Turkey's Sasa to establish company for refinery investment

Turkey's Sasa to establish company for refinery investment

Turkey's Sasa, a leading industrial group, has announced plans to establish a new company specifically focused on refinery investments. This strategic move underscores the company's commitment to expanding its presence in the downstream industry, particularly in the petrochemical sector, which is experiencing significant growth.

The decision to focus on refinery investments aligns with broader industry trends. According to a recent report by Wood Mackenzie [1], the petrochemical market is expected to rise in the coming years, with petrochemicals poised to become a major driver of crude oil consumption. This shift is driven by factors such as the increasing demand for petrochemical intermediates, like propylene, and the growing consumer market for petrochemical products.

Propylene, in particular, is one of the most important petrochemical intermediates, second only to ethylene in global consumption. Its versatility and high added value make it a critical component in various industries, including plastics, pharmaceuticals, and agriculture. The global propylene market is projected to reach values exceeding $162 billion by 2034, with an annual growth rate of 3.76% [2]. This significant growth potential presents an attractive opportunity for investors and companies like Sasa.

Sasa's new company will aim to leverage the growing demand for petrochemicals by maximizing the production of high-value petrochemical intermediates. This strategy is in line with the "Blue Ocean Strategy" proposed by W. Chan Kim and Renée Mauborgne, which advocates for creating new market spaces rather than competing in existing, crowded markets [3]. By focusing on petrochemicals, Sasa can differentiate itself from traditional refineries that primarily produce transportation fuels, thereby achieving higher margins and profitability.

The establishment of this new company is also a response to the challenges faced by the refining industry. Volatility in raw material prices, societal pressure to reduce environmental impacts, and declining consumer markets for fossil fuel-powered vehicles have all posed significant challenges to refiners. By diversifying into petrochemicals, Sasa can mitigate these risks and ensure its long-term sustainability.

The new company will likely focus on technologies that enhance the production of petrochemicals, such as steam cracking units and Fluid Catalytic Cracking (FCC) units. These technologies are crucial for producing propylene and other petrochemical intermediates. According to UOP Company data, there is a growing gap in propylene production, indicating a significant opportunity for investment [4].

In conclusion, Sasa's decision to establish a new company for refinery investments reflects its strategic vision to capitalize on the growing petrochemical market. By focusing on high-value petrochemical intermediates like propylene, Sasa can achieve higher margins and ensure its long-term competitive advantage. This move is likely to be well-received by investors and financial professionals, as it aligns with broader industry trends and presents a promising growth opportunity.

References:
[1] https://www.linkedin.com/pulse/growing-propylene-market-potential-refiners-face-da-silva-mba--2xxgf
[2] https://www.precedence.com/research/propylene-market
[3] Kim, W. Chan, and Renée Mauborgne. "Blue Ocean Strategy." Harvard Business Review, 2004.
[4] UOP Company. "Propylene Global Production Profile." 2019.