EURONAV TALKS IMO 2020 FROM THE VIEW OF A SHIPOWNER JUNE

EURONAV TALKS IMO 2020 FROM THE VIEW OF A SHIPOWNER JUNE 2018 1

IMO 2020 2

% weight permitted WHAT IS IMO 2020 I HAVE SEEN ONE BEFORE.BUT NEVER THIS BIG Hill 4.5% Cliff 4.0% 3.5% 3.0% Open Seas 2.5% 2.0% 1.5% 1.0% 0.5% Emission Control Areas (ECA) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: IMO Year 3

WHY SHIPPING MATTERS 45% 40% 35% 30% 25% 20% 15% HOUSTON (Rotterdam, Singapore, Fujairah) WE HAVE A PROBLEM 10% 5% 0% Global Shipping as % of Oil Demand Global Shipping as % of all oil based sulphur emissions Source: IMO 4

REFINERY IMO 2020: LIMITED IMPACT ON REFINERS Product Use 2018 Demand mbpd Current Prices $bbl LPG Commercial fuel 12 38 BRENT Naphtha Petrochemical 6 91 Gasoline Automotive fuel 26 97 Jet Fuel Aviation fuel 7 93 Kerosene Commercial heating 0.5 101 Diesel Automotive fuel 29 94 Residual Fuel Oil Ship bunker fuel 7 59 Asphalt Highway/Roof 2 55 Source: Bernstein, Citi 5

Value in use $/bbl Industrial RESIDUAL FUEL DEMAND TODAY 70 SUPPLY 60 50 40 30 Bunkers Utility Fuel for gas & coal 20 PRICE Refinery Feedstock 10 Mbpd 2 4 6 8 10 12 6

Value in use $/bbl Industrial RESIDUAL FUEL DEMAND POST 2020 70 SUPPLY 60 50 40 30 Bunkers Utility \ Fuel for gas & coal 20 PRICE Refinery Feedstock 10 Mbpd 2 4 6 8 10 12 7

WHO IS DOING WHAT? Showcasing 2 possible new 0.5% fuels at industry events Will supply new fuels in NW Euro, Mediterranean & Singapore Believes 0.5% sulphur oil will be $120-190/mt more expensive than LSFO Deciding whether to produce 0.5% LSFO for export outside European ECA MIXED MESSAGES Plans to sell 30-40,000 mt/month of single 0.5% sulphur fuels Built $1bn facility to provide advanced cracking; licensed to 2 plants in China 8

HIGH SULPHUR FUEL OIL DISPLACEMENT REFINERS CAN CLOSE MUCH OF THE GAP 0.1 0.3 0.4 1.0 1.0 1.2 LNG Scrubbers Non Compliance Blending MGO ULSFO Source: Euronav M bpd 9

SCRUBBERS ARE NOT FOR EVERYBODY, LITERALLY THEY ARE NOT A SCALE SOLUTION 120 Penetration of scrubbers in core shipping segments 100 1% As of September 2017 80 under 1.0% 60 13% 40 20 0 Ferries Cruise Ship Bulk Carrier Chemical/Oil Tanker Container LPG/Gas Carrier Other Source: Clarksons, Citi 10

HOW WILL THE REST OF THE WORLD SEE SULPHUR IN THE OCEAN? 11

THE BIG SHORT PLAY Buying a LONG futures positon in a falling market, what is the safe price? 1 VLCC consumes 75mt per day x 330 sailing days = 24,000 mt per year = NATURAL SHORT HSFO market 2000 mt per month in Calendar 2020 = BUY HSFO knowing it hedges physical position, then can trade the volatility = What is the Price? = Current market at TC market low BP recently fixed market rate +3k for scrubber So option price = $3k x 365 = $1,080,000 for a forward market volatile between todays HSFO price of $400 p/t and absolute destruction value of $100 p/t or less 12

COMPLIANCE, ENFORCEMENT & REGULATION WELL ESTABLISHED FOR TANKER MARKET Wide variance in penalty regimes but remember oily water separators Reputation & Customer structure in large tanker sector underpins high compliance 13

SHIP OWNER OPTIONS IMO 2020 options Ultra Low Sulphur Fuel Oil - ULSFO Install scrubbers Marine Gasoil LNG High expense, No risk Low expense, High risk High expense, No risk High expense, No risk 14

Payback Period, years SCRUBBER ECONOMICS 5.0 Scrubber Payback Period 4.5 4.0 4.30 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 3.39 2.79 2.69 2.14 1.78 1.53 1.24 1.03 1.26 1.07 1.02 0.93 0.87 0.76 0.74 0.86 0.73 0.60 0.61 0.64 0.50 0.51 0.42 100 150 250 300 350 400 500 600 Source: Euronav I Class VLCC Fuel Spread in usd/ton 300 days at sea 250 days at sea 200 days at sea 15

Payback Period, years SCRUBBER ECONOMICS 5.0 Scrubber Payback Period 4.5 4.0 4.30 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 3.39 2.79 2.69 2.14 1.78 1.53 1.24 1.03 1.26 1.07 1.02 0.93 0.87 0.76 0.74 0.86 0.73 0.60 0.61 0.64 0.50 0.51 0.42 100 150 250 300 350 400 500 600 Source: Euronav I Class VLCC Fuel Spread in usd/ton 300 days at sea 250 days at sea 200 days at sea 16

SCRUBBERS FOCUS IS ON WRONG AREA 17

SCRUBBERS FOCUS IS ON WRONG AREA 18

SCRUBBER ISSUES UNCERTAIN HOW LONG FUEL SPREAD WILL MAKE SCRUBBERS VIABLE CAPITAL COST & COMMISSIONING INSTALLATION OPERATION VESSEL EFFICIENCY FUEL SOURCING FUTURE REGULATION Fixed cost of $4-5m for VLCC Lost revenue in commissioning & installation Capacity to build units Difficulty of installation Space required on vessel varies according to differing designs Training costs and investment for staff Significant risk of corrosion key areas Risk of engine failure/will the scrubber work? Insurance/Liability Maintenance costs VLCC will lose 1% efficiency Extra weight from scrubber Cannot use scrubber in Port or approaches or in Ecozones Energy Load Back Pressure Uncertainty over capability to source sufficient HFO post 2020 Utilisation Potential for change in regulations post 2020 Vessel changes will increase carbon emissions 19

LNG COSTLY AND IMPRACTICAL SOLUTION; IT S AS SAFE AS IT IS COLD o Prohibitive cost to retrofit LNG to crude tanker c. $10m o Insulation risk for LNG facility o Limited current LNG capacity/infrastructure o Issue of space on a crude tanker with added LNG fittings 20

WIDER IMPLICATIONS FOR TANKER SECTOR OF IMO 2020 21

#1 NEW TRADING ROUTES 22

Source: Wells Fargo, IMO, UNCTAD, Company Filings # 2 STORAGE OPPORTUNITIES HSFO Volumes Bear Case Bull Case MARKET SIZE IMO 2020 HSFO Conversion Volumes 3.3 3.3 MITIGATING FACTORS Estimated Non Compliance/Scrubber Penetration -1.0-0.5 HSFO Volumes to be replaced 2.3 2.8 HSFO REPLACEMENT Higher coking capacity, higher light sweet crude runs etc -2.2-2.0 Remaining non compliant volumes 0.1 0.8 Mid Point 0.5 STORAGE Estimated Global HSFO storage 94.0 AVAILABILITY Current HSFO Inventory 64.0 Remaining Land based HSFO Storage 30.0 Time it would take to fill land based storage post March 2020 62 days VLCCs Absorbed per Quarter until market clears 23 23

# 3 MORE CRUDE RUNS REQUIRED = MORE SHIPPING 0.7m BPD CRUDE REQUIRED (PLATTS) TO PRODUCE ULTRA LOW SULPHUR FUEL OIL 24

Number of VLCCs # 4 ACCELERATING RECYCLING 35 30 25 20 15 Number of VLCCs over 17 years old 93 Tankers > 17 o Incoming regulatory costs (Ballast Water 2019 & IMO 2020) o Reduced earnings/utilisation with age o High value of recycle prices 10 o Higher fuel costs 5 0 24 23 22 21 20 19 18 17 VLCC Age @ June 2018 Source: Fearnley PRESSURE ON OWNERS OLDER TONNAGE 25

Average fuel consumption (Mt/day) # 5 SLOW STEAMING TO PRESERVE NEW FUEL 90 80 70 60 50 40 30 20 10 0 7 7.5 8 8.5 9 9.5 10 10.5 11 11.5 12 12.5 13 13.5 14 14.5 15 15.5 16 Ballast Speed (kts) Source: CR Weber, Morgan Stanley 26

WHAT IMO 2020 COULD MEAN FOR TANKERS #1 INCREASED FUEL COSTS = NEW TRADING ROUTES #2 INCREASED FUEL COSTS = STORAGE OPPORTUNITIES #3 INCREASED FUEL COSTS = MORE OIL PRODUCED = MORE SHIPPING #4 INCREASED FUEL COST = MORE RECYCLING #5 INCREASED FUEL COSTS = SLOW STEAMING 27