Turkey's largest LPG distributor, Aygaz, is a major importer and regional trader. The company also jointly owns Bangladeshi distributor United Aygaz LPG, having acquired a 50pc stake in the firm in 2019. More recently, it invested in three new VLGCs as it expanded into the LPG shipping sector. Argus' Waldemar Jaszczyk spoke with Aygaz chief executive Melih Poyraz about the firm's recent developments, the current operating climate and future plans. Edited highlights follow:
How has the Iran war affected the Turkish LPG market and Aygaz?
The Turkish market is supplied mainly from the US and Algeria, so we didn't have any problems getting product. But everyone turned to the US, and longer trade routes caused tanker rates to skyrocket. If you were getting your tonnes through term contracts, it was not a big deal, but spot product could have been a huge problem. At Aygaz, we usually buy 80pc on a term basis and 20pc on a spot basis.
Turkey has a big autogas market, and consumption grows during the summer driving season. Aygaz supplies more than half of the retail and wholesale sectors. We also export hundreds of thousands of tonnes to Mediterranean countries. So we had to manage our demand carefully. We drew down our inventories, which typically stand at 60,000t at our terminals, to avoid buying on the spot market and paying premiums, especially when India was trying to buy at the same time.
In Bangladesh, thanks to our risk-management policies, we were buying not only from the Mideast Gulf but also on a term basis from the US. As a result, we were the only ones able to provide a steady supply. Our biggest concern was supplying the market and helping the government rather than making a profit.
How did your consumers respond to price hikes?
The Turkish government reduced the special consumption tax on fuels to offset the surge in global prices. There was a hike in prices, but autogas consumers did not really feel the pain. Now that prices have dropped, the tax rate is rising again. In Bangladesh, the moment the [Saudi Aramco contract price] increased, we saw demand destruction. Consumers there are quite price-sensitive compared with those in Turkey because of lower income per capita, and demand is very elastic.
Turkey's imports from the US rose to record highs in the first half of 2026 as Algerian and Russian supplies were disrupted. Do you expect this to continue?
A lot of US LPG will be coming to the market in 2027-28. Mont Belvieu LPG is the cheapest, and it's going to get cheaper. Supply in the US will increase by about 30-50pc depending on the start-up of new projects. This has to be exported and the product will remain competitive. Imports from the US will increase throughout the region, which will support the industry. It will be easier to convince the Turkish owners of 2mn gasoline cars built over 2010-20 to convert them to LPG because of autogas' price competitiveness.
Will Aygaz buy from Russia's new Ust-Luga LPG terminal that can ship VLGCs?
It gets harder for Russian cargoes to flow. We have to be very careful about sanctions. But when you look at the location, it's much easier because we are very close to Russia. If the situation stays as it is, imports from Russia will not increase, no matter what infrastructure is built. If there's peace, it could be an opportunity.
Aygaz has ordered three VLGCs this year at a cost of $353mn. How will you utilise the new vessels?
The US tonnes will have to flow. But how? You need more vessels. The average vessel age in LPG is high. New vessels run on LPG as well. Suddenly, instead of paying $700-800/t for fuel oil, you pay $400/t because the tanker will be consuming LPG from the US cargo. This provides quite a big advantage because, during the 27-28-day journey, your consumption and carbon footprint drop. Then when I look at the Mont Belvieu arbitrage to other indexes, when it increases, so do VLGC rates. If you want to capture this, you have to buy a vessel. It was not easy convincing our holding company, but we are happy that we did.
Can Turkey sustain its recent growth in LPG re-exports?
The biggest problem for trade in the Black Sea region is security, particularly the risk of drone attacks. Everyone talks about the safety of terminals, but no one talks about the safety of tankers, which is at least as important. If I have a tanker going into Bulgaria and a drone attack happens, which authority am I meant to call? Shipping rates increase because insurance is more expensive, and suddenly trade decreases. In the south, Syria has huge potential after the sanctions were lifted. Once the Iran war ends, we will have more trade with our neighbours.
How has your Bangladeshi business fared since your investment in 2019, and what is the domestic outlook?
It is a very big market — more than 200mn people. The country has natural gas supply but it is diminishing and they want to use it for industry. It's also much easier to move LPG into rural areas. Consumption is very low, but a huge, young population will turn into middle-income consumers in the coming years. We are very happy with our joint venture and our partners. In four years, we have gained more than a 12pc market share at 300,000 t/yr from scratch. We have a terminal in Chittagong with a storage capacity of 16,000t. We will add another 5,000t there at the end of 2026. It is the only facility in the country capable of handling midsize ships carrying 22,000t. We also plan to expand our 3,000t site in Dhaka to 5,500t in the second half of 2027.
Do you plan to expand into other clean cooking markets?
We currently trade 2.4mn-2.5mn t/yr, but we want to reach 5mn t/yr in the next 10 years. We want to grow, especially in Africa and southeast Asia, which are our target markets. But sometimes valuations can be a bit too high and we don't want to overpay. We have patience, and when the right time comes, we will step in.
What is your outlook for the Turkish market in the coming years?
I don't expect to see a huge decrease in the cylinder market, currently about 500,000 t/yr, as natural gas penetration is largely completed and LPG is still required in many areas. For autogas, there is the huge potential of converting the 2mn gasoline cars built in 2010-20 to LPG. We work extensively with conversion companies and [car manufacturers] to convince them to produce more LPG cars. And while hybrid and electric vehicle sales are increasing, people are price-sensitive, especially in the Anatolian region.
Turkey will host the next Cop 31 climate summit and the World Liquid Gas Association's (WLGA) Liquid Gas Week this year. What are your expectations?
I'm the vice-president of the WLGA. We are very excited about it and have put a lot of effort into it. [IEA executive director] Fatih Birol will be the keynote speaker at our event, which could be the largest the WLGA has ever hosted. For the industry, these are great years. It is going to help us show governments that the world needs more LPG and that the industry is capable of changing people's lives. The Turkish government is keen to support LPG in Africa and Bangladesh. So these are exciting times for us, and challenging as well.
