1. A Selection of Market Issues INTERTANKO DUBAI TANKER EVENT March 29, 2004

2. 2 What will the future look like?

3. 3 Dubai 14 years later

4. 4 Understanding & Adapting to Change ‘It is not the strongest of the species, nor the smartest of the species that survive, but those most adaptive to change.’ Charles Darwin

5. 5 Most Significant Market Issues

6. 6 Selected Market Issues Oil Market World Oil Demand – Major Economies OPEC China Demand FSU Supply Oil Stocks Tanker Industry Tight Supply/Demand Situation Industry Consolidation & Sophistication

7. 7 World Oil Consumption SOURCE: IEA & Cambridge Energy Research Associates

8. 8 World Oil Consumption SOURCE: IEA & EIA 1982 Outlook 1990 Outlook 1995 Outlook Actual 1991 Outlook

9. 9 OPEC Oil Production SOURCE: IEA & Cambridge Energy Research Associates

10. 10 OPEC Oil Production SOURCE: IEA & EIA 1982 Outlook 1990 Outlook 1995 Outlook Actual 1991 Outlook

11. 11 OPEC Production vs VLCC Demand SOURCES: IEA - OPEC Production MARSOFT – VLCC Demand OPEC PRODUCTION VLCC DEMAND

12. 12 Tight VLCC Supply/Demand Balance SOURCE: MARSOFT SUPPLY DEMAND

13. 13 Low Oil Stocks SOURCE: EIA

14. 14 VLCC Supply/Demand vs Earnings SOURCE: MARSOFT SUPPLY VLCC Daily Earnings

15. 15 VLCC Utilization vs VLCC Earnings SOURCES: IEA - OPEC Production MARSOFT – Daily Earnings VLCC Utilization VLCC Daily Earnings

16. 16 Oil Companies Exit Shipping % of World Tanker Fleet Owned by Oil Companies

17. 17 Greater Reliance on Spot Charters % of Oil Company Cargoes Transported on a Spot Basis

18. 18 Transport Cost Less Important Transport Cost Other Costs

19. 19 Oil Companies Exit Shipping Original Rationale Core Competency - Owning & Operating Ships Control Operating Cost Reliability Control Supply & Distribution Current Rationale Core Competency – Commercial & Risk Mgt Operating Costs are Less Significant Allocate Capital to Higher Yield Investments Reliability - Quality Independent & Nat. Companies Flexible Supply & Distribution Practices

20. 20 Move Toward Standard Ship Sizes

21. 21 Industry Trends Commercial Pooling & Joint Ventures COAs & Profit Sharing Agreements Faster Information Processing Faster Market Changes Sophisticated Corporate Organizations Larger Fleets Emphasis on Intellectual Assets Information Technology Innovative Financing Structures Less Personal

22. 22 Oil Market Heading

23. 23 World Oil Consumption Forecast SOURCES: EIA Annual Energy Outlook 2004

24. 24 Oil Consumption Growth Compared to 2003 Base SOURCE: EIA Annual Energy Outlook 2004

25. 25 Consumption Outpaces Production ( North America, China, Other Asia) 2003 Base SOURCE: EIA Annual Energy Outlook 2004

26. 26 The China Factor The China Factor SOURCES: MARSOFT & Vela Annualized Incremental Tanker Daily Earnings for 3 Oil Demand Growth Scenarios (2005 – 2008)

27. 27 FSU Production Forecast SOURCES: EIA Annual Energy Outlook 2004

28. 28 Bosporus/Turkish Straits New Regulations Night Transit Ban: Ship LOA > 200 meters 48 Hour Notification One-way Traffic Regulation Delays of 3.5 days Operating Close to Capacity Congestion Delays of 10 to 21 days SOURCE: EIA & Richardson Lawrie Associates

29. 29 Caspian Pipeline Consortium SOURCE: EIA Today: 560 mbd Future: 1,340 mbd

30. 30 Baku-Tbilisi-Ceyhan Pipeline 1 mmbd SOURCE: EIA

31. 31 AMBO Pipeline 750 mbd SOURCE: EIA

32. 32 Turkish Bypass Pipeline 1.2 mmbd Planning Stage SOURCE: EIA

33. 33 Summary Forecasts – “educated guesses” Benefit is understanding clues for change and possible outcomes Tanker rates linked to OPEC production Tight Supply/Demand VLCC utilization levels > 90% Compounded by low oil stocks High volatility China key demand driver FSU key oil producer Short-term facility constraints

34. 34 Conclusions More complex and uncertain world Changes are happening much more quickly Successful organizations need capability to adapt Flexible Manage intellectual assets & knowledge Information technology Emphasis on learning Effectively adapting to market changes is more important than the market itself Strong or weak markets do not last forever

35. 35