CLARKSON RESEARCH STUDIES

THE ICE CLASS TANKER MARKET

Stephen Gordon Clarkson Research DNV Seminar 16th March 2005

The information supplied herewith is believed to be correct but the accuracy thereof is not guaranteed and the Company and its employees cannot accept liability for loss suffered in consequence of reliance on the information provided. Provision of this data does not obviate the need to make further appropriate enquiries and inspections. The information is for the use of the recipient only and is not to be used in any document for the purposes of raising finance without the written permission of Clarkson Research Studies. CLARKSON RESEARCH STUDIES

THE ICE CLASS TANKER MARKET

1. INTRODUCTION 2. DEMAND 3. SUPPLY 4. THE MARKET 5. THE OUTLOOK CLARKSON RESEARCH STUDIES FSUFSU OilOil OutputOutput –– KeenKeen toto GrowGrow Uzbekistan 15mbpd by 2015? 14 Turkmenistan

put 12 Romania Kazakhstan out

y 10 Azerbaijan Russian Federation da r 8 pe s l 6 e r r 4 on ba i

l 2 l i M 0

6 8 0 2 6 8 0 2 4 85 87 8 89 9 91 9 93 94 95 97 99 0 01 0 03 0 98 99 99 0 19 1 19 19 19 19 19 19 19 19 19 1 19 1 19 2 20 20 20 20 CLARKSON RESEARCH STUDIES

Murmansk

Archangel Oil ss tt RUSSIARUSSIA M

Primorsk ll aa rr Oil Ventspils Druzhba U Angarsk Oil Mongolia Omishalj Oil (Major short haul source for Asia) Ceyhan Mediterranean De Kastri To Iran ChinaChina Nahodka To Pakistan Primorsk Oil ProposedFields Pipeline Existing Pipeline Pipeline under construction CLARKSON RESEARCH STUDIES

Breaking New Ground? The Ice Option for Russian oil 40 m.dwt

35 • 3% of the total tanker fleet in

30 04-08 - 1992 had some form of ice 19% class 25 growth

20 94-04 - • We estimate that 10% of the 6% fleet by 2008 will have ice 15 fleet class 10 High Spec •“High Spec” fleet is set for 5 Low Spec massive growth

0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Clarkson Research Studies CLARKSON RESEARCH STUDIES

THE ICE CLASS TANKER MARKET

1. INTRODUCTION 2. DEMAND 3. SUPPLY 4. THE MARKET 5. THE OUTLOOK CLARKSON RESEARCH STUDIES

Oilfield a Port Se ra Ka Ice Class Port Dikson Tankers Murmansk Varandey Indiga

Archangel A pipeline linking West Siberian Crude directly to Murmansk now unlikely Primorsk of ea k S ots kh Baltic Output from Ice O Sakhalin Effected Ports 2002: Sakhalin Output from Ice Island 0.5m bpd 2005:1.8m bpd Effected ports 2010: 2010: 2.1m bpd 0.25m bpd CLARKSON RESEARCH STUDIES EastEast RussiaRussia

Sakhalin Timeline Date Event 1994 Production sharing agreement signed for Sakhalin-2 1995 Production sharing agreement signed for Sakhalin-1 July 1999 First oil produced from Vityaz (Sakhalin-2 Phase I) 2001 Exploration of Sakhalin-4 & Sakhalin-5 projects began December 2003 Exploration of Sakhalin-4 & Sakhalin-6 discontinued January 2004 Government cancels Sakhalin-3 tender, delaying project October 2004 First well drilled at Sakhalin-5 End 2005 Sakhalin-1 pipeline to De-Kastri begins operations 2006 Tanker operations from De-Kastri begin End 2006 Sakhalin-2 pipeline to begins operations 2007 Sakhalin-2 Phase II operations begin 2008 Sakhalin-5 exploration work complete CLARKSON RESEARCH STUDIES

Sakhalin Shelf Project Summary

Project Investment Partners Status Status Sakhalin-1 $12 billion ExxonMobil 30% Active PSA in place, pipeline completion due Sodeco 30% end-2005 ONGC Videsh 20% SMNG- Shelf 11.5% Rosneft-Astra 8.5%

Sakhalin-2 $12 billion SEIC-Mitsui 25% Active PSA in place, oil exports from Vityaz Shell 55% terminal under way, LNG export Mitsubishi 25% contracts to finalised, LNG exports to California being negotiated

Sakhalin-3 $151 million Reapportionment awaited Under development (exploration only)

Sakhalin-3 $380 million ExxonMobil 66% Under development (exploration only) Rosneft 17% SMNG 16%

Sakhalin-4 Not defined BP 49% Rosneft Discontinued Active exploration discontinued 25.5% Rosneft-SMNG December 2003 25.5% Sakhalin-5 Not defined BP 49% Under development PSA approval process encountering delays Sakhalin-6 Not defined Active exploration discontinued Discontinued December 2003

Data populating this table has been collected from a variety of sources. Further details are available from Clarkson Research Studies. CLARKSON RESEARCH STUDIES

Russia Kazachinskoe Poima Tynda

Skovorodino Kimelty Kosmolosk-on- Angarsk Amur Vanino Chita Karymskaya Khabarovsk Mongolia Existing Oil Pipeline Under Construction Railways Loading Onto Tankers Nakhodka CLARKSON RESEARCH STUDIES

Arctic Ocean Port Dikson Barents Sea

Murmansk Varandey Vitino Indiga

White Sea Pechora Vankor Finland Archangel Surgut Russia Port Oilfield Proposed Pipeline CLARKSON RESEARCH STUDIES

Port Dikson To Rotterdam 1770 km

800 km Murmansk

Archangel Vankor CLARKSON RESEARCH STUDIES

Baltic • Rapid developments in recent years (BPS now 1mbpd) • Next stage of growth more moderate (1.2mbpd by 2010) • Key “swing” region of ice class demand • Ice ports now handling large volumes • Prospects for additional Russian port in Gulf of Finland CLARKSON RESEARCH STUDIES

RegionRegion 20052005 2010?2010? Exports from ice ports ((mbpdmbpd)) • Sakhalin – watch out for pipelines EastEast 0.070.07 0.250.25 RussiaRussia • North Russia very exciting but many challenges and NorthNorth 0.180.18 0.760.76 crude export channels unclear RussiaRussia • Steady Baltic growth as further BPS expansion BalticBaltic 1.781.78 2.182.18 expensive CLARKSON RESEARCH STUDIES

THE ICE CLASS TANKER MARKET

1. INTRODUCTION 2. DEMAND 3. SUPPLY 4. THE MARKET 5. THE OUTLOOK CLARKSON RESEARCH STUDIES

Ice Class Fleet Summary at: Feb-05

Total Fleet Over 20 years Orderbook % of fleet over 20 % of fleet on years orderbook No Dwt No Dwt No Dwt No Dwt No Dwt

High Spec Ice Fleet 262 4.2 78 1.0 165 11.6 30% 24% 63% 276%

Ice Class 1B and "Lower" 735 19.3 262 2.8 69 3.9 36% 15% 9% 20%

Total Tanker Fleet 5,825 344.0 1,720 48.9 1,295 90.9 30% 14% 22% 26%

Source: Clarkson Research Studies CLARKSON RESEARCH STUDIES

$ bn Ice Class Investment 1999-2004 Ice Class Investment 4.0 • $12 billion since 1999, 15% 3.5 of total tanker newbuilding 3.0 1A/1AS investment 1B or Below 2.5 • Narrowing newbuild premium 2.0 for ice class 1.5 • Shipyards are becoming 1.0 more flexible 0.5

0.0 1999 2000 2001 2002 2003 2004 Source: Clarkson Research Studies CLARKSON RESEARCH STUDIES

Top Owners 1A / AS Orderbook Top Builders 1A / AS Orderbook Owner No Dwt Builder No dwt

Barclay Shpg. Ltd. 16 659,200 Hyundai Mipo 39 1,635,400 Sovcomflot OAO 10 1,037,200 Samsung S.B. 22 2,730,100 Western Petroleum 9 664,800 Hyundai H.I. 18 2,278,300 Tsakos Shpg. & Trad. 8 799,700 STX Shipbuild. 18 994,200 Minerva Marine Inc. 8 516,000 Brod. Split 10 818,000 BP Shipping Ltd. 6 690,000 Daewoo S.B. 7 983,000 Dynacom Tankers Mngt 6 672,000 Onomichi Dockyd 6 438,000 Stena Bulk AB 6 602,000 Aker Braila 6 90,000 Pietro Barbaro SpA 6 352,000 Volharding 6 84,000 Marlow Nav. Co. Ltd. 6 90,000 Hyundai Samho 5 565,000 Others 84 5,493,049 Others 28 959,949 Total 165 11,575,949 Total 165 11,575,949 CLARKSON RESEARCH STUDIES

THE ICE CLASS TANKER MARKET

1. INTRODUCTION 2. DEMAND 3. SUPPLY 4. THE MARKET 5. THE OUTLOOK CLARKSON RESEARCH STUDIES

The Market Tomorrow : Issues to look out for

• FUTURE OF RUSSIAN OIL INDUSTRY? • HOW WILL THE RUSSIAN OIL INDUSTRY DELIVER TO MARKET ? • NORTH RUSSIA & THE ARCTIC ? • ICE BREAKER DEMAND ? • REGULATORY CHANGES ? • HOW LARGE WILL THE ORDERBOOK GROW ?