The State of the tanker industry IMSF Singapore 17 April 2007 Manager Research and Projects The State of the tanker Industry High safety Low pollution Low age High earnings until now Surplus of tonnage building up Pollution rate 1000 ts spilt per bn tonne miles carried Source: ITOPF/Fearnleys 1000 ts spilt bntonne-m Tanker accidents and trade Source: ITOPF/Fearnleys 1000 ts spilt Bn tonne-miles trade Ship nameYearPollut.ion Torrey Canyon67119 Amoco Cadiz78223 Exxon Valdez8937 ABT Summer91260 Haven91144 Aegean Sea9274 Braer9385 Sea Empress9672 Erika9920 Prestige0263 Tasman Spirit0330 Tanker incidents by cause Q07 Number incidents Source: Based on incidents reports from Informa Tanker incidents by cause 2006 Source: Based on incident reports from Informa Accidental pollution from tankers largest accidents and age Source: Informa/INTERTANKO Number incidentsAverage age Total losses, tankers and bulkers Source: Clarkson Number Tanker Market Oil price and VLCC freight rates $ per day freight rate$ per barrel oil price VLCC spot and break-even rates $ per day freight rate VLCC break-even rates $ per day freight rate Source: INTERTANKO Oil price and freight rate $/barrel Deflated by the Consumer Price Index (USD) Source: INTERTANKO Gasoline price at the pump $ per litre mbd Source: IEA World oil demand - mbd litres Source: BP Review Oil consumption per capita mbd Oil consumption if world populations consumed oil as Americans Seaborne oil trade and Middle East oil production mbd Source: Fearnleys/IEA '000 bil tm Seaborne oil trade and tanker fleet Source: Fearnleys/IEA Tanker productivity tonne-miles/dwt Source: Fearnleys/IEA Source: IEA Sources of Asian oil imports mbd Source: IEA Sources of European oil imports - mbd mbd Source: IEA Sources of US oil imports - mbd Increase in world oil demand in ME*, USA, China and ROW** mbd Source: IEA FSU: Other Asia: L America: Africa: +0.06 World oil supply - mbd Source: IEA mbd Tanker Supply Tanker contracting $ bn m dwt VLCC $ bn Suezmax: 5.9 Aframax: 8.8 Panamax: 2.8 Handy: 22.9 (43%) Source: INTERTANKO/Clarkson Shipyard Monitor Tanker fleet, orderbook and phase out tankers above 30,000 dwt m dwt 79 m dwt133 m dwt Phase out SH tankers above 30,000 dwt m dwt VLCCs max phase out,+ 4.5% trade increase, assume balanced marked end 2006Number Fleet: 142 m dwt 487 ships Orderbook: 54 m dwt 177 Single hull: 42 m dwt 154 Average age: 9.4 years Suezmaxes max phase out + 4.5% trade increase, assume balanced marked end 2006 m dwt Fleet: 52 m dwt Orderbook: 20 m dwt Single hull: 9 m dwt Average age: 9.2 years Surplus end 2007: 1.8 m dwt 2008: 2.6 m dwt 2009: 8.1 m dwt 2010: 3.7 m dwt Conversion to DH Total 7. 2 m dwt Built VLCCsTotal 1970s Total Conversion to FPSO/FSO/bulk carriers, heavy lift . (1.9 m dwt in 2006, 1.2 m dwt so far 2007 Tanker deliveries, removals, min phase-out m dwt Tanker deliveries, removals, max phase-out m dwt Tanker fleet double-hull development Source: INTERTANKO % Oil import by Suezmaxes - share of double hull % Source : Fearnleys Tanker deliveries, removals, max phase-out m dwt Conclusion Strong safety performance Relatively strong demand development Very strong fleet increase Reduced earnings Tankers 30, ,999 dwt min phase out, + 6 % trade increase, assume balanced marked end 2006 m dwt..if 4.5% increase, no new orders needed before 2012 VLCC fleet development Number Source: INTERTANKO m dwt Aframaxes max phase out + 4.5% trade increase, assume balanced marked end 2006 m dwt Fleet: 72 m dwt Orderbook: 28 m dwt Single hull: 14 m dwt Average age: 9.2 years Surplus end 2007: 1.5 m dwt 2008: 5.5 m dwt 2009: 12.0 m dwt 15% 2010: 5.3 m dwt 6% Aframaxes max phase out + 4.5% trade increase, assume balanced marked end 2006 m dwt Fleet: 72 m dwt Orderbook: 28 m dwt Single hull: 14 m dwt Average age: 9.2 years Surplus end 2007: 1.5 m dwt 2008: 5.5 m dwt 2009: 12.0 m dwt 15% 2010: 5.3 m dwt 6% Tankers 30, ,999 dwt min phase out + 6 % trade increase, assume balanced marked end 2006Number end 2007, 145 del - 45 phase out*, 75 increase demand = surplus 25 ships 2008, 157 - 17 80 = 85 2009, 127 - 18 84 = 110 2010, 56 - 93 90 = 1 1,253 tankers 487 orders 228 phase out 11.1 years Oil import by Panamaxes - share of double hull % Source : Fearnleys Oil import by Suezmaxes - share of double hull % Source : Fearnleys