|Fitch Ratings warns Turkey on risk of cutting Iranian oil imports||
The global rating agency, Fitch, said in its statement that a substantial reduction in Iranian imports by Turkey’s largest petrochemical company, Tupras, “would be treated as an event risk” which could lead to a review of its rating.
“A ban on purchases of Iranian oil due to international sanctions could be negative for Tupras’s refining margins and working-capital needs, if Iranian crude cannot be economically replaced with suitable alternative sources,” Arkadiusz Wicik, a director at Fitch Ratings, said in a statement.
The other global rating agency, Moody’s, assigned its Ba1 rating to Kocaeli, Turkey-based Tupras on Oct. 18, the same as its grade for Turkey. The refiner is owned by Koc Holding AS (KCHOL), Turkey’s biggest conglomerate.
“The ratings primarily reflect Tupras’s dominant position in the Turkish market, as well as the execution risks associated with the company’s ongoing capital expenditure investment program,” Martin Kohlhase, Moody’s lead analyst for Tupras, said in an e-mailed statement. “Tupras ratings also incorporate challenges, including future profitability compression from reduced sourcing of discounted Iranian crude.”
Tupras hired Citigroup Inc. (C) and Deutsche Bank AG (DBK) to arrange the sale, which would be Turkey’s largest by a non-financial institution, the company said Oct. 17. Investor meetings start from in Europe and the U.S.
Iran remains Turkey’s main oil supllier
Iran was Turkey’s top supplier in the first half of this year, according to a Turkish energy market regulator company.
Turkey was among seven countries exempted in June from U.S. oil sanctions on Iran for a renewable six-month period because they reduced trade with the Islamic republic, U.S. Secretary of State Hillary Clinton said at the time. Tupras pledged on March 30 to cut its purchases of 180,000 barrels a day of Iranian crude by 20 percent following a U.S. law giving nations until June 28 to show reductions.
“Tupras was buying Iranian crude on lira-based long-time contracts, and now with 20 percent of Iranian supplies gone, they will have to make it up with shorter-term dollar-based contracts,” Hasan Sener, an analyst at Istanbul-based Oyak Securities, said by phone. The bond will finance additional working capital needs, he said.
Turkey, which imports 95 percent of its oil needs, is also buying crude from Russia and Saudi Arabia, Energy Minister Taner Yildiz said Oct. 15.
Yildiz said Turkey is in talks with U.S. officials on the waiver, which expires Dec. 6, and expects the dispensation to be granted. If a country fails to meet the terms of the law, its banks settling trades with Iran risk being shut out of the U.S. financial system.
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