PETDER OPINION ON EMRA BOARD DECISION ON CEILING PRICE IMPLEMENTATION

February 2015 PETDER plants one tree for each barrel of waste engine oil collected within the framework of One Barrel One Tree Project carried out under the protocol signed with Ministry of Environment and Urban Planning and Ministry of Forestry and Water Affairs. PETDER became a member of Traffic Safety Platform on 15 July 201. Liquid Fuel Committee plans and carries out its activities with PETDER members. IN THIS ISSUE PETDER Opinion on EMRA Board Decision on Ceiling Price Implementation Opinions on Draft Communiqué on Block Exemption in Vertical Agreements Amendment to Procedures and Principles for Dealer Audit System Draft General Communiqué on Implementation of Special Consumption Tax List (I) 1 TUIK Motor Vehicles Report Dated 16 January 2015 Monthly Sales Figures Other Sectoral Figures Lubricant Consumption 4 5 6 PETDER OPINION ON EMRA BOARD DECISION ON CEILING PRICE IMPLEMENTATION With the Energy Market Regulatory Authority Board Decision published in the Official Gazette no.2927 dated 20 January 2015 with immediate effect, a price ceiling has been implemented in gasoline and diesel product sales prices for a period of two months. Although the news in the press just prior to the Decision stated that a meeting was to be held with the companies, the decision was rendered without holding such a meeting. As of January 2015, the petroleum sector operates with its 81 distributors, 112 storage facilities, approximately 1.000 dealers and thousands of employees. The fuel sector has a volume of 120 billion TL with approximately 60 billion TL of SCT and VAT. The ceiling price intervention on a sector of such big size will negatively affect not only the sector but also the customers and the economy of the country. EMRA Price Ceiling Decision dated 20 February 2015 is the third direct intervention in the free market and is against Petroleum Market Law no.5015. The decision does not explain the reasons and is based on Article 10 of Petroleum Market Law. However, the Article states that EMRA shall be able to exercise its ceiling price implementation authority in the event that an action causes or might cause prevention, disruption or restriction of competition in the petroleum market or has disruptive impacts on market organization and legal proceedings are commenced accordingly. Considering the previous decisions which did not necessitate investigation, and exemptions granted by the Competition Authority to PETDER and these companies, there are not any findings of previous or current prevention of competition in the market and any legal proceedings commenced. The ceiling price decision is not determining only the margins, but also the margin distribution percentage between distributors and dealers. In this respect, the Decision will cause negative financial and legal consequences for existent contracts between distribution companies and dealers. This situation is aggravating the negative result for the distribution companies. Monthly Petroleum Bulletin is an e-bulletin published by Petroleum Industry Association (PETDER). The contents of the bulletin, published with the aim of providing news and information on PETDER activities and main areas of work, are prepared and compiled by the association personnel and finalized with the comments of PETDER corporate communications committee. For your opinions and suggestions regarding the bulletin: kurumsal.iletisim@petder.org.tr

AGENDA The Decision has had adverse effects on the confidence in free market approach not only in the fuel sector but also in all national and international energy markets. After the Petroleum Market Law entered into force, large scale investments have been made resulting in substantial employment rates in the petroleum market towards formation of a free market system. Consequently, Turkey has made greater progress compared to several developed countries in terms of competition, quality and service variety. It is clear that EMRA s third direct intervention to the market, which is in contradiction with the law, will have adverse effects on the national economy and the sector, mainly in terms of investments, employment and service quality. The Decision will have detrimental effects on the currently intense competition in the market, mainly at the expense of small scale enterprises operating in a lawful manner. These enterprises were able to compete by saving such costs instead of compromising on service variety and high level quality. However, narrowing the margins with the price ceiling will disrupt their ability to compete and such enterprises will have to shut down in time. An Appeal has been made to the Council of State for Reversal of the Decision on Monitoring Fuel Prices If the Price Ceiling Decision is based on the Board Decision (No. 5291-1 and dated 0/11/2014) on Monitoring Fuel Prices, which was mentioned in the press, PETDER has made an appeal to the Council of State for reversal of the Board Decision on Monitoring Fuel Prices, as it is against both the Law and free market conditions. Although the Decision is claimed to be for monitoring prices, it results in dictating a price formation on the fuel sector. The comparisons between prices and price trends in different countries should be made carefully. It is expected that the margins of the fuel sector Turkey are in accordance with the average margin of the four reference European countries (England, Italy, France, and Germany). There are many differences between the mentioned four countries and Turkey. The main differences are in the structure of petroleum markets, marketing methods, supply and distribution infrastructures, legal compliance costs, tax payment schedules, and collection methods of compared prices. In addition, many additional costs specific to Turkey and many of which are legal requirements such as antismuggling measures, national marker and automation system should also be considered. Indexing the margins of a sector of such volume which is important for the country with the average margins of other countries is far away from the economic realities of our country. Average real margins in the sector have decreased significantly since 2008. It is observed that instead of increasing, the average margins in fuel prices have decreased in the last seven years, compared to the prices in 2008 (adjusted for inflation). In addition, several additional cost elements have been introduced due to legal requirements since 2008. Margins which were 9 kurus in 2008 have been reduced to 22 kurus in real terms today. Public opinion has been mislead with incorrect information and analyses of fuel prices in the last year. Recently, there have been misleading claims in the press stating that the decrease in crude oil prices is not reflected in fuel prices and the fuel prices net of tax are decreasing less compared to the prices in some European countries. The change in diesel and gasoline product prices is driven by international markets. These products are produced from crude oil and after being refined, the end products are gasoline and diesel. Fuel products have their own markets and the prices are formed in those markets. In Turkey, these products are purchased in Dollars and sold in Turkish Liras, resulting in an exchange rate effect. When the product prices net of tax are analyzed taking into consideration the exchange rate effect in Turkey, it is observed that the change in prices is at the same level as the international markets. Consumer and sector benefit can only be promoted by decreasing the tax rate on fuels. According to the Petroleum Market Pricing Report January 2015 published by EMRA, for gasoline, the biggest part of the final price which is 4.1 TL/liter is taxes (%68), and the rest is product cost (%21) and gross profit margin operating in the market (%11). It is not possible for distributors and dealers to provide a meaningful and permanent decrease in prices with such a low margin. EMRA and the Fuel Sector should collaborate PETDER member fuel distribution companies always aim for the highest level in terms of services and quality offered to the customer and more importantly, occupational health, safety and environment issues and adopt a more competitive and careful attitude when compared with many other countries. We believe that the sustainable and efficient implementations in the sector can be developed only with the collaboration of EMRA and the sector. As we have expressed many times before the price ceiling decision, we would like to remind that we would be glad to participate in meetings and studies organized for this purpose as PETDER and its members. 2

AGENDA COMPETITION AUTHORITY DRAFT COMMUNIQUÉ ON BLOCK EXEMPTION IN VERTICAL AGREEMENTS PUBLISHED Competition Authority published the draft Block Exemption Communiqué (Communiqué No: 2015/X) in Vertical Agreements in the Fuel and Liquefied Petroleum Gases (LPG) (Except Bottled and Bulk LPG) Industry on its website. Sector representatives have been requested to share their opinion on the draft until March 2015. PETDER opinion on the issue has been shared with the Competition Authority. AMENDMENT TO DEALER AUDIT SYSTEM At the meeting on 12 February 2015, Energy Market Regulatory Authority issued the Board Decision Amending the Board Decision, dated 27/06/2007 and numbered 1240, on Procedures and Principles of the Dealer Audit System of Distributor License Holders in the Petroleum Market. This decision, which is going to enter into force on 1 June 2015, is considered to be the first step of a simple, applicable and sustainable dealer audit system. Though open to improvement, the decision has received positive feedback from the industry. TUIK MOTOR VEHICLES REPORT DATED 16 2015 The total number of vehicles registered by the end of November reached 18,767,989. The total number of vehicles registered by the end of November reached 18,767,989 and the shares were divided as follows; 52.% automobiles, 16.% vans, 15.1% motorcycles, 8.6% tractors, 4.1% trucks, 2.% minibuses, 1.1% buses, and 0.2% special purpose vehicles. Number of vehicles registered totaled 9,842. The total number of vehicles registered in November totaled 9,842 and the shares were divided as follows; 59.5% automobiles, 16.2% vans, 10.9% motorcycles, and 7.5% tractors. Vans, buses, trucks and special purpose vehicles constituted 5.9% of the vehicles. The share of LPG automobiles in traffic reached 41.% 41.4% of 9,806,661 automobiles registered as of the end of November were LPG powered, 29.2% were gasoline powered and 29% were diesel powered. The share of automobiles whose type of fuel is unknown is 0.4%. 496,198 vehicles were subject to transfer and the share of automobiles transferred was 68.2%. DRAFT GENERAL COMMUNIQUÉ ON IMPLEMENTATION OF SPECIAL CONSUMPTION TAX LIST (I) PUBLISHED Revenue Administration has published on its website the Draft General Communiqué on Implementation of Special Consumption Tax List (I), which is considered as the first step towards organizing the problematic structure of SCT and involves regulations regarding the fuel industry. The draft, which involves regulations regarding the provisions on the products (fuel and non-fuel petroleum products) listed in List (I) annexed to Special Consumption Tax Law and the procedures and principles for implementation of such provisions of the Law, also sets forth the grounds for liability and how to decide which products are set forth in the list mentioned above. The draft, which involves procedures for exemptions and tax reduction, also clarifies the exemption requirements for diplomatic, military purposes and oil exploration production, those who are eligible and the procedures to be followed. The draft also includes detailed procedures for import and domestic delivery of marine and aviation fuels. According to this, pursuant to the relevant article of the Law, a certain amount of guarantee will be demanded for each aviation fuel for domestic delivery and import of fuels accepted as aviation fuels. However, those who meet the requirements set forth in the draft and who hold Certificate for Unsecured Purchase of Aviation Fuels will be able to receive and import aviation fuels without guarantee. Such persons will be required to provide a one time guarantee fund of 10 million Turkish Liras. According to the draft, which also includes regulations regarding number 10 oil, it will not be possible to claim refund of the SCT paid for products used as input in manufacture of lubricants and other products which may be blended with fuel even though not manufactured as lubricants or which may be directly used as fuel. According to the draft, refund process will be simplified. Cash refund claims will be made online with the refund claim form to be submitted to the tax office of the claimant through the internet tax office. Provisions on implementation of list (I) of SCT General Communiqué s in force prior to the Communiqué will be repealed at the beginning of the following month after legislation of the Communiqué but the regulations regarding the products accepted as aviation fuels will remain in force until the new regulations enter into force.

MONTHLY SALES FIGURES FUEL SALES FIGURES (UNAUDITED*) 2015 TYPE 201 201 2014 2014 Total Gasoline (m ) 190.424 190.424 211.545 211.545 Total Diesel (m ) 1.461.798 1.461.798 1.65.641 1.65.641 Heating Oil (ton) 2.106 2.106 17.855 17.855 Total Fuel Oil (ton) 46.497 46.497 47.91 47.91 Kerosene (m ) 2.652 2.652 2.221 2.221 Autogas LPG (ton) 206.24 206.24 220.46 220.46 COMPARISON OF MONTHLY AMOUNTS Total Toplam Gasoline Benzin (m (m ) ) Toplam Total Diesel Motorin (m (m ) ) 1.65.641 211.545 COMPARISON OF AMOUNTS Total Toplam Gasoline Benzin (m )) Toplam Total Diesel Motorin (m (m ) ) 1.65.641 211.545 %11,09 %11,89 %11,09 %11,89 190.424 1.461.798 190.424 1.461.798 2014 OCAK 201 2014 2014 OCAK 201 2014 2014 KÜMÜLE 201 2015 KÜMÜLE 2014 2014 KÜMÜLE 201 2015 KÜMÜLE 2014 Total Toplam Fuel Fuel Oil Oil (ton) Kerosene Gazyağı (m ) 2.652 47.91 Total Toplam Fuel Fuel Oil Oil (ton) (ton) Kerosene Gazyağı (m ) 2.652 47.91 %1,92 %-16,25 %1,92 %-16,25 46.497 2.221 46.497 2.221 2014 OCAK 201 2015 OCAK 2014 2014 OCAK 201 2014 2014 KÜMÜLE 201 2015 KÜMÜLE 2014 2014 KÜMÜLE 201 2015 KÜMÜLE 2014 Kalorifer Heating Yakıtı Oil (ton) Autogas Otogaz LPG (ton) Kalorifer Heating Yakıtı Oil (ton) (ton) Autogas Otogaz LPG (ton) 2.106 %-22,7 17.855 %6,84 220.46 2.106 %-22,7 %-22,7 17.855 %6,84 %6,84 220.46 206.24 206.24 2014 OCAK 201 2014 2014 OCAK 201 2014 2014 KÜMÜLE 201 2015 KÜMÜLE 2014 2014 KÜMÜLE 201 2015 KÜMÜLE 2014 * All data presented in this report has been compiled by PwC. As it was not possible to access product sales figures of non-participant companies while compiling data, such amounts were included based on data provided by PETDER. 4

OTHER FIGURES INTERNATIONAL PETROLEUM AND PRODUCT PRICES (MEDITERRANEAN MARKETS) - January 2014 Brent Brent($/varil) (USD/barrel) Gasoline Benzin CIF (USD/ton) ($/ton) Diesel Motorin CIF (USD/ton) CIF ($/ton) LPG CIF LPG CIF (USD/ton) ($/ton) %18,1 %27,2 %22,4 %1,2 52,99 62,58 February 01.Şub.15 1, 2014 February 28.Şub.15 28, 2014 502 68,5 485,5 594,25 408,5 462,52 February 01.Şub.15 1, 2014 February 28.Şub.15 28, 2014 February 01.Şub.15 1, 2014 February 28.Şub.15 28, 2014 February 01.Şub.15 1, 2014 February 1.Oca.15 28, 2014 Sources: Platts, Argus Media Ltd, London, UK; http://www.epdk.gov.tr/; http://www.wtrg.com TURKEY PUMP PRICES ISTANBUL (EUROPE) - February 2014 Benzin (95) (TL/lt) Motorin (TL/lt) LPG (TL/lt) %,8 %5,9 %-0,4 February 01.Şub.15 1, 2014 4,17 4, February 28.Şub.15 28, 2014,57,78 February 01.Şub.15 1, 2014 February 28.Şub.15 28, 2014 February 01.Şub.15 1, 2014 February 28.Şub.15 28, 2014 Source: http://www.epdk.gov.tr TURKEY PRODUCT PRICES ISTANBUL (EUROPE) - February 2014 2,29 2,28 USD Benzin (95) (USD/lt) Motorin (USD/lt) %,7 %11, %1,6 2,4219 2,512 0,9 0,44 0,412 0,468 February 01.Şub.15 1, 2014 28.Şub.15 February 01.Şub.15 1, 2014 28.Şub.15 February 01.Şub.15 1, 2014 28.Şub.15 February 28, 2014 February 28, 2014 February 28, 2014 Turkey product prices calculation are based on industry margins set forth in EMRA December 2014 Pricing Report. NOTES Prices in international markets are in US Dollars, the prices in Turkey are in TL. Fuel price changes in Turkey are based on pump prices. Change rates in prices without tax are in parallel with international product markets and higher. Fuel prices in Turkey change based on crude oil prices in international markets, supply-demand equilibrium and foreign exchange rates. 5

LUBRICANTS DATA Lubricants Consumption (tons) 68.82 %4,6 65.769 201 4th 4. Çeyrek Quarter 2014 4th 4. Çeyrek Quarter The above figures are based on PwC reports compiled from data provided by 8 companies on a voluntary basis and therefore does not represent country-wide figures. Amount of Waste Engine Oil Collected by PETDER (FEBRUARY 2014) Amount (tons) Number of waste oil producers followed by PETDER s Waste System 2010 January-February 2011 January-February 2012 January-February 201 January-February 2014 January-February 2015 January-February 6

LEGAL REGULATIONS AND MEETINGS COUNCIL OF MINISTERS 2015.02.26 Law Approving our Participation to the Protocol Amending Article 1 (A), Article 14 (1) and Article 14 () (B) of the European Agreement concerning the International Carriage of Dangerous Goods by Road (ADR) dated 0 September 1957 MINISTRY OF FINANCE 2015.02.17 Communiqué Amending the Communiqué on Import Control of Wastes under Control for Protection of Environment (Product Safety and Control 2015/) MINISTRY OF ENERGY AND NATURAL RESOURCES 2015.02.07 Communiqué on Administrative Fines to be imposed in 2015 pursuant to Article 10 of Energy Efficiency Law no.5627 EMRA 2015.02.01 Regulation Amending Petroleum Market License Regulation 2015.02.04 Communiqué Repealing Communiqué on Technical Regulations of Production, Supply from Domestic and Foreign Sources and Placing on the Market of Autobiodiesel 2015.02.04 Communiqué Repealing Gasoline Technical 2015.02.04 Communiqué Repealing Diesel Technical Regulation Communiqué 2015.02.04 Communiqué Repealing Kerosene Technical 2015.02.04 Communiqué Repealing Autobiodiesel Technical 2015.02.04 Communiqué Repealing Fuel Naphtha Technical 2015.02.04 Communiqué Repealing Maritime Fuels Technical 2015.02.04 Communiqué Repealing Fuel Oil Technical 2015.02.04 EMRA Fines and Penalties 2015.02.14 EMRA Licenses 2015.02.15 EMRA Fines and Penalties 2015.02.20 Board Decision on Fuel Pricing 2015.02.19 Regulation Amending Petroleum Market License Regulation TSE 2015.02.1 TSE Announcement of Cancellations 2015.02.20 TSE Announcement of Cancellations 2015.02.25 TSE Announcement of Cancellations MEETINGS IN FEBRUARY Komitesi 4 Şubat Madeni Yağ Teknik Komitesi 5 Şubat İkmal Teknik Komitesi 6 Şubat SEÇ Akaryakıt Komitesi 11 Şubat Vergi ve Mali İşler Komitesi 11 Şubat LPG Sektör Kurulu 12 Şubat LPG Teknik Komitesi 1 Şubat Yönetim Kurulu MART AYI OLAĞAN TOPLANTILAR 4 Mart Hukuk Komitesi 4 Mart Madeni Yağ Teknik Komitesi 5 Mart İkmal Teknik Komitesi 6 Mart SEÇ Akaryakıt Komitesi 11 Mart Vergi ve Mali İşler Komitesi 11 Mart LPG Sektör Kurulu 12 Mart LPG Teknik Komitesi 1 Mart Yönetim Kurulu DİĞER TOPLANTI VE ÇALIŞMALAR Şubat Ulaştırma Denizcilik Haberleşme Bakanlığı Ziyareti 4 Şubat TOBB LPG Teknik Komite Toplantısı 6 Şubat Çevre ve Şehircilik Bakanlığı Müsteşarı Ziyareti 9 Şubat Tasfiye Hizmetleri Genel Müdürlüğü Ziyareti 10 Şubat Çevre ve Şehircilik Bakanlığı Toplantıları 11 Şubat EPDK LPG Dairesi Toplantısı 12 Şubat EPDK LPG Sektör Toplantısı 16 Şubat TOBB Mevzuat Komitesi 17 Şubat Ulaştırma Denizcilik ve Haberleşme Bakanlığı toplantısı 2 Şubat EPDK Ziyaretleri 24 Şubat Gelir İdaresi Başkanı Ziyareti 24 Şubat Çevre ve Şehircilik Bakanlığı Müsteşarı Ziyareti 24 Şubat Petrol İşleri Genel Müdürü Ziyareti 24 Şubat Ulaştırma Denizcilik Haberleşme Bakanlığı Müsteşarı Ziyareti Şubat süresince Gündemdeki konu ve gelişmelerle ilgili tüm kamu kurum ve kuruluşlarına ziyaretler PETDER (Petrol Sanayi Derneği) 2004 yılından bu yana, çevre ve insan sağlığını olumsuz etkileyen atık motor yağlarını ülkenin her tarafına bedelsiz hizmet götürerek toplamaktadır. Toplanan atık motor yağları Çevre ve Şehircilik Bakanlığı nca lisanslandırılmış işletmelerde ham madde ve enerji olarak geri kazandırılmakta, ülkemizin enerji verimliliğine katkı sağlanmaktadır. PETDER Çevre ve Şehircilik Bakanlığı ve Orman ve Su İşleri Bakanlığı ile imzaladığı protokol çerçevesinde başlattığı BİR VARİL, BİR AĞAÇ projesi kapsamında toplanan her bir varil atık motor yağı için bir fidan dikmekte, çocuklarımıza ve ülkemize daha iyi ve daha güzel bir çevre bırakmayı hedeflemektedir. Proje kapsamında dört yılda dikilen fidan sayısı 71.500 adettir. Petrol Sanayi Derneği (PETDER) hakkında PETDER 2 Eylül 1996 tarihinde, petrol ürünlerinin üretimden tüketime kadar olan faaliyetler zinciri üzerinde çalışmalar yapmak amacı ile ülkenin önde gelen akaryakıt dağıtım şirketleri tarafından kurulmuştur. Alpet, Aylık Petrol Bülteni Ocak 2015 9 Aytemiz, Belgin, BP, Exxon Mobil, Gulf, Opet, Petline, Petrol Ofisi, Shell, Shell & Turcas, Total, Turcas ve Turkuaz PETDER üyesi kuruluşlardır. Akaryakıtlar, yağlama yağları ve LPG nin üretimi, depolanması, ikmali, dağıtımı, taşınması, kullanımı, sağlık, emniyet ve çevre ile ilgili konularda çalışmalar yapan PETDER aynı zamanda Atık Motor Yağlarının Yönetimi Projesi ne paralel olarak Bir Varil Bir Ağaç çevre projesini de yürütmektedir. Yasal Uyarı Aylık Petrol Bülteni sektöre yönelik verilen, verilmesi planlanan bir danışmanlık hizmeti kapsamında değil, sektöre ilişkin gelişmeler hakkında kamuoyunu ve üyeleri bilgilendirmek üzere hazırlanmaktadır. Bu sebeple, aylık petrol bülteni bir danışmanlık hizmeti olarak yorumlanmamalıdır. Teşebbüsler, bültenlerdeki bilgilere dayanarak verecekleri kararların beklentilerine uygun sonuçlar doğurmayabileceğinin farkında olmalıdır. Bültenlerde yer alan bilgilerin doğruluğuna azami ölçüde hassasiyet göstermekle birlikte, bilgilerdeki hata, eksiklik, farklı yorumlama ve ticari amaçlı işlemlerde kullanılmasından doğabilecek zararlardan PETDER hiçbir şekilde sorumlu değildir. Teşebbüsler, aylık petrol bültenlerinin bu niteliğinin farkında olarak hareket etmelidir.