RENEWABLE ENERGY in WORLD & TURKEY

STEAŞ/Petkim Future Projections

Kenan YavuzSTEAŞ, CEO

Wind Power Turkey20-21 September, 2011

AGENDA

STEAŞ/PETKİM&

FUTURE PROJECTIONS

STEAŞSOCAR & TURCAS Energy Inc.

PETKİMPetkim Petrochemical Holding Inc.

STRAŞSOCAR & TURCAS Refinery Inc.

OTHER SUBSIDIARIES

Our VisionTo be a regional force in the refinery sector

Our ObjectiveTo compensate the supply of Turkish

Petroleum Products Market by manufacturing by the year 2015

Our VisionTo be a leader company who has a

Refinery-Petrochemical-Energy-Logistics integration in the area covers Turkey,

Azerbaijan and their neighboring countriesOur Objective

To be the greatest industrial production force of Turkey by accomplishing the

Refinery-Petrochemical-Energy-Logistics Integration until the year 2018

Our vision To sustain our leadership in the Turkish

market through continuous growth To become a regional force

Our ObjectiveTo reach 40% market share by the year

2018

3

STEAS Group Structure

STEAS

Aimed to Increase Petkim’s Competitive

Power &

Move her Future Dreams Of Being the Major

Petrochemical Hub in the Region

by the Realization of Growth Strategy

Including “Cluster Model”

PETKİM: Competitive Advantages

Petkim Port Petkim Dam

Within the frame of Refinery-Petrochemical-Energy-Logistics integration on Petkim Peninsula, we target to be the biggest energy and production center

of Europe by realizing Petkim “Value-Site” cluster project

STEAS: Vision and Targets

GROWTH PLANMid-to-Long Term

PETKİM DOWNSTREAM ENERGY LOGISTICS

&

TRADING

UPSTREAM

3 STEPS OF GROWTH PROJECTIONVision 2015 Vision 2020 Vision 2040

REFINERY

At least 1000 MW Total Energy Generation

Vision 2020

WIND ENERGY 25-47 MW Energy

Production

#1 PetrochemicalProduction Centre

In Turkey

Process IntegrationEnergy Efficiency

The Region’s World Class Energy and

Chemical LogisticsHub

PETKİM PORT & LOGISTICS1 million TEU capacity of Container Terminal 1 million tons Storage Capacity of Tank Terminal

NEW PETROCHEMICAL PRODUCTION

Vision 2015

PETKİM PORT & LOGISTICS1 million TEU capacity of Container Terminal 1 million tons Storage Capacity of Tank

Terminal

WIND ENERGY 25 MW Energy

Production+

ENERGY TERMINAL(300-600 MW)

PETROCHEMICAL PRODUCTION New Petrochemical Production; BDX, PET, XLPECapacity Expansions of the ExistingPlants; Aromatics, LDPE-T, ACN, PA, PTA, 600.000 MTPA Ethylene Production

REFINERY (STAR)Capacity: 10 MMTPA

#1 Petrochemical Production Centre In Turkey

REFINERYCAPACITY35 MMTPA

2.5 MMTPA ETHYLENE

PRODUCTION

INTEGRATED PORT

Min. 1.0 M TEUCapacity

Container Port

2000 MWENERGY

PRODUCTIONTANK

TERMINAL2 Million tons

Storage Capacity

UNDERGROUND CAVERN

EXPANDED PROCESS AREA

PRODUCTION OF HIGH VALUE-

ADDED PRODUCTS

CONDOMINIUM MODEL

Vision 2040

LogisticsUtilities

Supporting Facilities

Downstream Petrochemical Plants

IntermediatePetrochemical Plants

“Cracker”

Refinery

Integration Chain

▬ We target to increase our COMPETITIVE POWER by realizing Cluster Model & becoming the biggest petrochemical and logistics center on Petkim Site

▬ Our 25-megawatt wind farm is scheduled to become operational by the end of 2012,

▬ We are planning investments in solar power too.

Cluster Model & RenewablesPetkim uses renewable energy sources that is as environmentally friendly as it is cost-

effective and reliable

AGENDA

RENEWABLE ENERGY in the WORLD

&2030 FORECASTS

Global Energy Policies Towards 2030

Sustainable energy politics targets:

▬ Low cost

▬ Security of supply

▬ diversification of supply resources

▬ Supply at demanded quantity and expected quality

Total world energy demand is supplied by fossil fuels as 87%, renewable resources as 6% and

nuclear energy as 7%.

Source: WEO, 2009

▬ Global energy demand growth : 5,6% ( 3,5 % for OECD Countries, 7,5% for Non-OECD Countries; 11,2% for China)

▬ The share of renewables in primary energy consumption: 1,8% (0,6 in 2000)

ENERGY FACTS:

▬ 4 key recommendations in IEA report for Turkey Accelerating natural gas reform, (reducing BOTAŞ market share)Increasing effective usage of energy,Pushing the right button about procurement of oil and Natural gasIt is emphasized that an effective carbon emission target should be identified with in the scope of fighting climate change.

Turkey has became one of the fast growing energy markets

in the world with rapid growing economy.

Reference: International Energy Agency (IEA)Basis Scenario

Global Energy Policies Towards 2030

Energy in the World

▬Increase the global energy efficiency,

▬Increase the clean energy resources,

▬Develop innovative eco-friendly technologies,

▬Decrease the green house gas emissions,

▬Develop new generation energy technologies.

Even if energy efficiency is provided at 2030 in the world, energy demand will be doubled.

▬ 2010-2030 transition period to green economy▬ 2030-2050 green economy system adoption period▬ After 2050 Totally new world order period

OBJECTIVES:

▬ Oil and Natural Gas has took the place of Biomass and Coal over many years

▬ Nuclear Energy sources has been increased by the year 1980

Historical Progress of Energy ResourcesBy the year 2000, Renewable Energy Sources

came to order in parallel to GREEN ECONOMY concept

Global allocation potential of various renewable energy sources

Global energy supply scenario

Source: GWEC

Global Energy Scenarios Towards 2050

Renewable & Non-Renewable Energy Types

Renewable energy;▬ Obtained from sources that are essentially inexhaustible▬ Can be harnessed without the release of harmful pollutants

▬ Worldwide capacity reached 196630 Megawatt out of which 37642 Megawatt were added in 2010

▬ Wind power growth rate was 23,6% in 2010

▬ China is number one in totally installed capacity

World Wind Energy

Renewable Energy is supply response to the worlds energy demand,

But no single or easy solution to the energy challenge exists

▬ Wind turbines installed by the end of 2010 can generate 430 Terawatt hours pet annum and 2,5 % of the global electricity consumption.

▬ Turkey is the 5th country in growth rate in 2010.

▬ Turkey was one of the major wind markets who more than doubled its wind capacity

The wind sector in 2010 had a turnover of 40 Billion Euro and employed 670.000 of the global electricity

consumption.

World Wind Energy

▬ Turkey meets 70 % of energy demand by import.

▬ Foreign dependence of energy is over 90% especially fossil fuels; petroleum, and natural gas.

▬ Petrol has the biggest ratio in power consumption with 34%.

▬ Because of high import dependence, continuity of energy security and power supply has a vital importance.

▬ It has the potential of being country of transit in energy market by reason of presenting the 70% of world’s known natural gas and petrol reserves at adjacent zones and it should form energy policies in that frame.

▬ It aims to be a key actor in the world energy market despite it is not a power producer.

▬ Increasing the energy efficiency and overseeing the environmental factors are also in the priorities at Turkey’s energy policy.

Turkey Energy Policies Towards 2030

Wind Power in Turkey

CURRENT STATUS & EXPECTATIONS

▬ The energy consumption in Turkey increases by 8-9% annually

▬ Turkey has large potential for increasing power generation from renewable sources.

▬ The current value of installed wind power is around 1,3 GW

▬ By the end of 2010, Renewable resources compose 9% of its total installed power generation capacity.

▬ Theoretical Wind Energy potential in Turkey is about 48.000 MW

Potential Power and Installed Power per Resource

Current Installed Power in Turkey and License Developments

Installed wind power capacity is expected to reach to 10.000 MW at 2015 and 20.000 MW at 2020 in Turkey

Renewable Goals in the energy market

Expectations of Renewable Energy in Turkish Market

▬ Turkey has some strategic goals in renewable energy market.

▬ Approximately 80 billion TL of investment in the renewable energy sector is required by 2023

Source: Deolitte

Renewable Energy Support Mechanisms

▬ Fixed Price Guarantees (Feed-in-Tariff)

▬ Premium Guarantees

▬ Quota Based Green Certificates

▬ Tender Incentives

▬ Investment Intensives

▬ Tax Exemptions and Deductions

Analysis for Feed-in-Tariff Systems

▬ Proven to be successful and effective

▬ The risk premium required by investors can be minimized by the high level of price security systems

▬ Low cost for society

▬ Helps to promote a specific portfolio among different RES-E technologies

▬ Leads to a minimization of costs for society but not necessarily to minimization of generation costs,

▬ Helps to reach an area or plant size specific distribution of a RES-E technology

▬ Relatively homogeneous premium costs for society over time

▬ Encourages competition among manufacturers but not among investors in the early phase of deployment

▬ RES-E targets will be met by adjusting tariff level over time. Source: Fraunhofer Report

▬ According to the Directive 2001/77/EC, the EU has the objective to increase the share of electricity generated from renewable energy sources to 21% of the total electricity consumption.

▬ Feed in Tariff is the most common scheme in Europe.

Support Mechanisms in EU Countries

Wind power installed in Europe by end of 2010European Union : 84,324 MWCandidate Countries : 1,418 MWEFTA : 478 MWTotal Europe : 86,321 MW

Renewable Energy Policies in Turkey

▬ Turkey employs feed in tariff as the intensive method.

If mechanical or electrical equipment used in generation facilities commissioned before 2015 and that is subjected to the RER mechanism and manufactured in Turkey, then local equipment bonus added to the feed in tariff relevant to this renewable energy source

Support Prices projected by the RER support mechanism

In the case of achieving 20.000 MW wind power potential in 2023:• 26 million ton CO2 emissions can be prevented.• 170.000 person will be employed

Year

Turkey’s Export Figures

Actual / Expectant

(USD)

Consumed / Expectant Quantity of Electricity

(Billion kWh/year)

Consumed / Expectant CO2

emission amount according to quantity of electricity

(Billion ton/year)

2009 110 Billion $ 198 407

2023 500 Billion $ 900* 1850*

MAIN PROBLEMS:

▬ High Energy Cost

▬ We rely heavily on foreign energy resources

▬ High energy consumption; low efficiency

▬ We have to generate employment and enhance 500 billion USD export value.

*: Figures are calculated linear export figure growth assumption.

▬ 900 Billion kWh electricity need to obtain 500 billion USD export figures.

Turkey’s Situation

It is an obligation that Turkey should proceed as investing to nuclear energy as well as

renewable resources

ConclusionsNONEXISTENT ENERGY IS HIGHLY PRICED

ENERGYNO ENERGY NO COMPETITION

▬ While determining country energy policies, we should not be out of the GREEN ECONOMY race as considering the effects caused by security of supply issues, increasing energy costs, climate change and globalization .

▬ Energy saving awareness should planted to society and opinion leaders.

▬ Turkey should make the best of her renewable energy potential.

▬ It is not possible to close energy deficit by investing to only renewable energy resources for Turkey.

▬ Turkey should offer energy variety without thinking environment ascost factor.

▬ While offering variety, we should use other resources such as nuclear, coal, etc.. as well as renewable energy resources

ECO-FRIENDLY, CLEAN, EFFICIENT AND COMPETITIVE ENERGYPRODUCTION

Thank You

SOCAR & TURCAS Enerji A.Ş.SOCAR Bhosphorus Plaza, Büyükdere CaddesiNo 47 Kat 3 Maslak İstanbulTel : 0 212 276 43 40 Faks : 0 212 276 43 50www.socarturcas.com.tr