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Prepared in collaboration with external consultant K. C. Wilson & Associates ~ LNG Shipping Economics & Commercial Advisers, Singapore 1

Programme

LNG Shipping Recent Trends and Prospects

Mike P. Rowley, Director & General Manager LNG Division

Mitsui O.S.K. Bulk Shipping (Europe) Ltd.

& Kenneth C. Wilson, External Adviser - LNG Shipping Economics &Commercial Services

Gastec 2011 - Amsterdam

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Mitsui O.S.K. Lines Ltd. (MOL) Corporate & LNG Profile

Established: 1884

Head Office: Tokyo, Japan

Number of MOL Group employees: 9,707

Number of MOL Operating Fleet: 905 vessels

Revenues (2010): US$ 14,488 million

Assets: US$ 2,006 million

Debt: US$ 8,331 million

Credit Rating: A3 (Moody)

LNG Customers
http://www.osakagas.co.jp/indexe.htmlhttp://www.sonatrach-dz.com/NEW/index.htmlhttp://www.kepco.co.jp/english/index.htmlhttp://www.tokyo-gas.co.jp/index_e.htmlhttp://www.kogas.or.kr/kogas_kr/html/main/main.jsphttp://www.omanlng.com/tabid/36/Default.aspxhttp://www.pertamina.com/index.php/home/http://www.rasgas.com/rg/http://www.qatargas.com/Default.aspx

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High LNG shipping supply exceeded demand for last 10 years

0

15

30

45

60

75

2000 2002 2004 2006 2008 2010

Ship Capacity(million m3)

Fleet Supply (14% p.a.*)

Demand (9% p.a.*)

Excludes ships below 17,500m3* CAGR: compounded annual growth rate

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Result - shipping oversupply leading to lower fleet utilisation

0

15

30

45

60

75

2000 2002 2004 2006 2008 2010

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

Fleet Utilisation

Ship Capacity

(million m

3

)

Fleet Supply

Surplus

Demand

Excludes ships below 17,500m3

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Freight rates dropping from above 100,000 dollarsper day in the early 2000s to as low as 20s in 2010

0

20

40

60

80

100

120

140

1Q00 2Q01 3Q02 4Q031Q05 2Q06 3Q07 4Q08 1Q10

Short-term freights ($000 daily)

Also lower freight rates

0

15

30

45

60

75

2000 2002 2004 2006 2008 2010

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%


Fleet Utilisation

Supply Demand

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Speculatively ordered ships (18%)

70,000m3-plus ships only

Majors merchants fleets under-use (11%)

ShipsAwaitingProjects

(65%)

Technical inefficiencies (6%)

Estimates of 2008 make-up

of LNG fleet over-supply

65% of tonnage oversupply due to projectdelays in 2008

Speculatively ordered ships accounted for therest of the fleet over-supply

65% of surplus shipping in 2008 comprised ships awaiting new projects

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0

15

30

45

60

75

90

2000 2004 2008 2012 2016

LNG demand growth is expected to be strongestover the next few years, driven mainly by Asian

consumers

Asian markets will likely underpin shippingdemand

Other markets - particularly Latin America andEurope will boost demand

Worth noting long haul arbitrage trade may take amore prominent role

Forecast

Shipping demand is trending to increase progressively through 2016

Ship Capacity(million m3)

CAGR 7.5%

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8

The growth of LNG fleet supply is expected to moderate over the next six years

Replacement Orders

Existing Fleet (1.3.11)

Existing Order Book

The additional order requirement to satisfyreplacement needs and new exports isequivalent to about 25 standard-size ships,

by 2016

0

10

20

30

40

50

60

70

80

2011 2012 2013 2014 2015 2016

Ship Capacity (million m3)

Year of Delivery

Base Case Additional Orders Required

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0

10

20

30

40

50

60

2008 2009 2010 2011 2012 2013 2014 2015 2016

Number of LNG Ships(155,000m3 equivalent units)

Newbuild deliveries (excluding any speculative orders) will be much lower

Delivery Year

Deliveries


Replacement Ships

Additional Requirement

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0

15

30

45

60

75

90

2000 2004 2008 2012 2016

Million m3

Forecast

Demand

Supply

Fleet supply growth will flatten due to:

- Absorption of the large amount of thoseexisting ships which do not have anyemployment commitment

- Decline in order book- Conversion of increasing numbers of older

ships

Having risen sharply in recent years, fleet supply is forecast to level off

CAGR 1.5%

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0

15

30

45

60

75

90

2000 2004 2008 2012 2016

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

Convergence of shipping supply and demandwill boost fleet utilization

Fleet employment (already increasing since endof 2010) is expected to rise sharply to 2013

Million m3

Forecast

Fleet utilization is improving markedly from a low base in 2010

Utilisation

Demand

Supply

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Few ships are available for charter over the next 12 months

0

50

100

150

200

1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16

Standard-size ships, post-2000 built

Open ships Uncommittednew builds

Short charter to

longer-termcommitment

Committednew builds

Ship charter expiry & new building delivery schedule(assumes extension options exercised)

Bottleneck

Recent multiple fixtures has reduced the pool ofuncommitted modern, standard-size ships

This bottleneck situation is could well last into2012

Some speculatively-ordered new buildings are

available, but other existing modern ships arealready assigned to longer-term business

Chartered

Long-term chartered& owner-occupied

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Freight rates have risen sharply in response to tightening fleet demand/supplybalance

Time charter rates bottomed in June/July 2010,then rose sharply through February this year

0

15

30

45

60

75

J10 M10 M10 J10 S10 N10 J11

US$1,000Daily

Modern 155,000m3

Source: E.A.Gibson

6 months 2 years

Less than 6 months

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Older ships have been coming off project charter

0

5

10

15

20

25

30

35

40

1Q113Q111Q123Q121Q133Q131Q143Q141Q153Q151Q163Q16

Standard-size ships, pre-1986 built

Chartered

Open ships

ExpectedConversions

Ship charter expiry schedule(assumes options exercised)

Laid-up ships

A large number of ships built in the 1970s andearly-1980s coming off long term trades

Best ones will initially trade conventionally formedium term given current high demand

Currently 10 - 30 ships fixed or under considerationfor FSRU/FSO projects leading to a furthertightening in fleet supply and demand

Eventually most will find offshore projects

(FSO/FRSU) Long-term chartered& owner-occupied

Assumes static fleet (no scrap sales)

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MOL positioned to provide diversified LNG transport and offshore (FSO/FSRU)

High quality mature 126k m3 Moss steam ships

LNG Capricorn (CAP1)

LNG Libra (CAP1)LNG Taurus (CAP2)LNG Aries (CAP2)LNG Aquarius

Complementing existing modern fleet run out of London:

1.Steam shipsDukhan (135k m3 - 2004 Moss )Fuwairit (138k m3 2004 MkIII )Al Deebel (145k m3 2005 MkIII I)LNG Pioneer (138k m3 2005 NO 96 )GDF Suez Point Fortin (154k m3 2010 MkIII )

2.Slow Speed Diesel ships

Al Aamriya (210k m3 2008 No 96 )Murwab (210k m3 2008 No 96 )Fraiha (210k m3 2008 No 96 )

3.Tri-Fuel Diesel Electric shipsAbdel Kader (177k m3 2010 MkIII )Ben Badis (177k m3 2010 MkIII )

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Tightening LNG shipping supply / demand = higher freight rates

Quality older tonnage can bridge short to medium term requirements

During next 2-3 years new vessels will need to be ordered to replace oldertonnage and meet growing LNG transportation demand

Mitsui OSK Lines well positioned to meet these challenges and exploreopportunities that we can develop together with our customers:

New projects Older vessels for short medium term conventional business

Conversion of older tonnage for Offshore (FSO/FSRU)

Concluding remarks

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