Lebanon-based BB Energy enters Turkish market

Published 05.08.2016 21:14

One of the burning issues in the Turkish energy sector this year is French Total's decision to withdraw from Turkey and transfer its distribution network to Demirören Holding for 325 million euros. Nowadays, the fuel oil market is overcome by Austrian OMV's disposal of its stakes in Petrol Ofisi. Although the retreat of these two major global players is perceived as foreigners' withdrawal from the Turkish energy sector, some new players are entering the scene. The Lebanon-based BB Energy, one of the largest oil trading companies in the world, has decided to enter the Turkish market and has become the principal stakeholder of Ankara-based Lokal Group's Citypet.

Citypet, one of the youngest fuel oil companies in Turkey, only began to establish gas stations last year, although it started operations in 2014. The company established 30 stations in 2015 and aims to increase that number to 60 by the end of this year.

Lokal Group CEO Murat Yıldırım said they set this objective based on their own financing, adding, "We were not thinking about a new partner. We came to the table with the Lebanon-based BB Energy and finalized our talks. We became partners by selling 51 percent of our company's stakes."

According to Citypet General Manager Ertan Sulayıcı, BB Energy previously held talks with some Turkish companies to purchase a fuel oil network in Turkey and sought young companies with high growth potentials because of Turkey's market structure. Sulayıcı underlined that Citypet structures its station network on profitability, and said they attach priority to establishing gas stations in central city areas. He stated that this business plan has positive outcomes on turnover for the company, which operates in four regions of Turkey. Citypet sold more than TL 300 million worth of product in the first half of the year. Sulayıcı said, "It is a very rare instance in the sector that we reached this figure before turning three."

Currently, the number of fuel oil companies in Turkey with a distribution network stands at more than 80. A total of 38 companies among them carry out distribution and most have less than 20 stations each. According to Sulayıcı, with the new partnership, Citypet aims to increase its sales network to 150 next year.

Even though Citypet's new partner, BB Energy, is one of the global players in the fuel oil sector, it is not a well-known company. This is because, unlike other fuel companies, the Lebanon-based player is not engaged in distribution but focuses instead on sales operations. Last year, the company traded 16 million tons of oil and the fact that Turkey's total oil consumption is around 30 million tons a year gives a clue about BB Energy's size. Founded in 1937, BB Energy operates in Dubai, Hong Kong, Greece, Afghanistan and the U.S. and has a turnover of more than $15 billion. Owned by the Lebanese Bassatne family, the company carries out fuel oil distribution only in two countries — Lebanon and Angola — with the distribution network brand of Hypco.

Sulayıcı noted that the Bassatne family wants to establish its first distribution network for Europe in Turkey and aims to develop the brand in Turkey as well. "Perhaps, we can use the Hypco brand instead of Citypet," he concluded.

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