1. Oils and fats changes and opportunities Capt Ken Tree Associate Consultant to Drewry Shipping September 2005

2. Oils and fats changes and opportunities 2 Overview & slide references Oils & fats as organic chemicals (3-4) Volumes past, present and beyond (5) Growth drivers - (6-9) Uses- changes ahead (10-14) Effect of crude petroleum prices (15) Previous cargoes – changes/opportunities (16-18) Comparative earnings (19) The IMO double hulled future (20)

3. Oils and fats changes and opportunities 3 Oils and fats Lets call them what they are – Triacylglycerols They belong to the chemical family of esters their most important ingredient being triglycerides Triglycerides are esters of glycerol and oils and fats are mixtures of triglycerides from various fatty acids Their chemical and physical properties and the esters derived from them vary with the individual oils or fats fatty acid profile Naturally occurring triacylglycerols are all further processed for further use

4. Oils and fats changes and opportunities 4 Triacylglycerol raw materials

5. Oils and fats changes and opportunities 5 Forecast seaborne trade of liquid chemicals (1982-2007, mill tons)

6. Oils and fats changes and opportunities 6 Main growth drivers - population

7. Oils and fats changes and opportunities 7 Main growth drivers - caput consumption

8. Oils and fats changes and opportunities 8 China - phenomenal imports

9. Oils and fats changes and opportunities 9 India - domestic supply gap widens

10. Oils and fats changes and opportunities 10 Uses - changes ahead Human nutrition – 80% Animal Feed – 6 % Oleo-chemicals – 14% Bio Fuels (bio-diesel) – to be determined

11. Oils and fats changes and opportunities 11 Oleo - chemical & bio diesel (methyl esters) conventional production technologies

12. Oils and fats changes and opportunities 12 Oleo - chemical exports

13. Oils and fats changes and opportunities 13 EU bio diesel output targets

14. Oils and fats changes and opportunities 14 EU consumption of rapeseed oil

15. Oils and fats changes and opportunities 15 The effect of crude petroleum prices

16. Oils and fats changes and opportunities 16 Previous cargo requirements-oils for edible and/or oleo-chemical use Oils for Edible and or Oleo-chemical use are presently shipped using one of the following previous cargo criteria 1.Not on the FOSFA Banned List – (Standard FOSFA Contract) 2.Immediate Previous cargo on the FOSFA Acceptable List – (A choice with an AS9 sticker) 3.Immediate Previous cargo on EU 1 or 2 Acceptable List (Europe) 4.Immediate previous cargo on NIOP 1 or 2 List (USA)

17. Oils and fats changes and opportunities 17 Oleo - chemicals & bio-diesel-previous cargoes Oleo chemicals fall outside FOSFA-NIOP-EU Hygiene Legislative & are carried by IMO Class ships Quality requirements based on other high quality chemical cargoes between the shippers and owners. Kosher could be a requirement for glycerine Methyl Esters used for fuel non edible use last 3 clean and unleaded same as CPP (Already moving into Europe)

18. Oils and fats changes and opportunities 18 Previous cargo - new approaches? Stainless steel – passivation – recognition of non absorption & ease of cleaning by approved methods and testing, as with other sensitive chemicals (i.e. Alcohols) Oils and Fats for non edible use i.e Bio Diesel Provided strict traceability ensured from origin to end use, last cargo requirements could be last 3 clean and unleaded, or NOBL at most? Now moving under last 3 clean & unleaded into EU. Both the above will/could relieve pressure on freight

19. Oils and fats changes and opportunities 19 1Q001Q011Q021Q031Q0735,000 DWT Voyage PatternsLength 70721920279111116119655Straits-Europe-Argentina-India-Straits110 days 810818651101461322121805Straits-Med-Argentina-India-Straits102 Days 1324423375132031695720078Karachi R/V22 Days 82181885386531136021239Palm to Karachi-Molasses to S.France-Argentina-India-Straits118 Days 1117918299108771380921805Palm to Karachi-Caustic AG/Durban-Argentina India-Straits98 Days 1336723503136421676525413Palm to Med-Uan to USAC-Arg-India-Straits123 Days 1019820314107391387921666Average DVS Earnings 11350150001200012500?Average 30/32000 IMO 3 coated General Trade (mainly CPP) 161135153176255Heavy Oil PriceHO 244196202242475Diesel Oil PriceMDO Comparative earnings

20. Oils and fats changes and opportunities 20 Here is to a healthy, safe double hull IMO class future for the carriage of triacylglycerols