Manager Research and Projects Maritime Transportation of Energy from Russia & Central Asia Challenges & Opportunities St Petersburg 5 & 6 October 2004

Setting the Scene W orld of shortages of vital commodities? Fresh water short in all continents Grain (105 m ts over use in 2003) Oil – Will oil supply limit tank demand? I nability to predict the future CANNOT succeed without a portion of paranoia (Bill Gates). Continuously search for and identify what can cause problems and take necessary precautions on how to solve them

Setting the Scene W orld would have been facing a 3rd oil crisis without Russian expansion H ow much more and for how long? P ipelines T anker S afety performance high

Oil Export

Russian oil * ** *

Market effect of one mbd transported various trades

World increase in oil demand supplied by FSU and the rest mbd

World largest crude oil exporters - mbd

FSU crude oil and products export - mbd

European crude oil import from FSU mbd

Oil export from FSU 1H04 Source: IEA

Oil export by tanker B altic export will increase the most N ew markets opening North and East, and from Ceyhan P ipelines will probably take market shares from Eastwards transportation in the long term

Safety Performance

’000 tonnes The Turkish Straits are one of the world's busiest sea lanes (50,000 vessels annually, including 5,500 oil tankers) Under the Montreux Convention of 1936, commercial shipping has the right of free passage through the Bosporus and Turkish Straits in peacetime, although Turkey claims the right to impose regulations for safety and environmental purposes. Source: US EIA/DOE

Total number of tanker incidents reported Collisions, groudings, Hull&Machinery, Fire&Explosions, others

Tanker incidents Baltic, Black Sea, Bosporus, East Med

Most incidents in the Baltic related to ice

Tanker trade by hull - Baltic and Black Sea tankers above 50,000 dwt

Conclusion

R ussian oil export essential to the world market and will be of increasing importance to the tanker market P ipelines may in medium to long term take market shares S afety performance of tankers is high and the fleet rapidly modernized, tankers trading out of the Baltic 95% DH, out of the Black sea 76% DH 1Q04.