Lukoil country chief says firm not planning to leave Turkey

Lukoil country chief says firm not planning to leave Turkey

Merve Erdil - ISTANBUL
Lukoil country chief says firm not planning to leave Turkey Lukoil has no plans to exit the Turkish market, Lukoil Turkey CEO Alexander Terletskiy has said, refuting several reports which have claimed the opposite. 

There are “definitely” no plans to leave the Turkish market despite recent tensions with Russia, Terletskiy told daily Hürriyet. “We are very comfortable with the business. This business is really well located. All of our refineries are serving Turkey well. For us it is a really nice country and location to place the products which we produce in our refineries. So we feel we have a competitive advantage in that sense.”

Turkey is the first or second biggest country in terms of retail volume, he added.

Terletskiy also said Lukoil felt like a global international giant when asked about Russian-Turkish tensions. “We are not emphasizing our origin everywhere as to where the company was regionally created. So we don’t actually think this is the best phase in terms of relationships between our countries. But we hope that it will be settled,” he said, adding that they had not witnessed much of an impact on sales due to the crisis.

“We are carefully following the data. And what I can say is that we are more or less in line with the market which we can carefully see. As for the market data which is published by the government, for sure there could be some losses – we cannot say. But it is insignificant and we cannot see the exact amount. It is not that much to even measure. For sure, it could be because some clients could stop buying fuel because of their personal decisions. But it is not a tendency; it is not a trend for us. So we don’t feel that much, let’s say,” he said.  

Pressures on sector since 2014

2014 and 2015 were difficult years for the fuel industry with price caps and many new operational costs in Turkey that even led some players, like Total and OMV, to exit the market.

Asked how this process had affected Lukoil in Turkey, Terletskiy said they had managed to survive it.

“So that’s the most important news. Those years were really hard, both of them. I think that 2015 was the most complicated year,” he said. “We were all under the pressure of contract renewals, [and there was] the situation with the really low margin and weak Turkish Lira, but we used this time to expand the business. We grew in recent years, and we lost fewer stations than we got. So it is OK for us,” he said, adding that the company now had around 612 stations. 

Lukoil operates in retail and wholesale in Turkey, although the company not only sells fuels, but also gas and all types of chemicals and lubricants. 

“We have quite a big portfolio. But that is not all because quite significant volumes of oil are being sold to Turkey by our trading company, Litasco. Last year, they supplied around 4 million tons of diesel fuel to the main distribution companies of Turkey and around 1 million ton of crude oil to Tüpraş. So I should say that our company is making really big sales to Turkey. Overall, it’s around 5 million tons per year, which is substantial,” said Terletskiy. 

Many consumers in Turkey complain that the price of oil has decreased so much but that they fail to see this drop at the pumps. While some blame high taxes, others blame companies’ profit margins. 

Terletskiy said the prices were definitely not low in Turkey and that taxes in the final price might even be higher than they are in Norway or the United Kingdom.

“Actually it is the way how the government has decided to manage its own budget, so we cannot register any complaints. We are just obeying the rules and doing what we should do in terms of market regulations. I don’t think this much affects sales ... The prices are lower today compared to two years ago when we faced the price ceiling decision of the market watchdog, EPDK. Now we are trying to follow the rules and just keep the price levels at a reasonable level. That is our aim,” he added.