for representing the Turkish bunker industry in official and unofficial forums. Recently the TBA elected a new board of directors for the coming year. Yesim Muhtaroglu, who has been the association’s vice president, has been elected as president for the 2010-2011 period. The other board members are: vice president, Sibel Buyuk of TBS; secretary general, Mustafa Yilmaz of DTO Petrol; treasurer, Deniz Eraydin of CYE Petrol and, member, Mustafa Aslan of Asmira Petrol.

One of the TBA’s major undertakings is to organise the Istanbul Bunker Conference every second year in Istanbul, with the fifth due in June next year. Ms Muhtaroglu tells World Bunkering: “Located between two continents and between the Black Sea and the Mediterranean, with 50,000 ships passing through every year, Istanbul is the perfect location for bunkering in this area. Already about 15,000 ships a year take bunkers in Istanbul, and enjoy our safe, high quality service. We are trying to increase numbers.”

She continues: “The Turkish Bunker Association is a well established, widely recognised body, respected by the industry in Turkey, working on several official and non-official platforms to increase awareness of bunkering in Turkey and to increase the income and employment opportunities for our young country.”

According to Ms Muhtaroglu, bunkering is a business which brings export opportunties to Turkey’s doorstep, currently about $1 billion a year. She says: “Fortunately, all the relevant bodies are supporting us very well and we are working with them very closely to make Istanbul the preferred and best bunkering centre in the area. Maybe we cannot reach the volumes of some other Mediterranean bunker hubs, such as Gibraltar, which supplies some 4 million tonnes, and Piraeus with 3 million tonnes bunkers sold. But we can easily say Istanbul is by far the best supply port when considering quality and safe and reliable supplies.”

“In this respect,” she adds, “the Istanbul Bunker Conference is very important. We are organising the fifth one in June 2011 and ask our friends to note the date now and join us in June. It will also be the 10th anniversary of our association. So the event will be like a bunkering fiesta, with many delegates attending from all related areas including shipowners and official bodies in Turkey in addition to our traditional guests from the bunkering community all over the world. We are proud of our event which attracts more delegates each time is becoming the meeting point for our industry in the Black Sea/Aegean/Mediterranean area.”