1. Tanker Supply and Demand Graham Westgarth Chairman INTERTANKO Nor-Shipping DNV Seminar Oslo 25 May 2011

2. Looking beyond the next two years toward 2015, what sort of balance will there be in the tanker market? Will there be a similar consolidation in the tanker market as we have seen in the container market? What are the drivers for and against consolidation? Assuming that the large energy importing countries increase their control of the total value chain, to what extent will there be a role for the independent tanker owner?

3. Freight rates for some tanker segments at rock bottom Fundamentals still strong, but great uncertainty caused by –High oil price –Political unrest –Debt crises, unemployment, housing crises Many deliveries (but delays), young fleet Slack in supply of tankers –slow steaming (ballast) –Lowering C/P speed –Fewer tanker transits through Suez Canal –Piracy effect – longer routes/inefficiency New refineries in Saudi Arabia Tanker Supply and Demand What to watch

4. World GDP and Oil Demand Change Source. IMF/BP/IEA/Fearnleys % Oil/tanker demand correlates with economic growth Positive growth projected – but there is great uncertainty Signs of oil slower growth demand due to high prices

5. Oil Price and Freight Rates 1970-2011 $ per barrel

6. VLCC Newbuilding Prices and Break Even Rates Based on LRFairplay m $ $/day New tankers coming on to the market ordered at high prices

7. Tanker Demand

8. Increase in World Oil Demand in ME*, USA, China and ROW** Based on IEA bn tonne-miles

9. Tanker Trade Based on Fearnleys bn tonne-miles

10. Seaborne Oil Trade and Middle East Oil Production Based on Fearnleys/IEA mbd000 bn tonne-miles Asia 80% dependent on Middle East, Europe 18% and US 17% - some 15 mbd crude oil through Hormuz 2010

11. Middle East Oil Production January 2000 to March 2011 Based on Fearnleys/IEA mbd VLCC rates have approximately over the last years tracked Middle east oil production – no longer!

12. Trade Movements Based on BP mbd Demand shifting from west to east

13. Tanker Supply

14. Tanker Fleet Development (Assumed max phase out, orderbook March 2009, include chemical tankers) Tanker fleet increase 2003-2013 some 75% m dwtnumber

15. Tanker Phase Out, Deliveries, Scrapping Tankers 10,000 dwt + Balance Assuming Various Demand Increases m dwt

16. Strategic Considerations and Conclusions

17. Oil Demand, Tonne-mile, and Tanker Fleet Indices Source: IEA, Fearnleys, INTERTANKO Tanker fleet increase 2002-2010: 46% Index value Fleet surplus has been disguised by storage, slow steaming and special events Demand increased strongly in 2020, but Demand increase abating? Fleet increasing

18. Strategic Tanker Considerations A young fleet - 70% will be with us for at least another 10-15 years (built >2000) China expected to drive demand and the Middle East has the reserves World economy still under threat, the high oil price adds to the uncertainty Market balance set to weaken the next couple of years Successful Green House Gas emission reduction will mean reduced oil consumption Costs reduction needs careful risk management Product tanker market may be the strongest, fewer delivers, new Saudi refineries

19. Long and Short Term Considerations Still fragile economy Long term Wild cards: Oil price $ risik Disruptions: insurgency, hurricanes, strikes,……. Storage/stocks Short term Positive Negative Many deliveries Young fleet, little scrapping Large shipyard capacity Slow steaming and reduced C/P speed Around the cape transits Little use of Suez canal for crude transits Energy security GHG emission Alternative use of energy Fuel efficiency Peak oil? Population increase GPD increase Long term oil demand forecast up Increased dependence on Middle East oil Oil use per capita still low in China, India, Africa

20. A Fragmented Industry Largest operators/shares Based on LRFairplay VLCCs 560 Some 140 owners 7% Suezmaxes 420 Some 110 owners Aframaxes 890 Some 230 owners 7%

21. Four Scenarios