Oil & Tanker Trades Outlook

Transcription

1 Oil & Tanker Trades Outlook Volume 8, No. 7 July, 2003 ISSN: CATI * as at July, 2003 Dort yol Banias Ira q Dortyol Pipeline *Clarkson Average Tanker Earnings Index Highlights Si di Ke r ir Sum ed Ai n S ukhna Yanbu B ani asp ipeline Pet roline Kuwait Saudi Ar ab ia Iran Min a Al-Bakr Kharg Island Sea Island Ras Tanura Juaym ah Fa teh DasIs. Jebel Dhanna UAE Om an Fujairah Minaal Fah al Industry News... p.2. Market Outlook... p.3. VLCC Market...p.4-5. Suezmax Market Aframax Market...p.8-9. Panamax Market...p Seaborne Crude Imports... p.12. Seaborne Crude Exports... p.13. Trading Opportunities... p.14. Financial Markets... p.15. Sale & Purchase... p.16. Timecharter Market... p.17. Global Oil Supply... p.18. Refinery Capacity... p.19. Oil Inventories... p.20. Global Oil Demand... p.21. Oil Products Demand... p.22. Seaborne Product Imports... p.23. Product Tanker Market...p Tanker Safety... p.26. Safety & Incident News... p.27. Euro pe Mongstad Sul lom Voe Porvoo Ro t terdam Milford Haven Faw ley Cor unna Ravenna Constantza Tar ragona Car tagena Athens Augusta Ja pa n Muroran Chi ba Tokuyam a Os aka Oita No rth America M umbai Valdez Vancouver The Arabian Gulf Quebec San Francisco Philadelphi a LosAngeles New Orleans Cor pus Chr isti LOO P Asia Madras Colom bo Cal c uta Visakhapatnam QHD Guangzhou Bangkok Dalian Singapore Ul s a n Kaohsi ung Limoy Shipping Intelligence Network... "represents a giant leap forward in the information technology development in shipping." Join the SIN Club "With shipping's first 'need to know' information portal, Clarkson has made shipping intelligence better than ever before."

2 Further steps to liberalise the Russian oil and shipping industries are underway as a stake in Novorossiysk Shipping Co may soon be up for sale. As the sale of the last government stake in Lukoil is scheduled to take place next year a further 100 companies have been proposed for privatisation. This is maybe not so much the result of a surge in the belief in the free market as the need for the Russian government to raise cash. The 24.8% share of the Russian shipowner is expected to fetch something in excess of $22m. The most recent addition to the list of casualties in the wake of the PRESTIGE is the Greek shipping Minister George Anomeritis. At a meeting held at the beginning of July the minister was blamed for having spread a false sense of optimism about the legal consequences that would follow November s accident. As it happened the outcome proved very unsatisfactory for the Union of Greek Shipowners as draconian measures against single-hulled and older tankers were put into practice by the European Union. George Paschalides, a previous minister for Thrace and Macedonia, will succeed Anomeritis. The first cargo of crude from Russia s Far East Sakhalin Island is en-route to the US. The carrying vessels is the 96,000-dwt 1982-built KILOMAR and the destination is the Tesoro Refining and Marketing Co s Industry News refinery at Anacortes in Washington State. Q-ships are on the expansion route, currently putting in an Aframax newbuilding order of up to six ships. The project has been approved by the company s board and talks with shipyards for four orders with two options are underway. The newbuildings will be due for delivery in Also on the expansion path we find the Dubai Shipping Co, with an order for two 75,000- dwt tankers. The tankers are estimated to be worth $35m each and are due for delivery in The Dubai Shipping Co is a subsidiary of the Emirates National Oil Co, which is currently expanding its shipping business. Yards are also being kept busy by the Danes as Torm confirms an order for two product tankers. The orders are at Dalian New Shipbuilding for two coated 105,000-dwt tankers due for delivery in Nigeria has managed to continue shipping oil without delays despite the national strike called over fuel price increases. However there is still a great amount of uncertainty and an increased participation in the strike may have a negative effect on oil exports as well as on crude prices as the market still remains volatile after a series of disruptions. Business is back to normal for Petroecuador after an eightday strike comes to an end. Around 4,000 workers walked out in protest at the energy minister s move to privatise exploration in key fields. Oil production is estimated to have fallen by 40% and a gasoline shortage resulted. Although the strike is over for now further friction can be expected. JP Morgan Chase has been disclosed to hold a 5.5% stake in the China Shipping Development Co. The company is the Hong-Kong arm of the China Shipping Group, a notable force in the newbuilding market. The total value of the shares held by the US investment bank is estimated at $69m. more than double the value last year, due to an exceptionally good performance of the share price. Teekay, the Canadian Aframax owner, has bought up 16% of the Danish tanker owner Torm in a high profile deal. By moving in this aggressively Teekay has become the secondlargest shareholder, a rather influential position. However Teekay has offered its support of Torm s managers so no drastic changes are expected in the near future. The 16% share (2.9 million shares) is estimated to be worth $37.3m. and will give access to three products tanker pools comprising more than 60 vessels. The acquisition of the Torm shares follows Teekay s shopping spree over the last couple of years, which has already led to the buying up of Ugland Nordic Shipping and Navion. Clarkson Research Studies Page 2 Jul-03

3 Market Outlook Demand-Supply Dynamics: Crude Tankers Demand-Supply Dynamics: Product Tankers 12% 10% 8% 25% 20% 15% Demand 6% Demand 10% 4% 5% 2% 0% 0% -5% Supply -2% Supply -10% -4% -15% Crude Tanker Million Dwt Demand* * VL/ULCC FIRM... 5% Suezmax STEADY % Aframax STEADY % Panamax WEAKER -12% Handysize SOFTER -3% TOTAL STEADY % Crude % Growth 1.8% 7.0% 0% -2% 2.9% Product Tanker Million Dwt Demand* * 10-60,000 Dwt STEADY... 1% 60-80,000 Dwt STEADY... -1% ,000 Dwt STEADY... -1% TOTAL STEADY... 0% % growth 4.3% -4% 19% -10% 0% Crude Fleet Million Dwt Growth** * VL/ULCC STRONGER. 1% Suezmax STRONGER. 3.2% Aframax STRONGER. 6% Panamax SOFTER... -2% TOTAL STEADY % Product Fleet Million Dwt Growth** * 10-60,000 Dwt STEADY... -1% 60-80,000 Dwt STEADY... -1% ,000 Dwt FIRM... 4% TOTAL STEADY... 0% Tanker Million Dwt Balance * Year-on-Year % p.a. Year-on-Year % p.a. Year-on-Year % p.a. Year-on-Year % p.a. Year-on-Year % p.a. Total Demand STEADY... 2% Total Supply FIRM % SURPLUS HIGHER 35% The Tanker Market Outlook As second-quarter demand fell supply was kept steady which resulted in oil excesses of up to 2.1m b/d. This imbalance of market fundamentals has now started to cause OPEC a slight headache. A remedy to this haunting pain could to be a small dose of quota compliance or a healthy quota diet. For stocks however this is good news and not a headache at all. If the third quarter could see a stock build of more than 1 million barrels per day inventories could be brought back to comfortable levels by the end of the third quarter. With this forecast one could easily retire and think that all is well with the world, what with Iraqi production, although constrained, being safely guided along the road to recovery and Venezuelan production having wondered quite far already on that same road. However, as Shakespeare s characters must have a flaw so too does our scenario of forthcoming comfortable stock levels. The cloud in this picture comes from Nigeria, where civil strife is still threatening to throttle 2m b/d of oil exports. The general strike started when the president announced a 50% increase in fuel prices. The removal of all non-essential staff from the rigs lends a degree of severity to the crisis even though production has not been effected so far. Also in the air are tropical storms. Bill, the first this season passed through the US Gulf with little calamity but last years bad weather should not be forgotten yet. Clarkson Research Studies Page 3 Jul-03

4 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 US$/day No of Fixtures VL/ULCC Market Jun-01 Aug-01 Oct-01 Dec-01 Feb-02 Apr-02 Jun-02 Aug-02 Oct-02 Dec-02 Feb-03 Apr-03 Jun-03 VL/ULCC Spot Market Commentary VLCC Spot Market Outlook.. Rates in the VLCC spot market have been sliding south over the past month but owners were able to claw back some losses on rates at the start of July. With the commencement of charterers August programs it is likely that, for the short term, rates will remain firm as early August cover is secured. Beyond this position however the tonnage list appears to be extensive and a substantial volume of enquiry appears to be needed for August to relieve the potential downward pressure. Our spot outlook for the coming month is that of softer conditions. VL/ULCC Spot Average WS Average WS VL/ULCC Market Rates Jan Feb Mar Apr May Jun This Month... 90s Built 280K AG/Europe WEAKER % 90s Built 290K AG/US Gulf SOFTER... -6% 90s Built 270K AG/India WEAKER % 90s Built 260K AG/Japan/Korea WEAKER % 70s Built 350K AG/Red Sea* STEADY... -2% 260K WAF/USG STEADY... 1% *400k from March 26th s-built VLCC Earnings In June rates on the AG/Europe route decreased to WS 60, a fall of WS 13 from the previous month. AG-East did not fare much better with rates for India bound tankers falling 11% and Japan and Korea bound tankers a fall of 15% was noted. Timecharter rates did not fluctuate too much in June, with one-year charter rates softening by 2% for older tonnage and by 1% for modern tonnage. VL/ULCC Spot Average $/Day Average $/day VL/ULCC Market Earnings Jan Feb Mar Apr May Jun This Month... Average Earnings ('90s) 36,017 22,029 52,204 68,450 54,010 69,956 46,793 38,540 35,473 SOFTER... -8% 1 Year T/C Rate, ('90s) 38,792 24,441 31,708 38,300 32,875 32,500 30,625 28,200 27,750 STEADY... -2% Average Earnings (modern) 39,250 23,349 56,964 74,929 58,643 76,871 51,206 41,848 38,290 WEAKER... -9% 1 Year T/C Rate, (modern) 40,619 25,829 33,833 40,800 34,875 34,500 32,625 30,200 30,000 STEADY... -1% VL/ULCC Spot No of Fixtures No of Fixtures Demand Jan Feb Mar Apr May Jun This Month... VL/ULCC Spot Demand Ex - Arabian Gulf SOFTER... -5% Ex - UK/Cont WEAKER % Ex West Africa WEAKER % Others FIRM... 7% Total Nos SOFTER... -7% Total m. dwt SOFTER... -7% VL/ULCC Spot No of Vessels No of Vessels, start Supply Jan Feb Mar Apr May Jun Jul Trend. VL/ULCC Spot Outlook Arabian Gulf West Africa North Sea * Spot demand is the average number of fixtures per month. Spot supply covers the number of unfixed vessels entering the load zone per month SOFTER... SOFTER... SOFTER... Clarkson Research Studies Page 4 Jul-03

5 VLCC Market Trends VLCC Million Bpd Balance Forecast DEMAND*: AG/Europe % AG/N. America % AG/Korea % AG/Japan % AG/Other Far East % WAF/United States % Other % TOTAL, m bpd % TOTAL, m dwt % % growth 0% 8.0% -1% -6% 0% SUPPLY**: 200, ,999 dwt % 255, ,999 dwt % 320,000 dwt & above % TOTAL % Combos in Oil % Laid-up % Storage % Active Fleet % % growth -0.1% 4.4% -2.5% -0.6% BALANCE: Demand Growth m dwt % Supply Growth m dwt % Balance m dwt % VLCC Market Fundamentals. The fundamentals of the VLCC fleet are looking very healthy indeed these days. The fleet currently consists of 428 vessels, of which 54% are double hulled. The fleet also has a relatively youthful age profile with a mere 9% of the vessels falling into the above 20 years category, whereas the majority of the fleet, 61%, fall into the below 9 years categories. The orderbook is well-filled with 76 vessels, which is more than enough to cover replacement demand. We forecast that the fleet will expand to 127.5m dwt by the end of So far this year 35 newbuilding contracts have been placed. Scrapping is also progressing at a good speed, keeping a situation of surplus supply at bay. A total of 18 VLCC tankers have been sent to the scrapyards in 2003 and scrap prices have climbed to the appealing level of $210/ldt. Note: The balance is the difference between the growth in demand and the growth in supply. Positive numbers imply a tighter market, i.e. demand growing faster than supply. Negative numbers imply a market becoming over-supplied. VLCC S&P No. & Value of Sales No. & Value of Sales 3 Month Market Jan Feb Mar Apr May Jun Trend N'build Prices $m. 300k newbuild, $m FIRM % No. of Contracts placed WEAKER!! -40.9% Est. Investment Value $bn WEAKER!! -40.2% S'hand Prices $m. 280k 5yo, $m FIRM % 250k 10yo, $m WEAK % 250k 15yo, $m WEAK % No. of Sales WEAKER!! -66.7% 5 Year Old/NB Price Ratio 90% 88% 85% 93% 92% 92% 92% 91% 91% 91% WEAK % Demolition $/ldt FIRMER % No. Scrapped FIRMER % Est. Scrap Value (US$m) FIRMER % Fleet M. Dwt M. Dwt, month ending Forecast Profile Jan Feb Mar Apr May Jun Fleet Total (m.dwt) Deliveries (m.dwt) Scrapping (m.dwt) Contracting (m.dwt) Orderbook (m.dwt) Clarkson Research Studies Page 5 Jul-03

6 65,000 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 May-01 US$/day Suezmax Market '90s-built Suezmax Earnings No of Fixtures Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Suezmax Spot Market Commentary Suezmax Spot Market Outlook.. The Suezmax market showed rather moderate changes in June. The greatest movements could be seen in the cross-med market, where rates firmed 9% to WS 167. Although rates in this market fell back in the beginning of July this is still a volatile market in which modern double-hulls have been seen offering for Aframax cross- Med cargoes. It seems that this market has potential to continue to strengthen over the coming weeks. As the unstable political situation in Nigeria has been threatening oil exports and sending non-essential staff home from the rigs the numbers of fixtures ex-waf dropped to 35 compared to last month s 50. The effect on spot rates however was a firming in rates of 6% on the WAF/USG route and 4% on the WAF/UKC/M routes. Average earnings for 1990s built tonnage firmed 3% to $36,556/day whereas average earnings for modern tonnage increased by 8.5% to $45,215/day. Suezmax Spot Average WS Average WS Suezmax Market Rates Jan Feb Mar Apr May Jun This Month #... 90s Built WAF/USG* FIRM... 6% 90s Built WAF-UKC/M* FIRM... 6% 70s Built AG/Far East** SOFTER... -6% 90s Built AG/Far East** FIRM... 4% 90s Built Cross-N.Sea FIRM... 7% SBT Med/Med FIRMER... 9% * 70s built rates discontinued end-march 2001 ** AG/Singapore until 26th March 2001, now AG/Far East (Japan, S. Korea, S'pore) Suezmax Spot Average $/Day Average $/day Suezmax Market Earnings Jan Feb Mar Apr May Jun This Month... Average Earnings ('90s) 30,420 18,647 42,005 48,964 49,237 50,981 30,925 35,364 36,556 FIRM... 3% 1 Year T/C Rate, modern 31,370 17,826 25,758 26,200 27,250 27,250 24,750 24,600 24,500 STEADY... 0% 3 Year T/C Rate, modern 28,060 18,355 21,433 21,350 21,000 21,500 22,000 21,500 21,250 STEADY... -1% Suezmax Spot No of Fixtures No of Fixtures Demand Jan Feb Mar Apr May Jun This Month... Suezmax Spot Demand Ex-West Africa WEAKER!! -30% Ex-Mediterranean FIRMER... 9% Ex-North Sea STEADY... 0% Ex-Black Sea STEADY... 0% Others WEAKER % Total Nos WEAKER % Total m. dwt WEAKER % Suezmax Spot No of Vessels No of Vessels, start Suezmax Spot Outlook Supply * Jan Feb Mar Apr May Jun Jul Trend. West Africa Mediterranean North Sea * Spot demand is the average number of fixtures per month. Spot supply covers the number of unfixed vessels entering the load zone per month Clarkson Research Studies Page 6 SOFTER... SOFTER... SOFTER... Jul-03

7 Suezmax Market Trends Suezmax Million Bpd Balance Forecast DEMAND*: AG/Far East % WAF/N. America % Med/Med % UKC/UKC % UKC/N. America % Black Sea/UKC % WAF/Med % Caribs/N. America % Other % TOTAL, m bpd % TOTAL, m dwt % % growth 0.8% 4.7% -3.3% -0.8% SUPPLY**: 120,000/159,999 dwt % 160,000/199,999 dwt % TOTAL % Combos in Oil % Laid-up % Storage % Active Fleet % % growth -2.2% 2.8% -3.7% 0.0% BALANCE: Demand Growth m dwt % Supply Growth m dwt % Balance m dwt Suezmax Market Fundamentals The Suezmax fleet can, like the VLCC fleet, be considered fairly young. 52% of the 287 strong fleet are below 9 years and only 15% are above 20. We expect the Suezmax fleet to expand to 42.9m dwt by the end of % of the fleet is double-hulled and this proportion will increase further when the newbuildings hit the market. To date this year 24 contracts have been placed, leaving the orderbook at a plump 67 vessels, plump enough to make up for the accelerated scrapping. The second-hand market has been booming so far this year with a total of 17 sales completed. The total for 2003 was 18. Prices in this market have increased for the younger second-hand tonnage but decreased for the older tonnage, making this a rather lucrative market for owners who wish to trade outside of the European Union waters. Note: The balance is the difference between the growth in demand and the growth in supply. Positive numbers imply a tighter market, i.e. demand growing faster than supply. Negative numbers imply a market becoming over-supplied. Suezmax S&P No. & Value of Sales No. & Value of Sales 3 Month Market Jan Feb Mar Apr May Jun Trend N'build Prices $m. 150k newbuild, $m FIRM % No. of Contracts placed WEAKER!! -67% Est. Investment Value $bn WEAKER!! -66% S'hand Prices $m. 140k 5yo, $m FIRM % 150k 10 yo, $m WEAKER % No. of Sales WEAKER!! -11.1% 5 Year Old/NB Price Ratio 82% 93% 87% 96% 94% 97% 95% 95% 94% 95% WEAK % Demolition $/ldt FIRMER % No. Scrapped FIRMER % Est. Scrap Value FIRMER % Fleet M. Dwt M. Dwt Forecast Profile Jan Feb Mar Apr May Jun Fleet Total Deliveries Scrapping Contracting Orderbook Clarkson Research Studies Page 7 Jul-03

8 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Jun-01 US$/day Aug-01 Aframax Market Modern Aframax Earnings Oct-01 Dec-01 Feb-02 Apr-02 Jun-02 No of Fixtures Aug-02 Oct-02 Aframax Spot Market Dec-02 Feb-03 Apr-03 Jun Commentary Aframax Spot Market Outlook.. June was certainly a month of diversity for Aframax rates. Ex-Caribs rates shot up 24% to WS 207 at a time when AG-East rates were seen diving 18% to WS 124. The rise in the Caribs market came on the back of a surge of early July enquiry. However, when at the end of the month the tone started to change, as the high market was cracked by a refinery major, the market came down significantly from the artificially high levels owners managed to maintain earlier in the week. As there was no huge change in enquiry and owner sentiment the market fell back dramatically in mid-july to WS 120. The outlook for this market is a continued softening in rates although unexpected weather conditions such as the odd tropical storm, could drive up rates, as was the case last year. Overall, the amount of activity seen in June was approximately the same as for May, although the focus of attention was in the Med rather than the Caribs. Demand in all major Aframax trading areas is looking softer for July, especially in the North Sea. Aframax Spot Average WS Average WS Aframax Market Rates Jan Feb Mar Apr May Jun This Month... SBT Intra North Sea, 80k STEADY... -1% SBT Cross-Med, 80k STEADY... 0% SBT North Sea/TA, 80k STEADY... 2% SBT Caribs/USG, 70k FIRMER... 24% SBT AG/Singapore, 80k WEAKER % SBT Indo/Japan, 80k WEAKER % Aframax Spot Average $/Day Average $/day Aframax Market Earnings Jan Feb Mar Apr May Jun This Month... Average Earnings (90s) 30,759 18,954 38,348 33,400 52,351 53,746 29,815 30,018 30,758 STEADY... 2% 1 Year T/C Rate, modern(95kdwt) 23,381 15,990 19,225 18,000 20,500 21,750 18,500 18,600 18,000 SOFTER...U24-3% 3 Year T/C Rate, modern(95kdwt) 21,146 16,376 16,956 17,050 17,688 17,750 16,500 16,500 16,250 STEADY... -2% Aframax Spot No of Fixtures No of Fixtures Demand Jan Feb Mar Apr May Jun This Month... Afra' Spot Demand Ex - Caribbean WEAKER!! -34% Ex - UK/Cont WEAKER % Ex - Mediterranean FIRMER... 47% Ex - Arabian Gulf FIRMER... 64% Others WEAKER % Total Nos STEADY... -2% Total m. dwt STEADY... -2% Aframax Spot Aframax Spot Outlook No of Vessels No of Vessels, start Supply * Jan Feb Mar Apr May Jun Jul Trend. North Sea SOFTER... Caribbean SOFTER... Mediterranean SOFTER... * Spot demand is average number of fixtures per month. Spot Supply covers the number of unfixed vessels entering the load zone per month. Fixtures refer to Aframax crude fixtures only. Clarkson Research Studies Page 8 Jul-03

9 Aframax Market Trends Aframax Million Bpd Balance * Forecast DEMAND*: Caribs/N. America % UKC/UKC % Med/Med % Far East/Far East % AG/Far East % Other % TOTAL, m bpd % TOTAL, m dwt % % growth 8.4% 7.1% 2.1% 5.7% 0.0% SUPPLY**: 80,000/89,999 dwt % 90,000/99,999 dwt % 100,000/119,999 dwt % TOTAL % Combos in Oil % Laid-up ###### Storage % Products Tankers % Active Crude Fleet % % growth 2.7% 2.6% -0.6% 2.0% 0.0% 0% BALANCE: Demand Growth m dwt % Supply Growth m dwt % Balance m dwt % Aframax Market Fundamentals. The most interesting of the Aframax market fundamentals is the supply side, where newbuilding is continuing with notable swiftness. So far this year 41 newbuilding contracts have been placed, almost as many as were placed in 2002 and this is only for the first six months of this year! The newbuilding price for a 110k tanker currently stands at $37.0m, a figure that has remained steady since March. The heavy contract placing has produced an orderbook that currently stands at 133 vessels. Of these 38 are due for delivery in 2003, bringing the fleet to a forecasted 58.2m dwt. Secondhand prices have decreased slightly for older tonnage, which could be a reflection of the increase demand for quality tonnage in the afermath of the PRESTIGE incident. However 58% of the fleet is double-hulled, a proportion that will increase as scrapping and newbuilding fundamentals continue to move. Note: The balance is the difference between the growth in demand and the growth in supply. Positive numbers imply a tighter market, i.e. demand growing faster than supply. Negative numbers imply a market becoming over-supplied. Aframax S&P No. & Value of Sales No. & Value of Sales 3 Month Market Jan Feb Mar Apr May Jun Trend N'build Prices $m. 110k newbuild, $m FIRM % No. of Contracts placed FIRM % Est. Investment Value $bn FIRMER % S'hand Prices $m. 95k 5yo, d/h, $m WEAK % 85k 10yo, s/h, $m WEAKER % 85k 20 year old, $m WEAK % No. of Sales WEAKER!! -21.4% 5 Year Old/NB Price Ratio % 93% 92% 89% 89% 89% WEAK % Demolition $/ldt FIRMER % No. Scrapped FIRMER % Est. Scrap Value FIRMER % Fleet M. Dwt M. Dwt Forecast Profile Jan Feb Mar Apr May Jun Fleet Total Deliveries Scrapping Contracting Orderbook Clarkson Research Studies Page 9 Jul-03

10 US$/day 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Panamax Market Panamax Average Earnings No of Fixtures Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 Panamax Spot Market Commentary Panamax Spot Market Outlook.. Rates have been heading south on all major Panamax routes since the five-year peaks seen in March and they continued in this direction also in June. Average earnings for 1990s built tonnage fell back to $24,407/day, a low not seen since the start of this year, however as rates were a lot lower before Christmas last year they still have far to go. The outlook for the Panamax market will to a large extent be determined by the speed of recovery of Venezuelan exports, which, to date, has proceeded smoothly, although the political situation is far from stable. Another factor that could influence the trade in the US Gulf area is the weather, as is the case for the Aframaxes trading in this area. Although two tropical storms have already passed through the area they have been at such a distance that they have only marginally interfered with the refineries in the area. Panamax Spot Average WS Average WS Panamax Market Rates Jan Feb Mar Apr May Jun This Month #... 50k Caribs/USG SOFTER... -5% 50k Med/Med STEADY... 0% 50k Med/UKC WEAKER % 50k UKC/UKC WEAKER... -8% 50k UKC/Med WEAKER % 50k UKC/US WEAKER % Panamax Spot Average $/Day Average $/day Panamax Market Earnings Jan Feb Mar Apr May Jun This Month... Average Earnings ('90s) 23,590 15,355 31,403 24,482 38,815 45,577 26,944 28,192 24,407 WEAKER % 1 Year T/C Rate, modern 22,819 16,125 18,417 18,100 18,188 18,750 18,813 18,650 18,000 SOFTER... -3% Panamax Spot No of Fixtures No of Fixtures Demand Jan Feb Mar Apr May Jun This Month... Panamax Spot Demand Ex - Caribbean WEAKER % Ex - UK/Cont STEADY... 0% Ex - Mediterranean WEAKER % Ex - Far East WEAKER!! -36% Ex - Baltic FIRMER... 67% Others SOFTER... -6% Total Nos SOFTER... -8% Total m. dwt SOFTER... -8% Panamax Spot No of Vessels No of Vessels, start Panamax Spot Outlook Supply * Jan Feb Mar Apr May Jun Jul Trend. Caribbean SOFTER... Black Sea SOFTER... UK/Cont TIGHTER... # Please note that for all markets losses in rates are partly attributable to new WS flat rates. * Spot demand is the average number of fixtures per month. Spot Supply covers the number of unfixed vessels entering the load zone per month. Fixtures refer to Panamax crude fixtures only. Clarkson Research Studies Page 10 Jul-03

11 Panamax Market Trends Panamax Million Bpd Balance * Forecast DEMAND*: Caribs/N. America % Black Sea/Med % UKC/N. America % UKC/UKC % Med/Med % Far East/Far East % Other % TOTAL, m bpd % TOTAL, m dwt % % growth 3.9% 7.2% 21% 14% SUPPLY**: 60,000/69,999 dwt ,000/79,999 dwt TOTAL % Combos in Oil % Laid-up ###### Storage % Products Tankers % Active Crude Fleet % % growth -3.5% 0.4% -1.8% -1% BALANCE: Demand Growth m dwt Supply Growth m dwt Balance m dwt Panamax Market Fundamentals The Panamax fleet is one of the most mature tanker sectors, which is not an advantage in this age-culling time. Only 24% of the fleet are under the age of 4, whereas 36% are above 20! Of the currently 217-strong fleet 43% of the vessels are double-hulled. The effect from the new regulations that came in the wake of the PRESTIGE can be seen already as demand for quality tonnage has increased in the Med/Black Sea area, keeping rates from falling back too much, despite the general fall in the market after the conclusion of the war in Iraq. Although the newbuilding is flourishing for this sector, with 27 contracts placed so far this year, the rejuvenation of the fleet is stalling a little as scrapping numbers are lagging behind significantly. Only 7 Panamax tankers have been sent to the scrapyards in Note: The balance is the difference between the growth in demand and the growth in supply. Positive numbers imply a tighter market, i.e. demand growing faster than supply. Negative numbers imply a market becoming over-supplied. Panamax S&P No. & Value of Sales No. & Value of Sales 3 Month Market Jan Feb Mar Apr May Jun Trend N'build Prices $m. 70k newbuild, $m FIRM % No. of Contracts placed FIRMER % Est. Investment Value $bn FIRMER % S'hand Prices $m. 65k 10 year old WEAKER % 70k 5 year old FIRM % No. of Sales FIRMER % 5 Year Old/NB Price Ratio 77% 78% 70% 83% 80% 83% 82% 82% 82% 82% WEAK % Demolition $/ldt FIRMER % No. Scrapped WEAKER!! -83.3% Est. Scrap Value FIRMER % Fleet M. Dwt M. Dwt Forecast Profile Jan Feb Mar Apr May Jun Fleet Total Deliveries Scrapping Contracting Orderbook Clarkson Research Studies Page 11 Jul-03

12 Other Asia 21% Seaborne Crude Imports Global Imports By Region 2003 Commentary EU 30% Others 4% United States 24% Korea 8% Japan 13% Seaborne Crude Imports With the political situation in the Middle East highly volatile major importers have made clear efforts over the past year to find alternative sources of crude. The recent shipment of crude from the Sakhalin to the US is an example of the US trying to move towards increased independence of the Middle East. West Africa has also been identified as an attractive alternative source. A US state department official recently estimated that by % of US oil imports could come from Africa. However further investment is required in offshore projects and it is of course also important that some degree of stability is upheld in the political systems of these countries. In Japan crude imports showed a 13% year-on-year increase in May, rising to just above 4 million barrels per day. However, more than 90% of these imports are still sourced primarily from the Middle East. Imports to Million Bpd Year-on-Year US Imports By Region N. America * % p.a. 10 m. bpd United States STEADY... 2% Canada SOFTER... -6% Total STEADY... 1% Imports to Million Bpd 4 Caribs/L. Am 2 N & W Africa Asia* * % p.a. Middle East Japan STEADY... 0% 0 Korea FIRM... 4% India FIRMER... 24% Singapore STEADY... 0% EU Imports By Region China FIRM... 7% 12 m. bpd Other Asia FIRM... 5% % long-haul Others Total FIRM... 5% 9 West Africa Imports to Million Bpd Year-on-Year 6 EU * % p.a. Intra-Europe Germany STEADY... -1% 3 France STEADY... 0% Middle East Italy STEADY... 0% 0 Spain FIRM... 6% UK STEADY... 2% Other SOFTER... -4% Japanese Imports By Region Total STEADY... 0% 6 m. bpd % long-haul Other Major Million Bpd Year-on-Year 5 Others Importers * % p.a. 4 Asia Brazil WEAKER!! -41% 3 OECD Australasia FIRMER... 25% Global Million Bpd Imports * Year-on-Year Year-on-Year % p.a. Missing Barrels* WEAKER!! -88% Global Total STEADY... 3% Clarkson Research Studies Page 12 Jul Others Middle East % long-haul % 25% 20% 15% 10% 25% 20% 15% 10% 5% 0% 90% 85% 80% 75% 70% 65%

13 7% 3% -1% % growth Global Export Growth Seaborne Crude Exports Commentary Seaborne Crude Exports Iraqi exports are still struggling to get back on line, however this is proving to be a harder and longer journey than originally thought with extensive sabotage attacks being launched at the pipelines. The good news coming out of this is that the lack of any threat of a surge in Iraqi exports will prevent OPEC from making any production cuts when they next meet on July 31 st. -5% -9% Nigerian exports have been adversely affected by the ongoing tumultuous political situation and at one time they nearly came to a stop. At the very last minute though the oil workers strike was averted. -13% -17% Long-Haul Short-Haul The source of oil exports that seems to have continued unabated however is the Former Soviet Union. April saw a 31% rise in exports to Europe, the FSU s largest market, over last year s figures. 40% of Europe s 8.75m b/d of crude imports came from the FSU. Long Haul Million Bpd Year-on Year 2003 Long-Haul Exporters Exporters * % p.a. Saudi Arabia STEADY... -1% Iran STEADY... -1% Iraq (AG Exports Only) FIRMER... 35% UAE STEADY... -1% Kuwait STEADY... -1% Other Middle East FIRM... 5% Of which Long Haul SOFTER... -4% Short Haul Million Bpd Exporters * % p.a Latin American Exporters Norway STEADY... -2% Others United Kingdom STEADY... -2% Colom. 5% 10% Mexico North Sea Total STEADY... -2% 49% Mexico FIRMER... 10% Venezuela FIRMER... 10% Colombia WEAKER % Others SOFTER... -4% Latin American Total FIRM... 7% Nigeria FIRMER... 11% Libya & Algeria FIRM... 6% Angola STEADY... 3% Others FIRMER... 11% African Total FIRMER... 9% Others & Million Bpd Global Total * Indonesia FIRMER... 27% FSU (seaborne only) FIRMER... 11% Other Exporters STEADY... 0% Global Total FIRM... 4% Long-Haul AG Exports As % of Total 34% 34% 34% 30% Year-on Year Year-on Year % p.a. 28% SOFTER... -8% Iraq (AG Exports Only) 7% 2003 North Sea Exporters The definition of long and short-haul exports is determined by the distance of exporters from their major import markets. Long-haul exports are defined as those over 5,000 miles from their major markets. Short-haul trades are defined as exports less than 5,000 miles from their major markets. Long Haul AG Exports are total seaborne Middle East exports - Sumed throughput - Iraqi Mediterranean exports - AG/India trade. Clarkson Research Studies Page 13 Jul-03 UAE 12% Kuwait 8% Venez. 45% Norway 62% Other Middle East 11% Iran 15% Saudi Arabia 47% UK 34%

14 Fixtures Jun-02 Jul-02 Aug-02 Trading Opportunities Sep-02 Oct-02 WAF/US VLCC Spot Fixtures WTI/Bonny Window Nov-02 Dec-02 Jan-03 Feb-03 Trading Opportunities Mar-03 Apr-03 $/b May Trading News Oil Trading Opportunities The bars on the graph to the left show the number of monthly VLCC spot fixtures in the WAF/US market. The line on the graph shows the difference between the $/bbl West Texas Intermediate/Bonny crude spread and the freight cost per barrel of moving the oil. Positive numbers imply a trading opportunity for the charterer and in general the higher the line the more fixtures you would expect to see. The closed trans-atlantic arbitrage for gasoline caused by refinery maintenance and run-cuts was more reminiscent of a typical winter scenario rather than summer. As a result European gasoline stocks have built by 1.2 million barrels, as demand is not strong enough to absorb the excess supply not heading for the states. European jet fuel may be next in line to abandon the new Platts methodology for Argus with Finnair already having led the way in this direction. Arbitrage Watch Crude Spread: WTI/ Bonny Freight Cost: VLCC WAF/US Spread - Cost: Window Crude Spread: WTI/Brent Freight Cost: Afra UKC/US Spread - Cost: Window Product Spread: Hou/Rott Gasoline Freight Cost: 33K UKC/US Spread - Cost: Window 2001 Average Average Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Spot Crude Spot Prices, US$/bbl Prices Apr-03 May-03 Jun-03 Jan-02 $/bbl 35 Historical & Forward Brent Prices Dubai Brent Blend WTI SETT SETT Futures Prices Prices Aug-03 Sep-03 Oct-03 Nov-03 Crude Oil ($/bbl) Heating Oil (c/us galls) Gas Oil ($/tonne) Natural Gas ($/mmbtu) Un. Gasoline (c/us galls) Jun-02 Aug-02 Oct-02 Dec-02 Feb-03 Apr-03 Sep-02 Sep-03 Nov-03 Clarkson Research Studies Page 14 Jul-03

15 The Oil Tanker Fleet & Orderbook Volume 8 No.7 July-2003 A monthly review of the oil tanker fleet split in to twenty size ranges and eight main groupings. Each table is replicated for the whole fleet and for the double-hull fleet. The seven pages following cover: - The existing fleet and its recent development (over the last six months and the previous three years) in numbers of vessels and deadweight. - The age profile in five 5-year age bands in numbers of vessels and as a percentage of the total fleet in each of the twenty size ranges. - The orderbook in numbers of vessels and deadweight for each of the twenty size ranges, including its recent past (the last six months and the past three years) and the delivery schedule for the coming 2-3 years. The orderbook is also shown as a percentage of the fleet for each size range. - The main characeristics of the tanker fleet in terms of average size, age, dimensions, speed and consumption for each size range. In addition the average cargo capacity and the percentage of vessels coated is also listed. Key data this month: No. m. Dwt Total Fleet 3, % > 20yrs. 29% 19% Double-hull 1, % < 5 yrs. 54% 61% % Double-hull 50% 55% Orderbook % of fleet 21% 23% Avg. size, total fleet 85,411 Avg. size, double-hull 95,131 Avg. age, total fleet 13.2 Avg. age, double-hull m. dwt The Oil Tanker Fleet & Orderbook % of fleet 25% O'book as % of Fleet % % % 260 The Tanker Fleet, m. dwt 5% 250 0% Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Shipping Intelligence Network... "represents a giant leap forward in the information technology development in shipping." Join the SIN Club "With shipping's first 'need to know' information portal, Clarkson has made shipping intelligence better than ever before."

16 Tanker Fleet By Size (Numbers) Tanker Fleet No. vessels, end: No. vessels, end: Fleet Growth % Profile Jan Feb Mar Apr May June Year on Year Total < 10,000 1,762 1,806 1,850 1,852 1,856 1,855 1,864 1,869 1,877 STEADY 2.7% 10,000/14, STEADY 0.3% 15,000/19, FIRM 5.3% 20,000/24, WEAKER -9.6% 25,000/29, SOFTER -7.2% Total 10-30, STEADY -1.4% 30,000/34, STEADY 1.9% 35,000/39, FIRM 5.1% 40,000/44, FIRM 5.1% 45,000/49, STRONGER 25.8% 50,000/59, WEAKER -17.8% Total 30-60, ,001 1,008 1,017 1,023 1,025 1,033 FIRM 5.3% Total 10-60,000 1,947 1,974 1,982 1,987 1,992 2,000 1,999 1,993 2,008 STEADY 1.9% 60,000/69, FIRM 4.8% 70,000/79, SOFTER -6.5% Total Panamax STEADY 2.4% 80,000/89, WEAKER -11.7% 90,000/99, FIRM 7.3% 100,000/119, STRONGER 34.8% Total Aframax FIRM 9.0% 120,000/159, STEADY 1.5% 160,000/199, STRONGER 50.0% Total Suezmax FIRM % 200,000/254, WEAKER -17.6% 255,000/319, FIRM 9.5% 320,000 & WEAKER!! -36.0% Total VL/ULCC STEADY 2.4% TOTAL > 10,000 3,418 3,414 3,458 3,467 3,481 3,509 3,512 3,499 3,519 FIRM % D/Hull Fleet No. vessels, end: No. vessels, end: Fleet Growth % Profile Jan Feb Mar Apr May June Year on Year Total < 10, STRONGER 11.2% 10,000/14, FIRM % 15,000/19, STRONGER 22.9% 20,000/24, FIRM % 25,000/29, FIRM 4.1% Total 10-30, FIRM 9.9% 30,000/34, STRONGER 23.2% 35,000/39, STRONGER 25.2% 40,000/44, FIRM 8.0% 45,000/49, STRONGER 32.0% 50,000/59, WEAKER!! -28.6% Total 30-60, STRONGER 21.6% Total 10-60, STRONGER 16.6% 60,000/69, STRONGER 20.3% 70,000/79, STRONGER 35.3% Total Panamax STRONGER 23.7% 80,000/89, WEAKER -10.9% 90,000/99, STRONGER 14.6% 100,000/119, STRONGER 47.5% Total Aframax STRONGER 24.0% 120,000/159, FIRM 10.0% 160,000/199, STRONGER 200.0% Total Suezmax STRONGER 13.5% 200,000/254, WEAKER!! -66.7% 255,000/319, STRONGER 21.6% 320,000 & STRONGER 100.0% Total VL/ULCC STRONGER 21.1% TOTAL > 10,000 1,267 1,392 1,591 1,615 1,642 1,677 1,692 1,710 1,745 STRONGER 18.5% Clarkson Research Studies Page ii Jul-03