INTERTANKO Market Seminar Hong 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 Khodorkovsky Chairman and CEO YUKOS Oil Company

The state of the industry  S tatus  P erformance  M arket

The state of the industry Status  V ital to world economy  A nonymous  I mproved relations to other industry players

Accountable to Society

World largest companies $ bn market value

Largest charteres - cargo tonnes

Oil companies reducing fleets

A proficient oil transportation system means shared responsibility All market participants must focus on their main activity

Oil transportation=shared risk venture  C argo/ b unker properties  L iability for pollution  S afe port/ U nder K eel C larence  S ecurity  T raffic C ontrol S ystems/ P ilotage

Performance

Accidental oil pollution reduced by 78% 2 nd /1 st part 90s % of the oil arrives safely

No major spill since Erika

US oil spills into the sea - gallons

US oil spills into the sea - number

Continuous decline in tanker incidents

Tanker incident by cause

132 tanker incidents 2001

Port State Control All ships versus tankers

Port State Control- detention ratio All ships versus tankers

Market

The state of the market  V olatile freight market, declining prices  T onnage balance relatively tight, high scrapping  F undametals uncertain

Tanker spot rate trends VLCC 280,000 dwt, AG-West until end Oct. It all depends on your perspective

Supply

Modernisation tankers

ERIKA I – Phase out

Tanker deliveries and deletions

Tanker recycling by receiver country

Demand

Crude oil seaborne trade - Indices

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

Europe

European crude oil imports - mbd

FSU oil exports

N Sea oil production, mbd

USA

US crude oil production and net crude oil imports (est.), monthly Source: EIA

US Imports from Persian Gulf – mbd/%

Oil consumption in selected Asian countries

Seaborne chemical trades - mil tonnes Source: Drewry

Prospects

Morgan Stanley Capital Index

..added uncertainty.... Cheney Report…US National Energy Policy..

Source: BMW WWWsite Oil - a Sunset Industry? The Future is Here Today ” P owered with S un and w ater The BMW 750hL, the youngest member of the BMW hydrogen vehicle family”

Source: Fearnleys, IEA, INTERTANKO Will the strong growth continue?

Medium term oil trade development  M ore short haul oil, FSU, W Africa, Mexico (-N Sea)  US oil production decline halted – long term up?  I ncrease in trade depend on Asia  O verall OECD oil demand flat  S hort-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