28 December 2012 16:55 [Source: ICIS news]
LONDON (ICIS)--Sole major Turkish petrochemical producer Petkim is planning to boost profitability by sourcing substantial supplies of naphtha feedstock from Iraq, the company said on Friday.
The price of the Iraqi naphtha would offer Petkim a significant advantage over current costs on the wider naphtha market and thus reduce production costs, it added.
Petkim, which has to import 80% of its naphtha requirement, used to obtain almost all of its feedstock from Turkish refiner Tupras. But in the past decade that option has been gradually reduced with Tupras using more naphtha for gasoline.
Faced with the difficulties caused by the Tupras switch, Petkim turned to more expensive options such as naphtha suppliers in countries of the Commonwealth of Independent States (CIS).
In the past two years, analysts have regularly noted that Petkim's profitability has been undermined by high naphtha prices. Extremely high naphtha prices, for instance, hit the company's third quarter results for this year, Petkim said.
On 27 December, Fitch Ratings revised its outlook on Petkim's long-term foreign and local currency Issuer Default Rating (IDRs) to 'negative' from 'stable', noting postponed capital expenditure (capex) plans related to the company's reduced operating cash flows.
Looking at naphtha supplies in the longer term, Petkim plans to produce all the naphtha it needs at a new refinery that is due on-stream in 2015 to supply the petrochemical 'supersite' that Petkim is constructing in Aliaga, near Izmir, on western Turkey’s Aegean coast.
The controlling shareholder in Petkim is the State Oil Company of the Azerbaijan Republic (SOCAR).
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