INTERTANKO Market SeminarHong Kong - 4 November 2002

Tim Huxley, Clarkson Hong Kong The Pros and Cons of Building Ships in China

Giles Lane, Clarkson, Singapore The Prospects in the Tanker Market with Focus on Asia

Erik Ranheim, INTERTANKO The State of the Industry

                                                

                      

Japan's devastated banks

On the agenda

YUKOS’ OIL PRODUCTION UP 18.0% IN THE FIRST 9 MONTHS OF 2002

Mikhail KhodorkovskyChairman and CEOYUKOS Oil Company

The state of the industry

Status

Performance Market

The state of the industry Status

Vital to world economy Anonymous Improved relations to

other industry players

Accountable to Society

0 100 200 300 400

1General Electric World's largest company

Microsoft2

3ExxonMobil, World's largest oil company

BP

Shell

TotalFinaElf

ChevTex

8

10

25

32

Source: FT500

Largest shipping co. Oslo Stock Exchange

World largest companies $ bn market value

Largest charteres - cargo tonnes

- 15 30 45 60 75

EXXMOB

SHELL

ChevTex

BP

TotFinElf

Alpine

Repsol

SK Oil

Koch

Vitol These 10 charterer represent 33% of total reported f ixtures according to EA Gibson. The ExxonMobil market share is 6% of total

13%13% share

10%

9%

4%

Oil companies reducing fleets

0

10

20

30

40

50

60

1974 1978 1984 1990 1995 1997 1999 2002

ExxonMobil

Chevron/ Texaco

BPAmoco

Shell

Texaco

Mobil

Exxon

Chevron

BP

Amoco

dwt

A proficient oil transportation system means shared

responsibility

All market participants must focus on their main activity

Oil transportation=shared risk venture

Cargo/bunker propertiesLiability for pollution

Safe port/Under Keel Clarence SecurityTraffic Control Systems/Pilotage

Performance

Accidental oil pollution reduced by 78% 2nd/1st part 90s

Accidental oil pollution from tankers

0

225

450

675

900

1990-95 1995-01

0

17,500

35,000

52,500

70,000

000 ts spilt

bn tonne-miles

99.998% of the oil arrives

safely

No major spill since Erika

Accidental oil spill from tankers tonnes spilt per billion tonne mile transported

0

10

20

30

40

50

60

70

US oil spills into the sea - gallons

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00

Non shipping

All other shipping

Barges

Tankers

US oil spills into the sea - number

0

2000

4000

6000

8000

10000

12000

73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00

Non shipping

All other shipping

Barges

Tankers

Continuous decline in tanker incidents

0

200

400

600

800

1000

1200

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

Tanker incident by cause 1978-2002

0

100

200

300

400

500

78 80 82 84 86 88 90 92 94 96 98 00 02

CollisionFire/ExplFounderedTechnicalMisc WarGrounded

132 tanker incidents 2001

Collision37%

Fire/Exp.16%

Misc14%

Grounding19%

Technical14%

Miscellanous:6 terminal related3 smugglers2 highjacket/attcked by terrorists

Technical:11 engine trouble2 steering2 hull

Port State ControlAll ships versus tankers

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1998all

1998tank

1999all

1999tank

2000all

2000tank

2001all

2001tank

2001Estimate

Detentions

Inspections

Port State Control- detention ratio All ships versus tankers

Port State ControlPercentage of inspected ships detained

0%

2%

4%

6%

8%

10%

12%

14%

20012000199919981997

0%

2%

4%

6%

8%

10%

12%

14%

Tankers

All ships

Market

The state of the market

Volatile freight market, declining prices

Tonnage balance relatively tight, high scrapping

Fundametals uncertain

Average monthly VLCC rates andMiddle East crude oil production

5,000

17,000

29,000

41,000

53,000

65,000

77,000

89,000

Jul-9

9

Nov-99

Mar

-00

Jul-0

0

Nov-00

Mar

-01

Jul-0

1

Nov-01

Mar

-02

Jul-0

2

US

D/d

ay18.0

19.0

20.0

21.0

22.0

23.0

24.0

25.0

Mb

d

Middle East crude oil production

VLCC rate AG-East

Tanker spot rate trends VLCC 280,000 dwt, AG-West until end Oct.

010,00020,00030,00040,000

50,00060,00070,00080,000

Source: Fearnleys

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000Source: Fearnleys

It all depends on your

perspective

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Aug-02 Sep-02 Oct-02

Source: Fearnleys

Supply

Modernisation tankers

622

51

75 81

9478

49

25 19

0

20

40

60

80

100

1991 1997 End 02 End 07 End 10

SH share (%)

DH share (%)

ERIKA I – Phase outMARPOL 13G single-hull tanker phase-out

tanker fleet 5,000 dwt and above

0

5

10

15

20

25

30

35

40

45

<1970

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

Millions

Dw

t

0

5

10

15

20

25

30

35

40

45Existing double-hull

Existing single-hull

For delivery

MARPOL 13G phase-out

Tanker deliveries and deletions

-150

-100

-50

0

50

100

150

200

250

300

1997 1998 1999 2000 2001 2002 2003 2004

178

71

3528

138

Tanker recycling by receiver country

0

5

10

15

20

25

30

84 86 88 90 92 94 96 98 00 02

Others/NN

Bangladesh

Pakistan

India

Taiwan

Korea

China

10 months

Demand

Crude oil seaborne trade - Indices

40

60

80

100

120

Tonne-miles

Tonnes

Miles

Based on f igures from Fearnleys

OPEC/non-OPEC crude oil production 1971-2002 (Proj.)

15

20

25

30

35

40

45

50

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

Mbd

Non-OPEC

OPEC

Europe

European crude oil imports

9.50

10.00

10.50

11.00

11.50

12.00

12.50

13.00

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

mbd

Europe

European products oil imports

3.50

4.00

4.50

5.00

5.50

1988

1990

1992

1994

1996

1998

2000

2002

mbd

European crude oil imports - mbd

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1995 1996 1997 1998 1999 2000 2001 1Q02

Norway

UK

Middle East

W Africa

N Africa

FSU

Others

FSU oil exports

0.5

0.9

1.3

1.7

2.1

2.5

1994 1995 1996 1997 1998 1999 2000 2001 2002

Black Sea**Baltic Sea**

Druzhba Pipeline

**seaborne

N Sea oil production, mbd

0

1

2

3

4

5

6

7

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Netherland

Denmark

Norway

UK

USA

US oil products imports

1.60

1.80

2.00

2.20

2.40

2.60

1994 1995 1996 1997 1998 1999 2000 2001 2002

mbd

USA

US crude oil imports

6.50

7.00

7.50

8.00

8.50

9.00

9.50

1994 1995 1996 1997 1998 1999 2000 2001 2002

mbd

US crude oil production and net crude oil imports1983-2003 (est.), monthly

Source: EIA

2

3

4

5

6

7

8

9

10Ja

n-83

Jan-

85

Jan-

87

Jan-

89

Jan-

91

Jan-

93

Jan-

95

Jan-

97

Jan-

99

Jan-

01

Jan-

03

Mb

d

US crude oilproductionUS net crude oilimportsLinear (US netcrude oil imports)Linear (US crudeoil production)

US Imports from Persian Gulf – mbd/%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1973 1976 1979 1982 1985 1988 1991 1994 1997 20000

2

4

6

8

10

12

14

16

As % share of total oil supplied

mbd

Oil consumption in selected Asian countries

0.00

2.00

4.00

6.00

8.00

10.00

80 82 84 86 88 90 92 94 96 98 00 02

mbd

China

India

Thailand

Korea

Taiwan

Seaborne chemical trades - mil tonnes

0

20

40

60

80

100

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Other

VegOils

Inorganics

Organics

Source: Drewry

Prospects

0

400

800

1200

160029

/06/

1990

29/0

6/19

91

29/0

6/19

92

29/0

6/19

93

29/0

6/19

94

29/0

6/19

95

29/0

6/19

96

29/0

6/19

97

29/0

6/19

98

29/0

6/19

99

29/0

6/20

00

29/0

6/20

01

29/0

6/20

02

World shares

Shipping

N American

Morgan Stanley Capital Index 1990-2002

..added uncertainty..

..Cheney Report…US National Energy Policy..

Source: BMW WWWsite

                                                                                                                               

                          

Oil - a Sunset Industry?The Future is Here Today

” Powered with Sun and

water The BMW 750hL, the youngest member of the

BMW hydrogen vehicle family”

8

12

16

20

24

28

321

97

0

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

4

6

8

10

12

14

16

Middle East Oil Prod mbd

Tonne miles

mbd'000bil tm

ProjectionIEA/EIA

Source: Fearnleys, IEA, INTERTANKO

Will the strong growth continue?

Medium term oil trade development

More short haul oil, FSU, W Africa, Mexico (-N Sea)

US oil production decline halted – long term up?

Increase in trade depend on Asia

Overall OECD oil demand flat

Short-term, cheap capacity lies in the Middle East

IEA: The pace of economic activity is the single most important driver of energy demand, but

Politicians may set a different scenario