1. Marine Transportation of Energy Marine Transportation System Capacity Mare Forum Houston Nov. 18-19 2002 Bulk Liquid Ocean Shipping Issues Peter M. Swift

2. The world needs tankers As long as the world uses oil As long as the world uses oil World oil consumption 3,590 mpta World oil consumption 3,590 mpta 60 % transported by sea = 2,015 mtpa 60 % transported by sea = 2,015 mtpa + 103 mtpa chemicals + 103 mtpa chemicals

3. Nominal Arabian Light Deflated Arabian Light Nominal freight rates Deflated freight rates Source: INTERTANKO, IEA 10

4. Tonnes spilt per billion tonne-mile transported

5. US crude oil production and net crude oil imports 1983-2003 (est.) Source: EIA

6. Oil consumption in selected Asian countries

7. OPEC and non-OPEC oil production 1971-2002 Source: IEA

8. Major world crude oil exporters - Mbd Source: OPEC, PIW, IEA, Norwegian Oil Directorate

9. Crude oil – seaborne trade indicies 1973=100 Source: Fearnleys

10. Oil products – seaborne trade indicies 1973=100 Source: Fearnleys

11. Tanker & combined carrier fleet by year of build 0 25 50 75 100 125 150 175 200 225 250 275 < 1968 1970 1972197419761978198019821984198619881990199219941996199820002002 2004 + Number of tankers U/VLCCs Suezmax Aframax Panamax 10'-60' dwt For delivery

12. Tanker & combined carrier fleet by year of build 0 5 10 15 20 25 30 35 40 <1968 19701972197419761978198019821984198619881990199219941996199820002002 2004+ Dwt millions U/VLCCs Suezmax Aframax Panamax 10'-60' dwt For delivery

13. Tanker fleet double-hull development Source: INTERTANKO

14. Double hull ships are great …but like the life rafts of a Boeing 747, it is a device we should do all in our power to avoid testing.

15. World fleet and orderbook - million dwt

16. World Shipbuilding Capacity (mCGT)

18. Bulk Liquid Ocean Shipping Issues  Demand for marine transportation  Supply of marine transportation  Shipping standards  Environmental concerns  Security issues

19. Bulk Liquid Ocean Shipping Issues Demand for Marine Transportation  Oil dependence & Global economic health  Oil sources – long haul vs. short haul  Alternative energy sources  Pipelines

20. Bulk Liquid Ocean Shipping Issues Supply of Marine Transportation  Fair return on investment  AGEISM Arbitrary but flawed age limitations - legislation or charterers - challenge to principle of grandfathering

21. Bulk Liquid Ocean Shipping Issues Shipping Standards – The Threats  Poor freight rates  Weak links in the chain of responsibility  Competition between builders and between classification societies  Ineffective self-regulation  Inadequate feedback mechanisms

22. QUALITY STANDARDS - T HE V ICIOUS C IRCLE STANDARDS LOWERED ACCIDENTS INCREASE IMPOSITION OF NEW REGULATIONS INVESTMENT DISCOURAGED ??

23. Bulk Liquid Ocean Shipping Issues Environmental Concerns  Society’s ever increasing expectations – effectively zero tolerance  Bunker fuel requirements  Oil movements in extra sensitive areas

24. Some of the more sensitive areas

25. Bulk Liquid Ocean Shipping Issues Security Issues  Limburg incident  Security at loading and discharge ports  Critical passages

26. Critical Oil Movements Security Concerns Straits of Hormuz15.5 mbd (14 mbd crude) Malacca Straits10 -12 mbd Red Sea3.3 mbd Sumed pipeline2.2 mbd Bosporous/Turkish Straits1.6 up to 2.3 mbd Druzba / ”Friendship” pipeline 1.2 mbd Ceyhan pipeline1.1 mbd Suez canal0.9 mbd Panama canal and pipeline0.5 mbd

27. The world needs tankers - the world expects tankers to be safe !

28. Thank you www.intertanko.com