Tanker shipping key driving forces Maritime Insight - Gothenburg - 17 October Erik Ranheim Senior Manager Research & Projects INTERTANKO

The state of the industry The main driving force Who loses Basics Overview The state of the industry The main driving force Who loses Basics Europe Long term

The state of the industry

Estimated accumulated losses VLCCs + Suezmaxes + Aframaxes $ billion

Average freight rates 1 -10 years backwards $ / day

The main driving force

Oil price and freight rates 1970-2013 $ per barrel

Assuming: $10,000 per day $600 per tonne bunkers Aframax voyage (Mina Al Ahmadi - Singapore )- speed, T/C result and CO2 emission $/day Tonnes emission Assuming: $10,000 per day $600 per tonne bunkers Knots

Who loses

Tanker ownership, period and spot market

Basics

Population growth Billion Years gap for each bn increase in population 127 33 14 13 12 12 14 18 40 Years gap for each bn increase in population

10 largest oil consumers 2014 mbd Litres per capita per year

Net oil import US and China as % of consumption

Tanker indices %

Economic, oil market and seaborne trade growth %

Europe

<1% of oil reserves (ex. FSU 7.5%) 14% of world oil consumption Europe Population 739.2 m ex. FSU <1% of oil reserves (ex. FSU 7.5%) 14% of world oil consumption 4% of world oil production 25% of crude oil import 18% of oil product import 1% of crude oil export 11% of oil product export 14% of world refinery capacity Crude oil import

Middle East oil Export 1990/2012

US and N Sea Crude Oil Production mbd

Major oil import areas mbd

Oil trade to Europe mbd

Global Crude Distillation Capacity

Aframax spot discharge 2013

Suezmax spot discharge 2013

Long term

US. crude oil production by source, 1990-2040 mbd

Total energy Transportation By Continent Long term - mtoe Total energy Transportation By Continent Source: BP

Crises create changes – we are in the middle of a major tanker crises End thoughts Crises create changes – we are in the middle of a major tanker crises High oil/bunker prices a main game changer for the industry Tanker fleet increasing Europe mature Tanker safety is strong, but oil transportation is inherently a high risk industry In the long run, the market gets the service it pays for

Tanker accidents – all sizes all segments Number ’00 ts pollution

Chain of responsibility/sustainability A sustainable tanker industry A sustainable tanker industry provides a high quality safe and environmental friendly transportation service regardless of market cycles   Sustainability assumes balanced terms and conditions and a fair risk sharing among the main stakeholders Shipowner Charterer Shipbuilder Class Chain of responsibility/sustainability Insurer Flag Port Broker