Why do kith and kin of Erdoğan and Yıldırım are so enthusiastic about shipping?

The enthusiasm of kith and kin of the President Erdoğan and the Prime Minister Yıldırım for shipping is closely related with the fact that Turkey is a large oil market. Not to mention opportunities presented to domestic and foreign capitalists through TÜPRAŞ and Star Oil Refineries
soL News
Thursday, 30 November 2017 05:06

Why do kith and kin of the Turkey's President Recep Tayyip Erdoğan and the Prime Minister Binali Yıldırım are so enthusiastic about shipping? Why do they keep investing in this sector despite the decreasing profit rates since 2008 crisis?

No doubt that shipping is a convenient line of business for money laundering as it enables any sort of good and money exchange and makes it possible to "anchor" in tax havens.

But especially in oil shipping, things are quite straightforward. Here, "business relations" are not complicated; they are in sight but always overlooked... The privatization of TÜPRAŞ oil refinery, PETKİM petrochemical industries, Erdemir iron-steel industries, and Telekom communication company, which had taken place over the last two decades, meant more than simply transfer of public funds to the private sector.

They meant more than one-time commission payments or usual mechanisms of exploitations as they opened the path for new opportunities and new "collaborations."

TURKEY AS A SIGNIFICANT OIL PROCESSOR AND CONSUMER

With TÜPRAŞ and PETKİM, two giant refineries once owned by the state, Turkey is one of the prominent crude oil processors in the Mediterranean basin. Unlike Saudi Arabia and Qatar, which started developing their refinery capacities during the 2000s, Turkey has been in the same league with countries like France and Italy for long.

In addition to that, the country has a large vehicle park, industrial and commercial infrastructure, an intense transportation traffic, which makes it quite a market for fuel.

Turkey is also a hub. Two straits, Bosporus and Dardanelles, are practically transit points through which Russian oil is transferred to the Mediterranean basin, while Azeri and Iraqi oil pass through southern Anatolia to reach the latter.

A BIG MARKET, A BIG PIE

According to BP Statistical Review 2017, Turkey has consumed 41 million tons of oil in total in 2016, 20-22 million tons of which consists of crude oil.

It is estimated that crude oil consumption will reach up to 30 million tons as the Star Oil Refinery, established in İzmir in western Turkey by the Azerbaijani Socar, starts production in 2018. Currently, 40-45 percent of the total oil demand of the country is covered by TÜPRAŞ refinery, and the rest is met by imports from multinational oil monopolies, notably Shell and BP.

The total oil demand of 41 million tons is worth 25-30 billion US dollars with the current market prices. As such, Turkey’s demand constitutes 5 percent of all Eurasia.

NOT A ONE-TIME BRIBE

Together with Opet and other domestic refineries, TÜPRAŞ is one of the largest crude oil purchasers in the region, that is, one of the biggest players in the oil trade across Mediterranean basin. Socar, on the other hand, reaches beyond the Azerbaijani oil, and plays a crucial role in marketing the Gulf oil. It also has significant investments in Turkey, Greece, some Balkan countries, and even Europe.

It is clear that all that "network of commissions" go far beyond one-time bribes that were given when TÜPRAŞ was privatized and transferred to Koç Group (one of the largest capitalist dynasties in Turkey) or when Socar Star Refinery was licenced.