Manager Research and Projects The Dynamic Tanker Market Tokyo 10 November 2004 VLCC price and freight rate m $000 $ Historic market why? R ecord demand - unforeseen Commodity squeeze -T ight oil supply - record consumption O il production > consumption 2 and 3Q04 - high price and production L ow stocks, or do we know? P ersian Gulf long haul export up mbd F leet increasing - but less than demand? P hase out of SH P hase in of DH M oderate sales for decommissioning before 2010 R estricted shipyard capacity Average monthly tanker spot rate and Middle East oil production Middle East oil prod mbd $ per day $ per day VL- AG East Oil price and freight rates real and nominal WS 200 $52 Middle East oil production mbd +2 mbd means+ 44/77 VLCCs E/W Crude oil seaborne trade - Indices Demand growth areas World oil demand growth by region mbd Source: IEA Chinese oil production and demand mbd US crude oil import Source: EIA/DOE mbd Production US product oil import Source: EIA/DOE US total stocks - barrels m bbls European crude oil import (up 2.7%) Source: OECD European oil product import Source: OECD Japanese crude import mbd Japanese products imports mbd World oil demand outlook- EIA mbd World oil demand outlook- IEA mbd World oil supply outlook- IEA mbd FSU crude oil and products export Other export: 0.5 mbd, Sakhalin/North mbd Tanker supply Tanker Fleet Development M dwt Number Source: Clarkson Tanker phase out - m dwt Phase out 5-29,999 dwt- no. 3.5 m dwt 2.4 m dwt Phase out Aframaxes Number VLCC phase out - number Subject to administrations ** LOOP, lightering areas exempted Tanker renewal - fleet by hull ? Tanker trade by hull 2003 960 m ts % SH average 40% VLCC trade 1H m dwt (960 m dwt 2003) m dwt Source. Fearnleys VLCC trade 1H m dwt (960 m dwt 2003) Source. Fearnleys Sales for decommissioning m dwt Tanker fleet development m dwt Shipyards activity JapanS Korea m cgt Source: MSR VLCC price development Mil YenMil USD Dec 91: Max 13,860 m Yen/Dec 91 $110 m April 95: Min 7,064 m Yen/Sep 02 $62.5 m Nov04 : 11,108 m Yen/ $105m Steelprice: Mil WonMil USD Conclusion Gasoline price at the pump Conclusion D emand -continue to increase - slower pace H igh deliveries stronger fleet increase M odern fleet M oderate phase out/sales for decommissioning Y ard capacity increasing N ewbuilding prices declining