The Impact of the Growing LNG Trade on the Conventional Oil Tanker Industry

Guide to the presentation Introduction Energy Consumption Overview & Future Trends Natural Gas Segment of Total Energy LNG Fundamentals LNG Impact on Oil Tanker Industry Conclusions

1. Introduction

ANGELICOUSSIS SHIPPING GROUP THE FLEET NO DWT Operating 22 2,510,418 On Order 6 1,032,000 Total 28 3,542,418 DRY CARGO TANKERS LNG NO DWT Operating 31 7,227,251 On Order 2 640,000 Total 33 7,867,251 (Including Managed vessels) NO DWT Operating - On Order 4 292,400 Total Fleet as at 13 April 2005

2. Energy Consumption Overview & Future Trends

Energy Consumption Overview

World Primary Energy Consumption 2002

Energy, Million Tons of Oil Equivalent (MTOE) Source : IEA 2004

3. Natural Gas Segment of Total Energy

Proven Natural Gas Reserves Source : IEA 2004 Total: 180 tcm as of Jan 2004

LNG Pipeline Vs LNG Carrier

7% per year growth (1992-2002) LNG is about 6% of worldwide natural gas consumption and about 94% of natural gas consumption in Japan.

LNG Demand through 2015 Source : Gastech 2005

LNG Supply through 2015 Source : Gastech 2005

4. LNG Fundamentals

Characteristics of the “OLD” LNG Market Individual Projects Long Term Contracts Shipping Tightly Linked Reliability Paramount Concern Relatively Slow Growth

Characteristics of the “NEW” LNG Market New Growth Phase – Common View Many More Projects - Expansions - New Green Field Cross - Project Competition More Players and Assets Increased Cost Focus

More Political Government Ownership Every Liquefaction plant has host government ownership interest (Except in Kenai, Alaska) Governments benefit by : Tax Revenue Job creation Royalties Infrastructure Improvements

Public Opinion : “LNG is environmentally friendly – but scary”

Public Opinion : “LNG is environmentally friendly – but scary” Facts : • LNG facilities and terminals have a 45-year record of operation without serious incident • Worldwide, there have been more than 33,000 LNG carrier voyages without serious incident • LNG is not explosive because it is not stored under pressure, and it is not toxic LNG itself does not burn because it contains no oxygen, which is needed for combustion. • If LNG is released into the air, the liquid immediately warms up and converts back to a gas. Initially, the gas is colder and heavier than the air, so it freezes any water vapour in the air. This can temporarily create an icy fog. As the gas continues to warm, it dissipates and rises harmlessly into the air.

Competitive Alternatives - 1. CNG CNG is a domestically-produced by product of crude production or from gas wells . At the moment, th automotive industry uses natural gas that has been compressed (called compressed natural gas or CNG) and stored in high-pressure cylinders.              

Competitive Alternatives - 2. GTL Gas To Liquids (GTL) production is based on the Fischer-Tropsch process, which involves the conversion of natural gas to higher hydrocarbons like kerosene, gasoline, and naphtha, depending upon the operating conditions and catalysts used

Competitive Alternatives - 3. Bulk Balls - Gas hydrates Gas clathrates, commonly called gas hydrates, are ice-like mixtures of gases and water, in which the gas molecules are trapped within a framework of cages of water molecules. Each volume of hydrate may contain as much as 150-180 volumes of gas.

5. LNG Impact on Oil Tanker Industry

Oil Routes Oil Routes, 2004 Oil Routes, 2010 Source : DNV MARKET OUTLOOK - Shipping Market Development Trends 2005-2015 Seaborne trade with other commodities will be increasingly dependant on China, but within the next 10 years the supply situation will be basically the same as today.

Oil Trade flows 2002 & 2030 Source : IEA 2004

Gas Routes Key Global Gas Trades, 2004 Expected Global Gas Trades, 2010 Source : DNV MARKET OUTLOOK - Shipping Market Development Trends 2005-2015 International trade in LNG is set to double to 200 Mt in 2010. The strong growth is also expected to continue beyond 2010. Some industry watchers believe a global LNG trade of 300 Mt in 2020 is a distinct possibility. Based on the supply/demand situation two markets will develop, one Pacific and one Atlantic Basin market.

Gas Trade flows 2002 & 2030 Source : IEA 2004

Oil & Gas Demand as a % of Total Energy Demand

World Energy Consumption by Fuel

Constraints To Growth Financing Man Power Management Sea Going Officers & Crew Shipbuilding Capacity

Available Newbuilding Capacity 1975-2010 12 10 S. Korea Japan 8 China MCgt 6 Europe 4 ROW 2 1975 1980 1990 2000 2005 2010 SAI Source: AWES

6. CONCLUSIONS

CONCLUSIONS World Energy demand will continue to grow strongly All forms of energy supply will be needed to meet this growing demand Competition will be for building berths, man-power, financing, – impacting on costs and rates China’s continuing development will increase energy demand, but also add to ship production base. The LNG industry will not cannibalize the Oil Tanker industry