Freight Rates and the Price of Oil Part Company

CHARLES R. WEBER COMPANY TANKER REPORT

2005 Freight Rates and the Price of Oil Part Company

MAY 2005 mESSENTIAL READINGa FOR THEy INTERNATIONAL’ OIL 0TRANSPORTATION5 INDUSTRY IN THIS REPORT

01:1-2 EXECUTIVE SUMMARY WILL TANKER SHIPPING TAKE OFF IN 2005?

02:3-6 WORLD OIL MARKET CRUDE OIL DEMAND - FORCAST FOR 2005 STRENGTHENS AGAIN + OPEC’S MICRO MANAGEMENT DOES NOTHING FOR MARKET CONFIDENCE + INSUFFICIENT CRUDE OIL PRODUCTION CAPACITY + LONG TERM UNDERINVEST- MENT IN THE REFINERY INDUSTRY

03:7-9 TANKER MARKET THE LINK BETWEEN CRUDE OIL PRICES AND TANKER FREIGHT RATES BREAKS IN 1Q05 + FREIGHT RATE WEAKNESS + INVESTOR REACTION TO TANKER MARKET PERFORMANCE

04:10-13 PROSPECTS FOR TANKER FREIGHT RATES 2005 TANKER STOCKS HOLDING UP + CRUDE OIL DEMAND GROWTH + CONTINUED LONG HAUL TRADE GROWTH

05:14-16 VESSEL SECTORS TANKER MARKET REVIEW + THE RANKINGS +

06:17-20 VLCC FLEET THE ACTUAL TRADING VLCC FLEET BASIS MAY 2005 Issue 02

Weber TANKER Report EDITORIAL BOARD DISCLAIMER Charles R. Weber Company Inc. Tanker Report is Basil G. Mavroleon - Managing Director Whilst every care has been taken in the produc- published four times a year. It reviews important top- Dan O’Donnell - Director tion of this study, no liability can be accepted for ics within the tanker shipping industry and tanker sec- any loss incurred in any way whatsoever by any tors that are of particular interest. It focuses on CONTACT DETAILS person who may seek to rely on the information changes in tanker trading patterns and changes in Johnny M. Kulukundis contained herin. The information in this report fleet supply and demand. Charles R. Weber Company Inc. may not be reproduced without he express writ- Greenwich Office Park One ten permission of the Charles R. Weber Comapny, SOURCES: Greenwich, Conneccticut, 06831, USA Inc. Charles R. Weber Research, International Energy voice:+1 203 629 2300 Agency, Energy Information Agency, Lloyds Maritime fax:+1 203 629 9103 COPYRIGHT Information Unit, Baltic Exchange, Global Trade e-mail:[email protected] © 2005 Charles R. Weber Company, Inc. Information Services. web: www.crweber.com

”>>THERE IS NO DOUBT THAT THERE HAS BEEN GROWING CONCERN THAT CRUDE OIL SUPPLY WILL CHARLES R. WEBER TANKER REPORT EXECUTIVE SUMMARY:01 Will Tanker Shipping Take Off in 2005? The weakness of tanker freight rates during 1Q05 can The disappointing feature for tanker owners during 1Q05 be explained by two major factors. was that while crude oil prices remained close to levels seen at the end of 2004, tanker spot earnings fell by around 75% from peak levels in mid November 2004. However, it Firstly, the pace of tanker fleet expansion (up +6.2% in should be pointed out that leading publicly quoted tanker 2004) was unabated at the start of the year with a net owners still posted encouraging results for 1Q05 with net increase of 7.4MnDwt (+2.2%) for first quarter 2005. Tanker income up an average of 48% compared to 1Q04 for OSG, deliveries were particularly strong with 9MnDwt added, OMI, Genmar and Teekay (see section 3 for more details of while tanker scrapping remains low, but is starting to creep tanker company results). All be it a carry over from the a up. very firm fourth quarter of 2004 as discussed in our last quarterly report. Secondly, high oil prices were finally translated in higher bunker prices at the start of the year, which significantly The VLCC market illustrates this demise with average spot increased tanker voyage costs and helped drag tanker earnings for a modern vessel at around $50,000pd at the earnings lower. It is estimated that bunker prices have risen end of April compared to a peak of $221,455pd in the week by 50% since the start of the year. ending 12th November 2004.

The Link Between Tanker Earnings and Crude Oil However, the continuing strength of tanker demand Prices Breaks in 1Q05 suggests that the freight market has overshot. 250,000 60

55 VLCC Average Spot Tanker demand as measured by crude oil production was 200,000 Earnings up 1.5Mnbd YOY in 1Q05 - despite falling slightly to West Texas 50 83.8Mnbd from peak levels of 84.2Mnbd in 4Q04. Intermediate

45 Therefore, the sluggish start to the year does not necessar- 150,000 ily give rise to concerns for tanker freight rate prospects for 40 the remainder of the year. $Bbl $day

100,000 35 Crude oil demand forecasts for 2005 strengthen again 30 50,000

25 Figure 2 shows the world crude oil supply/demand balance (source International Energy Agency, IEA) for 2003 and 0 20 2004, as well as the IEA's demand forecast for 2005. 04/01/2002 10/01/2003 16/01/2004 21/01/2005

figure 2 figure1 IEA World Oil Supply/Demand Balance 2003-05 87

Figure 1 shows that there has been a reason- 85 able correlation between crude oil prices and tanker earnings for the three year period up to 83 the start of this year, but that this link was well and truly broken during 1Q05. Mnbd 81

77 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 Supply 79.2 78.4 79.4 81.7 82.3 82.4 83.2 84.2 83.8 Demand 80.4 77.3 79.4 82.1 82.5 81.1 81.9 84.5 84.6 82.7 83.7 86.1

BE UNABLE TO KEEP PACE WITH DEMAND. ONE OF THE PRIMARY WORRIES HAS BEEN THE LACK OF 1 CHARLES R. WEBER TANKER REPORT EXECUTIVE SUMMARY:01 While demand is not expected to reach growth levels of growth predicted by the IMF), and if Chinese crude oil 2004 the demand forecasts for 2005 have been revised up. imports (and to a lesser extent imports to India and the United States) continue to expand strongly, then This latest forecasts from the IEA are up from their supply/demand tightness in the market will persist and there December 2004 numbers and are now more in-line with will be every chance of significant tanker freight rate spikes other forecasting organizations that are also estimating later in the year. increased growth.

Tanker freight rate prospects for the remainder of 2005 These spikes may be triggered by downstream bottlenecks, geopolitical tension; nervousness in the market caused by the actions of OPEC or increased concern about spare The strength of the shipping market at the end of last year crude oil production capacity. The supply/demand balance occurred despite a 6.2% increase in the supply of tanker is so tight that even small events may have major conse- tonnage. In 2004, supply negatives were overpowered quences. However, the expected tanker freight rate spikes by a combination of surging world oil demand and a are unlikely to be as spectacular as in 2004 - unless shift to an increased dependence on longer haul trades. Chinese crude oil imports increase at a faster rate than currently forecast. Even if this happens, a lack of storage and At the start of 2005, crude oil demand has continued to refinining capacity availability in the short term will serve to strengthen (+2.6% yoy). However, the improvement in somewhat cap these spikes. crude oil supply during 1Q05 has been less impressive (+1.7% yoy), while tanker supply growth has continued to forge ahead (+2.2%).

Fleet growth and high voyage costs will continue to act as a drag on tanker earnings in 2005, but freight rate spikes are probable during 2H05

High crude oil prices represent the biggest risk for a recov- ery in tanker rates in 2005 for two reasons. Firstly, if crude oil prices remain high, then bunker prices (a major compo- nent of tanker voyage costs) will also remain high and tanker earnings will be depressed.

Secondly, the damaging impact of high crude oil prices on tanker profitability is being repeated across many other industries. Consequently, worldwide economic prosperity is being put at risk - as stressed in April by the IMF in its twice yearly assessment of global economic prospects. A pro- longed period of high oil prices cannot be sustained, and will eventually cause crude oil demand to falter.

Rapid tanker supply growth, which is set to continue in 2005, is nothing new. However, the fleet is expanding much faster (est. +6.0% 2005) than crude oil demand (est. +2.1% 2005). Therefore, unless tanker long haul trades expand faster than short haul trade - boosting tanker tonmile demand - then the upside potential for tanker freight rates will be restricted. China - with its reliance on long haul crude oil imports - remains crucial to the fortunes of the tanker market.

However, if crude oil prices can be maintained at "reasonable" levels (and the world economy achieves the "solid" SPARE PRODUCTION CAPACITY, GLOBAL PRODUCTION CAPACITY CLAIMS ARE NO LONGER BEING 2 CHARLES R. WEBER TANKER REPORT WORLD OIL MARKET:02

(1) Prospects for the World Oil Market in 2005 China Crude Oil Imports

13000

Crude Oil Demand - Forecast for 2005 strengthens 12000 again 11000

Although not expected to match the bumper crude oil 10000 demand growth seen in 2004 (+2.72 Mnbd, +3.4%), 9000 demand forecasts for 2005 have been revised up to 1.77 Mnbd (+2.1%) (source International Energy Agency, IEA). 8000 '000bd 7000 This latest forecast for 2005 represents a 0.39Mnbd increase compared to the IEA's forecast in December 2004, 6000 and brings the organisation into line with other forecasting 5000 2004/5 organizations that are also estimating growth of around 2003/4 4000 2Mnbd. The US Government's Energy Information Agency 2002/3 (EIA) is predicting average crude oil demand growth of 3000 2.2Mnbd for 2005 and 2006. 10 11 12 1 2 3 4 5 6 7 8 9 Months The positive outlook for crude oil demand growth is under- figure 4 pinned by positive world economic indicators. Chinese strength is central to this positive outlook, and its economic performance remains robust. Figure 3 shows that the value of Chinese imports and exports is continuing to run along at record levels at the start of 2005. Despite the slow start to the year, some forecasters contin- China Imports China Exports ue to expect significant Chinese crude oil import growth in

70,000 70,000 2005 and 2006, albeit at a slower rate than in 2004 (source: EIA). They point to the government initiative to build a 60,000 60,000 strategic petroleum reserve (SPR) as an important factor underpinning crude oil demand in 2005 and beyond. 50,000 50,000 Though progress with this (SPR) projects is reportedly not

40,000 40,000 moving as fast had been previously hoped for. $ Million $ Million 30,000 30,000 It is important to remember that despite all the attention, China remains an unknown quantity. At the start of 2004, 20,000 05 20,000 05 04 04 most commentators were not expecting crude oil imports to 10,000 03 10,000 03 break 100MnTons. 02 02 0 0 Year Crude Oil Imports % Chg Yoy 1 3 5 7 9 1 3 5 7 9 11 11 Months Months (MnTons) figure 3 2002 69.4 2003 91.1 31.2% Nevertheless, some commentators argue that there is con- 2004 122.8 34.8% siderable economic risk in the Chinese economy despite 2005e 139.1 13.3% seemingly strong growth. The slow down in Chinese crude 2006e 155.4 11.7% oil imports at the start of the year (see figure 4) perhaps points to some fragility with imports for 1Q05 (29.6MnTons) China may seem to be bathed in the light of a bright still lower than the corresponding period in 2004 new dawn, but it is struggling to fashion its peculiar (30.1MnTons). brand of capitalism inside a communist straight jacket.

TAKEN AT FACE VALUE, AS THEY HAD BEEN IN THE PAST. AT THE END OF 2004, SAUDI ARABIA 3 CHARLES R. WEBER TANKER REPORT WORLD OIL MARKET:02 Crude Oil Supply - OPEC's micro manage- By the end of the year, crude oil prices were finally starting ment does nothing for market confidence at to respond to increased crude oil production (by both OPEC the start of 2005 and non-OPEC producers). However, OPEC likes to be proactive and - anticipating a 2Q05 seasonal lull in demand - elected to introduce an "unofficial"* quota reduction in early December 2004 (-1Mnbd). This cut was an important OPEC's successive production cuts in September 2003 (- catalyst in a renewed surge in crude oil prices, which had 0.9Mnbd) and February 2004 (-1Mnbd) contributed to the fallen to around $41bbl (WTI) just before the quota cut was surge in oil prices during 2004 because OPEC was cutting announced. crude oil supply just as world crude oil demand was starting to take off. * "unofficial" quota because it didn't apply to all OPEC mem- bers

Three subsequent production increases in 2004 (7/04 By mid March, crude oil prices had reached new record lev- +2Mnbd, 8/04 +0.5Mnbd, 9/04 +1Mnbd) were a belated els (West Texas Intermediate $56.47 bbl on 16.03.05). At attempt to force crude oil supply to catch up with demand, this point, OPEC - although still concerned about a 2Q05 and were insufficient to prevent crude oil prices reaching seasonal lull in demand - was forced to introduce a counter record levels (West Texas Intermediate $55.23 bbl on seasonal increase in quota levels (+0.5Mnbd, 27.5Mnbd**) 25.10.04). in order to try to control the upward spiral of oil prices.

** a further 0.5Mnbd is available if oil prices fail to respond to higher production levels. figure 5 OPEC Quota Changes 2004-5

28 60 West Texas Intermediate (right axis) 27 55 OPEC 132 15.9.04 Quota 27Mnbd (+1.0Mnbd) 26 50

25 45 OPEC 133 OPEC 135 Mnbd 10.12.04 16.3.05 Quota "Unofficial" 27.5Mnbd Quota 26Mnbd ( - (+1.5Mnbd) 24 1.0Mnbd) 40

OPEC 131 3.6.04 Quota 23 25.5Mnbd 35 $Bbl Intermediate Texas West OPEC 129 (+2.0Mnbd) 10.2.04 Quota rising to 26Mnbd 23.5Mnbd ( - in August 1.0Mnbd) 22 30 1/04 4/04 7/04 10/04 1/05 4/05

OPEC Production Quota ex Iraq Actual OPEC Production ex NGLs & Iraq

INCREASED PRODUCTION TO 9.3 MNBD. WHEN OPEC PRODUCTION PEAKED IN OCTOBER 2004, THE 4 CHARLES R. WEBER TANKER REPORT WORLD OIL MARKET:02 Its proactive policy of production cuts to head off crude oil price falls ahead of an anticipated seasonal lull in demand had failed, and was replaced just three months Total OECD Industry Product Stocks later (and before the start of the seasonal lull) by a reac- 1500 tive policy of production increases to try to reign in run 2004/5 away crude oil prices. 1450 2003/4 2002/3

It seems that OPEC's attempt to micro-manage the crude oil 1400 price by its frequent quota adjustment has not helped to create a stable, transparent crude oil market. Indeed OPEC - 1350 despite its protestations that health of the world economy is MnTons its primary consideration - injected further confusion into an 1300 already uncertain environment when it failed to provide a replacement system for its "target $22-28 price band" which it formally abandoned at its January 2005 "extraordinary" 1250 meeting.

1200 10 11 12 1 2 3 4 5 6 7 8 9 Of course, OPEC is only partly responsible for creating Months the environment that has proved so conducive to high prices. As OPEC points out there are a number of factors at work that help explain the current era of high prices. It contends that the oil prices have become inflated by a combination of psychological, short term and "outside" factors rather than structural weaknesses in the market. These OPEC argues that far from crude oil supply failing to keep factors include: up with demand, the market is in fact well supplied with crude oil, and points to improved OECD crude oil and prod- (i) Late winter northern hemisphere cold snap uct stock levels (see following charts) as evidence for this. (ii) Expectation/concern of higher than expected crude oil demand paralleling events in 2004 (iii) Concern that there is insufficient spare produc tion capacity to deal with a crude demand surge or local production hiatus Total OECD Industry Crude Oil Stocks (iv) Geopolitical tensions (Iran, Iraq, and Nigeria etc.)

960 (v) Speculators - defined as non-commercials such as hedge funds and more recently pension and index 940 funds that are active in the futures market (vi) Long term underinvestment in the refinery 920 industry that has created a fragile infrastructure prone to frequent downstream bottlenecks and 900 unable to deal with the increase in world crude

880 oil demand MnTons 860 All of the above are important factors underpinning high crude oil prices. The following section will investigate some 840 2004/5 of these factors in more detail. 2003/4 820 2002/3 Insufficient Crude Oil Production Capacity 800 10 11 12 1 2 3 4 5 6 7 8 9 There is no doubt that there has been growing concern that Months crude oil supply will be unable to keep pace with demand. One of the primary worries has been the lack of spare production capacity. Rather like the recent imperative to reval- uate worldwide crude oil reserves following misreporting of its reserves by Shell, production capacity claims are no longer being taken at face value.

IEA CALCULATED THAT THE INDUSTRY WAS CLOSE TO ITS PHYSICAL MAXIMUM ” 5 CHARLES R. WEBER TANKER REPORT TANKER MARKET:03 vestment over many years has created an industry that is in At the end 2004, Saudi Arabia increased its production to part ageing and unreliable - prone to outages and often 9.3Mnbd from 8.25Mnbd at the start of the year. When lacking the flexibility to process heavy/sour crudes. With the OPEC production peaked in October 2004, the IEA calcu- industry so stretched even minor outages/bottlenecks can lated that the industry was close to its physical maximum have a magnified impact. with OPEC having as little as 1Mnbd of spare production capacity. New refinery plant is coming on stream (see table below). The United States and China will add a combined 1.1Mnbd Since then OPEC has taken positive steps to salve market of new capacity in 2005. However, concern about the lack of concerns. It announced in early March 2005 that it had refinery capacity persists with the expectation of disloca- increased spare production capacity to 2Mnbd, and that this tions between the crude oil and crude oil product market. figure would exceed 3Mnbd by the end of 2005. Not all commentators believe that this is a realistic forecast. New and Expansion Refining Capacity Scheduled to Come on Stream in 2005 (source: Oil & Gas Journal) International oil companies have also increased their investment activities. This is illustrated by the figure below, which Country New Capacity shows that rig employment levels remain high (source: '000 Bbls/day Baker Hughes). However, there are concerns as to whether the quality of the additional production capacity will be high United States 665* enough to meet market requirements. China 478 Indonesia 247 figure 7 Angola 200 Greece 199 The downward revision in forecast non-OPEC crude oil sup- India 176 ply growth in 2005 has compounded the concerns sur- Colombia 162 rounding the lack of spare production capacity. The IEA Abu Dhabi 77 Bangladesh 74 World Rig Count Croatia 62 Canada 53

2700 Other 363

Total 2756 2500 * There is some debate that the estimate for additional 2300 United States refinery capacity is too high. The W.S.J. quoted PIRA on May 24th as saying that global refinery capaci-

2100 ty grew by only 700,000 b/d in 2003 & 2004. Barnes & Click

Number of Rigs state that since 1993, despite the number of U.S. operating refineries falling by 30 to 145, the industry added 1.62 mil- 1900 lion b/d of operable capacity, an aggregate expansion of 2004/5 10.7% or the equivalent of 8 new world-scale refineries, 1700 2003/4 despite zero new refinery construction. They site two expla- 2002/3 nations: A constant trickle of major capital projects which 1500 collectively add capacity such as the following in ,000 b/d: 10 11 12 1 2 3 4 5 6 7 8 9 Before After Months Valero (Premcor) Port Arthur TX 255 325 Valero (Orion) Good Hope LA 155 230 downgraded its 1Q05 estimate for Non-OPEC crude oil sup- Murphy Meraux LA 100 125 ply from 51.3Mnbd (December 2004) to 50.3Mnbd (April MarathonAshland Detroit MI 74 100 2005). Although some of the lost output has been trans- Holly Artesia NM 58 75 ferred to the end of the year, the downward revision on Non- Valero Texas City 165 243 OPEC supply will mean that more is expected of OPEC in Totals 807 1,098 its role of swing producer. Their other theory is capacity creep, where refiners increase capacity not with capital but through better utilisation of Long term Underinvestment in the Refinery Industry existing “iron” and use of technology. They site EIA figures for 2003 as reporting an increase of capacity of 275,000 b/d. There has been widespread concern voiced about the One would expect that the high gross margins presently shortage of new refinery capacity coming on stream (espe- being experienced by refiners will induce them to continue cially conversion capacity). Low profitability and underin- to squeeze more from less.... www.crweber.com 6 CHARLES R. WEBER TANKER REPORT TANKER MARKET:03 (2) Tanker Market Performance in 1Q05 Why tanker freight rates shadowed crude oil price movements in 2004 The Link between crude oil prices and tanker freight rates broken 1Q05 The relationship between commodity prices and freight rates is indirect. In 2004, crude oil prices surged partly Figure 8 shows that there was a reasonable positive linear because of wild card events like the hurricanes in the correlation between crude oil prices and tanker earnings for USGulf, but mainly because unexpectedly strong crude oil the three year period up to the start of this year, but that this demand (underpinned by Chinese economic expansion) ran link was well and truly broken during 1Q05. ahead of crude oil supply. Crude oil producers pulled out the stops to try and increase the supply of crude oil and this VLCC average spot earnings fell to around $50,000pd at intensified the tanker fleet workload with the result that the end of April 2005 compared to a peak of $221,455pd in there was a (lagged) improvement in tanker freight rates the week ending 12th November 2004, while crude oil starting in May 2004. prices have held on to the record levels achieved during 4Q04 The link between crude oil prices and tanker freight rates can be broken as a result of structural changes to the sup- By contrast, figure 9 reveals that the equivalent positive lin- ply/demand balance e.g. significant tanker fleet additions, ear correlation between Capesize dry bulk freight rates and as well as short term factors such as local disruption to world steel prices remains intact - although there are signs crude oil supply (although this may also have the effect of that by the end of April/early May that dry bulk rates are also boosting rates as the tanker fleet is required to reposition), starting to slide. or even psychological factors. The Link Between Tanker Earnings and Crude Oil Prices Breaks in 1Q05 Explaining the divergence between crude oil prices and 250,000 60 tanker freight rates in 1Q05

55 VLCC Average Spot The divergence between tanker rates and crude oil prices 200,000 Earnings looks dramatic and unusual. However, by focusing on the West Texas 50 Intermediate annual cycle of tanker freight rates (see figure 10), the path 45 of tanker freight rates during 1Q05 looks to be following a 150,000 familiar path - closely paralleling earnings at the start of 40 $Bbl $day each of the last two years.

100,000 35 Tanker Earnings Following the Same Routine?

250,000 30 50,000

25 2005 200,000 2004 0 20 2003 04/01/2002 10/01/2003 16/01/2004 21/01/2005 150,000

Still Connected - World Steel Price $day and Capesize Spot Rates 100,000

720

670 39 50,000 620 Hot Rolled Coil Transaction Price (Av. 34 EU, Asia, USA) Source: MEPS 570 Tubarao-Beilun/Baoshan 150KDwct 29 0

520 1 2 3 4 5 6 7 8 9 10 11 12 Months 470 24 $Tonne $Tonne figure 10 420 19 370 In light of the above chart, could it be that crude oil prices 14 320 are artificially inflated, while tanker freight rates are 9 responding to normal supply/demand factors? Alternatively, 270 in the context of steadily increasing worldwide crude oil 220 4 demand (+3.4% in 2004, +2.1%e in 2005), could it be that Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 tanker rates are artificially low? www.crweber.com 7 CHARLES R. WEBER TANKER REPORT TANKER MARKET:03 This section of the report will try to find where the balance The weakness of tanker freight rates during 1Q05 is due lies. to a number of factors.

As discussed earlier in section 1, there are a number of (1) Continued Strong Fleet Expansion - +2.2% in 1Q05 factors - structural, short term and psychological - that collectively explain the current era of very high crude Figure 12 shows that the pace of tanker fleet expansion (up oil prices. Section 1 highlights nervousness in the crude oil +6.2% in 2004) was unabated at the start of the year with a market that has skewed the normal supply/demand balance net increase of 7.4MnDwt (+2.2%). Tanker deliveries were and helped underpin high oil prices. This nervousness has particularly strong with 9MnDwt added, while tanker scrap- been generated by concerns - both real and perceived - ping remains low, but is starting to creep up. relating to potential crude oil supply shortages, the viability of spare crude oil production capacity, the potential for a Tanker Fleet Expands by 2.2% in 1Q05 crude oil demand surge like that in 2004, the role of specu- 4 345 lators and underinvestment in the refinery industry.

3 340 However, section 1 also points out that although factors are at work to artificially boost price, the fundamental cause of 2 335 high oil prices is supply/demand tightness. Crude oil demand in 2004 (+3.4%) increased faster than in 2002 1 330

(+0.7%) and 2003 (+2.4%) and as a result crude oil produc- MnDwt MnDwt tion has been pushed to its limits. The tightness in the mar- 0 325 ket has been exacerbated by OPEC's clumsy attempts to micro manage oil prices, and downstream bottlenecks. -1 320 Dow Jones & Oil Price Consolidate 2004 Gains During 1Q05 -2 315 60 11000 4 5 6 7 8 9 10 11 12 1 2 3

55 10500 Deliveries Deletions Fleet

50 10000 figure 12

45 9500

40 9000 $Bbl Index

35 8500

30 8000 West Texas Intermediate 25 Dow Jones 7500

20 7000 04/01/2002 10/01/2003 16/01/2004 21/01/2005 figure 11

For another perspective, it is worth comparing the performance of oil prices with the Dow Jones (see figure 11). This reveals that crude oil prices gains (prices have roughly dou- bled over the last two years) are well in excess of those made by a resurgent stock market, which has increased in value by around one third over the same period.

www.crweber.com 8 CHARLES R. WEBER TANKER REPORT TANKER MARKET:03 (2) High Bunker Prices How Investors have reacted to the performance of the tanker market in 1Q05 High crude oil prices have taken some time to translate into higher bunker prices. However, figure 13 demonstrates that Tanker orders were consistently above 2MnDwt per month from the beginning of the year to the end of April, bunkers between August 2004 and January 2005 despite steadily have risen by close to 50% e.g. Singapore 380 cst has increasing newbuilding prices. However, a significant rise in climbed from $159Ton to $284.5Ton over this period. prices from February 2005 coupled with freight rate weak- Without wishing to overstate the importance of bunker ness has significantly curtailed contracting with a total of just prices, this sharp escalation of a key tanker voyage costs 1.4MnDwt ordered in February and March. It may be the has acted to depress tanker spot earnings during 1Q05. case that investors are also being put off by the long delivery times for newbuildings. For example the earliest delivery Bunkers Dent Tanker Earnings at the Start of 2005 date for a VLCC is 3Q08. 250,000 300

280 Tanker secondhand sales were very buoyant up until VLCC Average Spot 200,000 260 November 2004 when sales activity peaked at 6.3MnDwt. Earnings Bunkers Singapore However, with 5 year vessels becoming more expensive 240 380 cst than newbuilds by the end of the 2004, investor second- 150,000 220 hand activity has tailed off considerably - averaging 200 1.8MnDwt for the period December 2004 to March 2005. $day $Ton

100,000 180 figure 15

160 Investor Interest Slows as Prices

50,000 140 Continue to Spiral 10 130 120 9

0 100 8 120 04/01/2002 10/01/2003 16/01/2004 21/01/2005 7 110 6 figure 13 5 100 Bunkers Catch up Oil Price Gains MnDwt

4 $Million 300 60 3 90

280 2 55 80 Bunkers Singapore 1 260 380 cst 50 0 70 West Texas 240 Intermediate 4 5 6 7 8 9 10 11 12 1 2 3 45 220 Orders Sales VLCC NB Price VLCC 5Yr Price

200 40 $Bbl $Ton

180 35 At the end of May, it is estimated that a VLCC newbuilding

160 will cost $126 mill, while a 5 year old VLCC is $120 mill. A 30 Suezmax newbuilding $78 mill vs $75 for 5 year old and a 140 newbuilding Aframax $65 mill vs $64 for 5 year old. 25 120

100 20 If vessel values are sustained at such high levels, then 04/01/2002 10/01/2003 16/01/2004 21/01/2005 tanker investor activity levels in 2005 may be much lower figure 14 than in 2004. Combined tanker orders and sales totaled 10.5MnDwt for 1Q05, compared to 77MnDwt for full year (3) Lower Crude Oil Production 2004.

Crude oil production slipped back slightly during 1Q05 from At the moment, tanker investors are in "wait and see" mode. 84.2Mnbd to 83.8Mnbd, but this reduction is relatively small If there are significant freight market spikes in 2H05, then and would not appear to justify such a dramatic fall in earn- investors may be tempted to come back in even at such ings. high prices (and such late delivery dates). However, if freight rates remain at disappointing levels, then vessel val- Therefore, despite the negative impact of higher bunker ues may correct sharply downward. prices and fleet expansion, it would appear that tanker freight rates have over corrected. The next section looks at the prospects for tanker freight rates for the remainder of 2005. www.crweber.com 9 CHARLES R. WEBER TANKER REPORT FREIGHT RATES:04 (3) Prospects for Tanker Freight Rates in 2005 strong earnings during 4Q04 were primarily the conse- quence of strong crude oil demand growth coupled with Tanker stocks holding up strong growth in tanker long haul trades which acted as an accelerator for tanker demand. These factors will continue Although tanker spot earnings were disappointing during to act as key positives throughout 2005. 1Q05, and though influenced by 4th quarter 2004, shipping stocks provide a more positive indication regarding the Crude oil demand growth with help underpin tanker strength of the market for the remainder of the year. Figure freight rates in 2005 16 - which plots Baltic Dirty Tanker Index against Overseas Shipholding Group - reveals that tanker stocks have not Looking ahead for the remainder of the year, it seems that been affected by lower freight rates. In fact tanker stocks fol- crude oil demand growth will again be an important factor low very closely the path of crude oil prices, which seems to underpinning the market over the next few months. be interpreted as the fundamental driver for this shipping However, forecast crude oil demand growth in 2005 (+2.1%) sector. Figure 17 reveals that share price resilience was is lower than growth in 2004 (+3.4%) and would not be underpinned by strong results in 1Q05 for leading quoted expected to exert as positive an influence. Tanker Stocks Starting to React to Falling Earnings It should be pointed out though that China may yet again 3500 75 surprise the market with the strength of its crude oil import

BDTI requirement.

3000 Overseas Shipholding 65 Group Long haul trade growth will continue as an accelerator for tanker demand in 2005 2500 55 It has been an accepted fact in tanker shipping for more 2000 45 than thirty years that the Middle East with its relatively large Index $Share crude oil reserves will eventually dominate world tanker

1500 35 seaborne trade. Middle East seaborne trade routes are gen- erally longer than for other export regions.

1000 25 Tonmile demand is a truer reflection of tanker demand than simply using crude oil demand. It takes into account the dis- 500 15 tance traveled to deliver each tonne of crude oil. Obviously, 09/05/2003 16/04/2004 11/03/2005 long haul trades will generate a higher tonmile demand than short trades for the same amount of cargo delivered. tanker companies. Listed Tanker Company Net Income - Therefore, long haul trades require more vessels than short Quarterly Results haul trades for the same amount of cargo delivered. 300 The importance of long haul crude oil trades has also been 250 boosted by the preference for sweet/light crudes such as those from West Africa and the North Sea. (Heavy/sour 200 crudes include certain grades from Saudi Arabia, Venezuela

150 and Mexico). $Million 100 In 2004, China and the United States were responsible for around 50% of the total increase in world crude oil demand 50 (see figure 18). The Middle East was the major source of this extra demand, benefiting from problems with Nigerian 0 1Q04 2Q04 3Q04 4Q04 1Q05 and Venezuelan production coupled with declining North Teekay 189 98.5 245.3 224.6 279 Sea production. OMI 56.4 30.3 50.5 108.5 75.8 OSG 76.2 45.4 68.5 211.1 164.9 The dependence on the Middle East for incremental crude 78.3 41.6 54.6 140.5 68.5 General oil demand acted as an accelerator for tanker demand in figure 16 2004. In 2005, crude oil demand growth is expected to slow, figure 17 but once again the distribution of the extra demand will boost tanker tonmile demand with China and the United In the first quarterly publication of the year, we stressed that States again forecast to be the most important growth import markets. www.crweber.com 10 CHARLES R. WEBER TANKER REPORT FREIGHT RATES:04

Estimated Annual World Oil Demand Growth 2000-2005 United States Crude Oil Imports 1995-2004 Source: IEA (April 2005) Source: Global Trade Information Services Figures Million barrels per day Figures in Million Barrels Regions 00-99 01-00 02-01 03-02 04-03 05-04 Exporter Voyage Units 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Forecast Duration North America 0.26 -0.06 0.10 0.47 0.61 0.36 Latin America 0.00 0.00 -0.04 -0.10 0.17 0.12 Canada Short Haul/ MnBbls 379 396 425 461 424 501 na 521 551 581 FSU 0.08 0.00 -0.20 0.12 0.13 0.05 Overland % Chg 4% 7% 8% -8% 18% 6% 5% Europe -0.12 0.21 0.00 0.20 0.24 0.11 Venezuela Short Haul MnBbls 425 454 513 522 461 500 na 511 506 577 OECD Pacific -0.04 -0.07 -0.04 0.14 -0.15 0.00 China 0.26 0.12 0.30 0.55 0.86 0.50 % Chg 7% 13% 2% -12% 8% -1% 14% Other Asia 0.09 0.18 0.27 0.22 0.47 0.24 Mexico Short Haul/ MnBbls 346 337 484 469 448 473 na 537 568 567 Subtotal Asia 0.31 0.23 0.53 0.91 1.18 0.75 Overland % Chg -3% 44% -3% -5% 6% 6% 0% Middle East 0.12 0.17 0.17 0.20 0.32 0.29 Saudi Arabia Long Haul MnBbls 474 407 482 507 490 507 na 544 633 552 Africa 0.00 0.13 0.08 0.04 0.07 0.09 % Chg -14% 18% 5% -4% 4% 16% -13% World 0.66 0.67 0.63 1.84 2.72 1.77 Nigeria Medium Haul MnBbls 264 269 304 287 231 343 na 221 317 393 % Chg 2% 13% -6% -20% 49% 44% 24% Iraq Long Haul MnBbls 17 108 263 232 na 174 165 247 % Chg 532% 143% -12% -5% 50% Algeria Medium Haul MnBbls 961277 0na5498123 figure 18 % Chg -33% 106% -45% 8% -100% 80% 26% Angola Medium Haul MnBbls 130 129 142 172 141 121 na 127 143 117 % Chg -1% 10% 21% -18% -15% 12% -18% The tables below (figures 19 and 20) break down the distri- United Kingdom Medium Haul MnBbls 141 93 72 70 100 107 na 151 150 99 % Chg -34% -23% -3% 43% 8% -1% -34% bution of Chinese and United States crude oil imports by Norway Medium Haul MnBbls 91 105 99 84 111 117 na 146 89 92 % Chg 15% -6% -15% 33% 5% -39% 3% exporting country. Kuwait Long Haul MnBbls 81 87 109 113 84 101 na 82 77 87 % Chg 8% 25% 4% -26% 20% -7% 13% China Crude Oil Imports 1995-2004 Ecuador Short Haul MnBbls 45 37 37 33 31 40 na 41 51 85 % Chg -18% 0% -9% -8% 29% 24% 66% Source: Global Trade Information Services Other MnBbls 319 345 382 424 434 358 na 399 414 409 Figures in Million Tonnes % Chg 8% 11% 11% 2% -17% 4% -1% Exporter Voyage Units 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Duration Total MnBbls 2704 2665 3077 3258 3224 3399 na 3508 3761 3929 Saudi Arabia Long Haul MnTons 0.34 0.23 0.50 1.81 2.50 5.73 8.78 11.39 15.18 17.24 % Chg -1% 15% 6% -1% 5% 7% 4% % Chg -32% 117% 262% 38% 129% 53% 30% 33% 14% Oman Long Haul MnTons 3.65 5.65 9.03 5.67 5.02 15.60 8.14 8.05 9.28 16.35 % Chg 55% 60% -37% -11% 211% -48% -1% 15% 76% figure 20 Angola Long Haul MnTons 1.00 1.66 3.84 1.10 2.88 8.64 3.80 5.71 10.10 16.21 % Chg 66% 131% -71% 160% 200% -56% 50% 77% 60% Iran Long Haul MnTons 0.93 2.31 2.76 3.62 3.95 7.00 10.85 10.63 12.39 13.24 % Chg 148% 19% 31% 9% 77% 55% -2% 17% 7% In contrast to China, US crude oil imports are not so Russia Short Haul/ MnTons 0.04 0.32 0.48 0.14 0.57 1.48 1.77 3.03 5.25 10.78 Overland % Chg 773% 49% -70% 296% 158% 20% 72% 73% 105% dependent on long haul trades. Near neighbors - Canada, Sudan Long Haul MnTons 0.00 0.00 0.27 3.31 4.97 6.43 6.26 5.77 % Chg 50% 29% -3% -8% Venezuela and Mexico - were the top three exporters to the Vietnam Medium Haul MnTons 0.76 1.01 1.50 0.87 1.51 3.16 3.36 3.54 3.51 5.35 % Chg 32% 49% -42% 75% 109% 6% 5% -1% 53% US last year. Yemen Long Haul MnTons 2.47 3.77 4.06 3.75 4.13 3.61 2.29 2.26 7.00 4.91 % Chg 52% 8% -8% 10% -13% -37% -1% 209% -30% Congo Long Haul MnTons 0.03 0.13 0.98 0.38 0.38 1.45 0.64 1.05 3.39 4.77 % Chg 390% 681% -61% 1% 278% -56% 63% 224% 41% Saudi Arabia was the largest exporter to the US in 2003, but Equatorial GuineaLong Haul MnTons 0.20 0.24 0.81 0.92 2.15 1.78 1.46 3.48 % Chg 19% 234% 13% 134% -17% -18% 139% was only 4th largest in 2004. Its exports fell by 13% in 2004 Indonesia Medium Haul MnTons 5.28 6.30 6.59 3.42 3.95 4.58 2.65 3.24 3.33 3.43 (based on full year data). % Chg 19% 5% -48% 16% 16% -42% 22% 3% 3% Norway Long Haul MnTons 0.99 0.49 2.01 1.48 0.92 2.11 0.93 2.01 % Chg -50% 310% -26% -38% 130% -56% 116% Other MnTons 2.59 1.25 4.56 5.31 8.63 13.19 9.95 10.20 13.05 19.27 However, other long haul trades from Iraq and Kuwait were % Chg -52% 266% 17% 62% 53% -25% 2% 28% 48% Total MnTons 17.09 22.62 35.47 26.80 36.61 70.13 60.26 69.41 91.13 122.82 up 50% and 13% respectively. % Chg 32% 57% -24% 37% 92% -14% 15% 31% 35% figure 19

China crude oil imports are dominated by long haul trades from the Middle East (and also West Africa). Exports from Oman and Angola, the second and third largest exporters to China, increased by 76% and 60% respectively in 2004 (based on full year data).

It should be noted that the fastest growing exporter of crude oil to China is Russia. Most crude oil from Russia enters China by train, while in the future pipeline transportation is likely to dominate.

An important landmark was achieved on 30th March 2005 when the 441,000Dwt TI Europe (operated by Tankers International) received Government approval to dock at Ningbo. Prior to the TI Europe, the largest vessels to call at Ningbo was less that 320,000Dwt. Four other terminals in China will be able to handle upto 500,000 dwt vessels in the near future. The visit illustrates the growing importance of China to the VLCC sector.

www.crweber.com 11 CHARLES R. WEBER TANKER REPORT FREIGHT RATES:04 Short term Tanker Freight Rate Forecast

Fleet growth and high voyage costs will continue to act as a Long term Tanker Supply/Demand Balance Forecast drag on tanker earnings in 2005, but freight rate spikes are 2005-2010 probable during 2H05 Figure 21 compares world crude oil demand and tanker High crude oil prices represent the biggest risk for a recov- supply (fleet >=10,000Dwt) for the period 2000-2004 and ery in tanker rates in 2005 for two reasons. Firstly, if crude then projects forward for the period 2005-2010. oil prices remain high, then bunker prices (a major compo- nent of tanker voyage costs) will also remain high and There are two crude oil demand forecasts: The "low" case tanker earnings will be depressed. is based on annual average growth of 1.3%, which corre- sponds to the average historical growth rate 1998-2003. Secondly, the damaging impact of high crude oil prices on The "high" case is based on the IEA forecast (April 2004) of tanker profitability is being repeated across many other 2.1% for 2005, and an annual average growth rate of 2.3% industries. Consequently, worldwide economic prosperity is for 2006-10, which is 0.5% higher than the average growth being put at risk - as stressed in April by the IMF in its twice rate for the last 10 years. (The growth rate has fallen below yearly assessment of global economic prospects. A pro- 1.3% on three occasions in the last 10 years - in 1998 longed period of high oil prices cannot be sustained, and will (0.5%), 2001 (0.9%), and 2002 (0.8%)). eventually cause crude oil demand to falter. There are also two tanker supply forecasts: The "high" Rapid tanker supply growth, which is set to continue in case reflects deletions based on IMO's phase-out schedule, 2005, is nothing new. However, the fleet is expanding much and orders based on scheduled orderbook deliveries for faster (est. +6.0% 2005) than crude oil demand (est. +2.1% 2005-7 and for 2008-10 deliveries based on estimated 2005). Therefore, unless tanker long haul trades expand annual average deliveries for the period 2002-7 (a boom faster than short haul trade - boosting tanker tonmile period for tanker deliveries). The "average" case reflects a demand - then the upside potential for tanker freight rates 20% increase on IMO's phase-out schedule, and deliveries will be restricted. China - with its reliance on long haul crude based on scheduled orderbook deliveries for 2005-7 (as for oil imports - remains crucial to the fortunes of the tanker "high" case) and for 2008-10 deliveries based on 2001 market. orders (the low point for deliveries in the period 2000-7).

However, if crude oil prices can be maintained at "reasonable" levels (and the world economy achieves the "solid" growth predicted by the IMF), and if Chinese crude oil imports (and to a World Crude Oil Demand v Tanker Supply lesser extent imports to India and History 2000-4 & Forecast 2005-10 the United States) continue to expand strongly, then 95 supply/demand tightness in the 440 93 market will persist and there will be 420 every chance of significant tanker 91 freight rate spikes later in the year. 400 89 These spikes may be triggered by downstream bottlenecks, geopoliti- 380 87 cal tension; nervousness in the eadweight 85 market caused by the actions of 360 Mnbd OPEC or increased concern about Tanker Supply - High Case 83 spare crude oil production capacity. D Million 340 The supply/demand balance is so Tanker Supply - Average Case 81 tight that even small events may 320 World Oil Demand (Forecast 79 have major consequences. Growth av 2.3% p.a.) However, the expected tanker 300 World Oil Demand (Forecast 77 freight rate spikes are unlikely to be Growth av 1.3% p.a.) as spectacular as in 2004 - unless 280 75 Chinese crude oil imports increase 00 01 02 03 04 e05 e06 e07 e08 e09 e10 at a faster rate than currently forecast. figure 21 www.crweber.com 12 CHARLES R. WEBER TANKER REPORT FREIGHT RATES:04 and opportunities for larger tankers to find alternative It should be noted that the forecast methodology is a rela- employment as storage or FPSO vessels. It is not yet clear tively simplistic approach to supply/demand balancing. For how many tanker owners have so far embarked on putting example in the case of measuring tanker supply, there is no their vessels through CAS, although it is probably only a allowance for changing trade patterns which impacts on the handful. average transportation distance of a barrel of crude oil (measured in seaborne tonne-miles). This is an important (2) As discussed the impact of a shift towards long haul consideration when calculating how far tonnage supply will trades was crucial to the strength of the tanker market in stretch i.e. effective supply. 2004. World crude oil demand of 3.4% was effectively boosted by the growth of long haul trades, so that demand Nevertheless, (within the confines of this rough measure) it more than offset the burden of 6.2% tanker fleet growth. is apparent that under both the "high" and "average" supply cases there will be enough tonnage overall to match/exceed The growing importance of long haul trades will continue in the "low"/"high" demand scenarios until 2009. However, in the short and long term. For example, the rapid economic 2010 the sharp acceleration in removals under IMO phase- rise of China will continue to foster long haul trades from out schedules will create a potential shortfall of tanker ton- regions like West Africa, the Black Sea and even the North nage (1). Sea, while the decline of North Sea production (down to 6.1Mnbd in 2004 compared to 6.8Mnbd in 2000) will It is clear that the tanker fleet is in a potentially perilous posi- increase the reliance on Middle East production. The pref- tion. Today the tanker orderbook is equivalent to 24% of erence for sweet/light crudes also has a positive impact on the tanker trading fleet. Under the "high" and "average" tanker tonmile demand. supply cases, the fleet is set to expand at between 4.2% and 5.8% p.a. over the next 5 years (2005-9), which is revised up from 3.9% and 5.5% respectively in January 2005. This compares to demand growth of 2.3% under the "high" demand case. Notwithstanding, the growing importance of long haul trades (2), the tanker market will be extremely vulnerable to demand fluctuations during this period. For example, a major concern is that China will not sustain its phenomenal growth rates of the last few years.

Therefore, strong crude oil demand growth of 2%+ p.a. and a further significant shift towards long haul trades are the key factors in ensuring consistently strong tanker rates for 2005-10.

If "effective" demand (taking into account tanker tonmiles) falters, it is unlikely that the supply curve will follow either that shown in the "high" or "average" supply cases. It is perhaps more likely that supply will follow a third way or "low" case. With little scope to halt fleet growth through a slow down in orders (the orderbooks are virtually full up to the end of 2007), it is the majority of single hull tankers (as well as double side and double bottom) tonnage that will come under pressure to scrap even more rapidly than in the "average" supply case (20% higher than the IMO scrapping rules demand) in order to slow down the rate of tanker supply expansion.

(1) The majority of tanker single hull tonnage will not be finally phased out until 2010, and even then the Continuous Assessment Scheme (CAS) affords a further extension to the trading life of these vessels. However, as discussed, if tanker rates come under significant downward pressure, this majority may exit the market earlier than the 2010 cut off - especially with the extremely high level of scrap values www.crweber.com 13 CHARLES R. WEBER TANKER REPORT VESSEL SECTORS:05 (4) A Review of the Tanker Market in 1Q05 by The following sections recap developments in 2004 and Vessel Segment 1Q05, and provide updated fleet forecasts 2005-2010 for each of the vessel sectors.

In order to help highlight the key developments in each vessel segment, a system of rankings has been put together (figure 22) to reflect the development of key performance indicators in 2005. Amongst other things, these rankings show which segment has attracted the most investment so far in 2005, and which has grown fastest.

The Rankings 1Q05 (all figures as % of relevant sector trading fleet)

Deliveries % Scrap % Orders % Sales % Obook% Growth % VLCC 2.3 0.0 1.1 2.8 17.6 2.3 Suezmax 2.3 0.6 0.0 2.4 23.5 1.7 Aframax 2.7 0.9 1.7 2.7 26.1 1.9 Panamax 4.4 1.9 3.0 3.5 54.8 2.5 Handy 2.4 0.3 1.5 2.1 26.5 2.1 Total 2.5 0.5 1.2 2.6 24.3 2.2 figure 22

The above table shows that the Panamax sector remains the most popular sector with investors. The equivalent of 3% of the Panamax fleet was contracted during 1Q05, which has maintained the orderbook at a level equivalent to more than 50% of the trading fleet.

By contrast the Suezmax sector has received no interest from investors at the start of the year.

The Panamax sector has the highest delivery percentage for 1Q05 (4.4%) and - despite also recording the highest percentage of deletions (1.9%) - is also the fastest growing sector (+2.5%). The VLCC sector (+2.3%) is the only other segment where fleet growth exceeded overall fleet expansion (+2.2%) in 1Q05.

The ranking table for 2004 is included here for to allow com- parisons to be made with 2005.

The Rankings 2004 (all figures as % of relevant sector trading fleet)

Deliveries % Scrap % Orders % Sales % Obook% Growth % VLCC 7.1 1.2 8.9 12.9 19.3 6.3 Suezmax 8.2 5.5 8.2 6.8 25.1 5.5 Aframax 8.7 4.0 12.6 8.3 27.0 4.9 Panamax 13.9 5.6 26.5 5.1 55.4 9.0 Handy 10.8 2.8 14.3 4.9 26.9 8.7 Total 8.7 2.6 11.7 9.1 25.5 6.5 figure 23

www.crweber.com 14 CHARLES R. WEBER TANKER REPORT VESSEL SECTORS:05

2005 First Quarter Average Earnings As we look forward, the additional capacity coming to the market at more than two 100,000 vessels a month for the year has not been

90,000 absorbed as growth in ton miles slowed and there was minimal scrapping, making 80,000 any improvement in rates doubtful for the 70,000 near term. One has to look out to the end

60,000 of the 3rd qtr before any meaningful improvement may be expected as sea- 50,000

$/Day sonal stock building takes place. With

40,000 high bunker cost eating into returns, it’s understandable that some owners are 30,000 taking advantage of high asset values 20,000 and selling tonnage at very firm numbers.

10,000

0 2005-01 2005-02 2005-03 2005-04 Suezmax Sector: Month

VLCC Suezmax Aframax Panamax Products The Suezmax sector enjoyed strong / steady earnings in the first quarter of 2005 with average TCE’s of about VLCC Sector: The Hot Button Sector Reported Delivery Schedule Basis End May 2005

There is an on-going debate about exact- 100 ly how scheduled IMO scapping in this sector will affect the market. We have 90 included the present trading fleet at the 80 back of this report to try and get to the 70 bottom of this question. 60

As discussed earlier in this quarterly, the 50 increase in long-haul trades and global oil consumption has placed a greater No. of Vessels 40 reliance on this sector of the market, 30 there is in essence some room to increase the orderbook through the 2010 20 cut off. Also a number of vessels will 10 have the flexibility to trade in certain mar- 0 kets after the 2010 cut off. Remainder of 2005 through 2008

VLCC Suezmax Aframax Panamax Products The start of the year proved disappointing for VLCC owners as rates rapidly retreated from the historic highs of the fourth quarter. As we $50,000 p/d. With the weather not playing the same part it entered the new year rates fell from the ws 300 level for did in the Black Sea trade this year the 2004 rate spike from AG/East to ws 85 in three weeks. A slight spike to the mid the Black Sea didn’t materialize, limiting delays to around ws100's in February brought some relief. One could say that 10 days versus the 25-30 days of 2004. This spilled over the writing was on the wall as the number of VLCC fixtures into West Africa and acted as a stabilizing influence, remov- ex AG shrank from the 120's in the 4th to the very low 100's ing much of the previous quarters volatility and West Africa of the first quarter. This reduced off-take caused an erosion rates shuttled between WS 160 and 190. With more sweet of rates to the WS 80/90 level which closed out the quarter. crude destined for China, an alternate trade for VLCC’s, car- The Atlantic VLCC market experienced less volatility with gos for the U.S. were primarily left to Suexmax tonnage. rates falling from the WS 200 level to WS 100 as the year started. The Atlantic hasn't seen the wide swings in freight The prospects for the year remain guarded as 2nd quarter as it moves in a much narrower band, with the raw numbers refinery turnarounds will slow the pace of activity and rates trading between WS 85 and WS 130. will reflect this softness. The addition of 9 units so far this year and further 17 scheduled to be delivered in 2005 (this

www.crweber.com 15 CHARLES R. WEBER TANKER REPORT VESSEL SECTORS:05 includes 1 shuttle tanker) with what would look to be a very 150 WS points for double hulls and WS 90 for others. March soft sector scrapping figure, only two units scrapped so far saw the market jump back up to an average of WS 268 and this year. This may serve to hold down any 3rd and 4th WS 223 respectively. April, May and June have followed the quarter rate run up. same see-saw pattern.

The start up of the BTC pipeline for an additional 400,000 Despite these fluctuations the market as a whole has b/d of Med export in the 4th quarter as well as increased remained resilient, be it CBS/USAC, CONT/STATES, Baltic exports will help to absorb the new ice class tonnage. WAFR/STATES or Brazil up. Just when one thinks the bot- The mid east trades continue to operate in parallel to the tom is about to fall out, one of the four load areas has come VLCC sector with volatility always present. to the rescue. While the Aframax market has had some affect dampening or pushing depending on the market It is interesting to note a return to period interest with char- cycle, for all intents and purposes the Panamax market has terers willing to take tonnage for long periods reflecting their been making its own way on its own merits. belief in this sector. 2005 Reported Suezmax Period Charters Over 12 Months: With PDVSA banning all single hull and probably double sided and double vessels to follow, we could be in for an Vessel Built Period interesting next few months.

Monte Granada 2004 12 months Four Sun 2003 33 months CPP Sector: Flawless 1991 3 years Timeless 1991 3 years The Atlantic basin clean market has clearly softened over Faultless 1992 5 years the course of the year, to some degree as the domestic Sacramento 1998 7 years crude and product inventory levels have increased. While Sabine 1998 7 years rates during the first quarter of 2005 upcoast averaged Spetses 1996 7 years about 38 x WS 290, and Cont/States averaged about 37 x Sea Star 1996 7 years WS 314.25, we have seen consistent softening during May and June in both markets.

Aframax Sector: Freight rates during the first quarter of 2005 certainly saw some benefit from the changing inventory paradigm, moving Since the start of 2005 Aframax’s have experienced dra- from the low inventories of the first 2 or 3 quarters of 2004, matic swings in WS rate levels in the Caribbean. Since to the high inventories we have domestically today, coupled January the inter-month low to high has been approximate- with the usual seasonal strength seen during the winter ly 90 points, but, nonetheless, the average remains in- months and the buildup for the summer driving season. excess of WS 200 which equates to more than $35,000 per Gasoline inventories today are in the upper half of the aver- day time charter equivalent. Thus owners are not finding age range and distillate inventories in the lower half of the this market’s volatility too painful. average range. Certainly such levels have some impact on transportation demand. The inter-UKC market, after coming off the winter highs has been trading in a narrow band between WS 140 and WS Going forward, as we move farther into what is traditionally 175 with little sign of change. a softer summer season for freight rates, we should expect the markets to soften. The cross-Med market has witnessed by far the most vio- lent swings, super highs approaching WS 300 and stagger- However, taking into account the expected demand increasing lows nearing WS 100. es for refined product over 2005, and in particular potential refining bottlenecks as we move into the fourth quarter or We believe that there will not be much of a change as we heating oil season, there is good reason to expect that clean head into the second half of the year. markets will see their usual fourth quarter rebound.

Panamax Sector:

The Caribbean Panamax market has been anything but pre- dictable. January was strong with an average WS rate of 380 for double hulled vessels trading CBS/USAC-G and WS 267 for non-double hulls. February saw rates drop almost

www.crweber.com 16 CHARLES R. WEBER TANKER REPORT VLCC FLEET:06

VLCC Actual Trading Fleet as of May 2005

14 30

25 2 4 41 20 13 3 38 37

15 1 30 30 27 24 23 21 10 19 17 15 14 12 13 12 5 10 8 9 6 2 3 3 0 1 1 1 1 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Single Double Bottom Double Sides Double hull

S/R Mediterranean 214861 1986 SH Y 2010 Shoju Maru 258034 1986 SH Y 2010 The Actual VLCC Trading Fleet Titan Libra 265551 1986 SH Y 2010 Titan Venus 250267 1986 SH Y 2010 Vl Chios 239783 1986 SH Y 2010 Ship_name Dwt Blt Hull Sbt F'cast Scrap 1987 1979 A Elephant 264758 1987 SH Y 2010 Aegiali 254601 1987 SH Y 2010 Folk Sun 323100 1979 SH N 2005 C Elephant 250079 1987 SH 2010 S/R Long Beach 214862 1987 SH Y 2010 1980 Takamatsu Maru 264631 1987 SH Y 2010 Petrobras 50 279688 1980 SH 2005 Titan Gemini 261068 1987 SH Y 2010 Belokamenka 360700 1980 SH Y 2007 1988 1981 C. Concord 276052 1988 SH Y 2010 Apollo 257882 1981 SH Y 2007 Europe 255087 1988 SH Y 2010 Chang Yun 224738 1981 SH Y 2007 Island Accord 255271 1988 SH Y 2010 Folk Moon 360700 1981 SH Y 2007 Island Bauhinia 255346 1988 SH Y 2010 Kolossi 248049 1988 SH Y 2010 1982 Shinyo Jubilee 240401 1988 SH 2010 Kazimah 290085 1982 SH Y 2008 Tinos 260039 1988 SH Y 2010 Titan Leo 245653 1988 SH Y 2010 1983 Titan Neptune 265322 1988 SH Y 2010 Folk Sea 322912 1983 SH N 2005 World Prelude 265243 1988 SH Y 2010 Al Funtas 294739 1983 SH Y 2009 Settebello 322446 1983 SH Y 2009 1989 Clovely 248034 1989 DB Y 2014 1984 Albatross 255087 1989 SH Y 2010 Eleuthera 255987 1984 SH Y 2010 Astro Lupus 238500 1989 SH Y 2010 Brilliant Jewel 247471 1989 SH Y 2010 1985 Dorado 304622 1989 SH Y 2010 Eastern Fortune 277020 1989 SH Y 2010 Apollo Sun 259995 1985 SH Y 2010 Eastern Jewel 258049 1989 SH Y 2010 Episkopi 265316 1989 SH Y 2010 1986 F Elephant 275984 1989 SH Y 2010 B Elephant 239351 1986 SH Y 2010 Halden 277020 1989 SH Y 2010 Bright Jewel 264148 1986 SH Y 2010 Lysaker 276210 1989 SH Y 2010 Hebei Explorer 248965 1986 SH Y 2010 Navarin 276736 1989 SH Y 2010 www.crweber.com 17 CHARLES R. WEBER TANKER REPORT VLCC FLEET:06

Protaras 255028 1989 SH Y 2010 Shinyo Landes 306474 1993 DH Y Star II 304622 1989 SH Y 2010 Soro 299718 1993 DH Y Verona TBRN 258076 1989 SH Y 2010 Universal Hope 299700 1993 DH Y Vl Malibu 248976 1989 SH Y 2010 Edinburgh 302493 1993 DS Y 2015 New Vitality 290691 1993 DS Y 2015 1990 Starlight Jewel 306902 1993 DS Y 2015 Azuma Enterprise 255226 1990 SH Y 2010 Yiomaral 302432 1993 DS Y 2015 Dynamic City 244651 1990 SH Y 2010 Able Dolphin 264512 1993 SH Y 2010 Front Sabang 285715 1990 SH Y 2010 Front Ace 275546 1993 SH Y 2010 Geilo 243272 1990 SH Y 2010 Front Duchess 284480 1993 SH Y 2010 Grand Atlantic 275269 1990 SH Y 2010 Front Tobago 259992 1993 SH Y 2010 Grand Explorer 285768 1990 SH Y 2010 Grand Mountain 260995 1993 SH Y 2010 Grand King 285690 1990 SH Y 2010 Hebei Spirit 269605 1993 SH Y 2010 Hebei Ambition 285640 1990 SH Y 2010 Libra Star 291435 1993 SH Y 2010 Lania 248050 1990 SH Y 2010 New Victory 291613 1993 SH Y 2010 Orpheus Asia 274990 1990 SH Y 2010 Okinoshima Maru 262945 1993 SH Y 2010 Taos 275993 1990 SH Y 2010 Pacific Ruby 260988 1993 SH Y 2010 Vasant J Sheth 261167 1990 SH Y 2010 Phoenix Star 291435 1993 SH Y 2010 Prem Putli 280654 1993 SH Y 2010 1991 Sala 279989 1993 SH Y 2010 Satsuma 258019 1993 SH Y 2010 Agios Nikolaos III 281751 1991 SH Y 2010 Shinyo Guardian 259993 1993 SH Y 2010 Al Awdah 284533 1991 SH Y 2010 Sunlight Jewel 300364 1993 SH Y 2010 Falkonera 264892 1991 SH Y 2010 Sunrise III 264165 1993 SH Y 2010 Front Highness 284317 1991 SH Y 2010 Suva 293371 1993 SH Y 2010 Front Lady 284487 1991 SH Y 2010 Sylt 293297 1993 SH Y 2010 Front Lord 284497 1991 SH Y 2010 Takayama 259991 1993 SH Y 2010 Front Vanadis 285873 1991 SH Y 2010 Tataki 244275 1993 SH Y 2010 Grand Lady 281794 1991 SH Y 2010 Kaimon 261155 1991 SH Y 2010 Nichiryu 249037 1991 SH Y 2010 1994 Nile 285739 1991 SH Y 2010 Berge Stadt 306951 1994 DH Y Orient Jewel 275628 1991 SH Y 2010 La Madrina 299700 1994 DH Y Shinyo Alliance 248034 1991 SH Y 2010 New Vision 279864 1994 DH Y Shinyo Mariner 271208 1991 SH Y 2010 Al Bali Star 291435 1994 SH Y 2010 Sunrise Iv 259530 1991 SH Y 2010 Carina Star 305668 1994 SH Y 2010 Sunrise V 264164 1991 SH Y 2010 Dar Yun 262618 1994 SH Y 2010 Tohdoh 261212 1991 SH Y 2010 Falcon 265995 1994 SH Y 2010 Welsh Venture 280000 1991 SH Y 2010 Grand Pacific 263097 1994 SH Y 2010 Yahiko Maru 259490 1991 SH Y 2010 Hamal Star 301550 1994 SH Y 2010 Han-Ei 259999 1994 SH Y 2010 1992 Hydra Star 305846 1994 SH Y 2010 Markab Star 301227 1994 SH Y 2010 Radiant Jewel 302149 1992 DS Y 2015 Mirfak Star 301542 1994 SH Y 2010 Sunrise Jewel 302440 1992 DS Y 2015 Orion Star 305783 1994 SH Y 2010 A H Bhiwandiwalla 264301 1992 SH N 2005 Pacific Crystal 264158 1994 SH Y 2010 Al Samidoon 284889 1992 SH Y 2010 Pacific Superior 269605 1994 SH Y 2010 Al Shuhadaa 285117 1992 SH Y 2010 Polaris Star 301569 1994 SH Y 2010 Al Tahreer 284532 1992 SH Y 2010 Provence 285365 1994 SH Y 2010 Antiparos 269065 1992 SH Y 2010 Shaula Star 301591 1994 SH Y 2010 Asian Jewel 264484 1992 SH Y 2010 Suhail Star 301862 1994 SH Y 2010 Astro Leon 285767 1992 SH Y 2010 Astro Libra 285771 1992 SH Y 2010 Bright Artemis 261284 1992 SH Y 2010 1995 Front Duke 284480 1992 SH Y 2010 Astro Centaurus 299900 1995 DH Y Kanayama 258094 1992 SH Y 2010 Atlantic Liberty 281559 1995 DH Y New Valor 281598 1992 SH Y 2010 Atlantic Prosperity 310000 1995 DH Y New Venture 291640 1992 SH Y 2010 C. Trust 281226 1995 DH Y Nichiwa 249107 1992 SH Y 2010 Camden 298306 1995 DH Y Noto 286006 1992 SH Y 2010 Chelsea 298432 1995 DH Y Nuri 285933 1992 SH Y 2010 Diamond Hope 264340 1995 DH Y Oriental Venture 281018 1992 SH Y 2010 Jupiter Glory 298816 1995 DH Y Orpheus Orchid 258080 1992 SH Y 2010 Kensington 298306 1995 DH Y Pacific Beauty 258096 1992 SH Y 2010 La Paz 299700 1995 DH Y Pacific Courage 269101 1992 SH Y 2010 Mayfair 298405 1995 DH Y Shinyo Clipper 243870 1992 SH Y 2010 Super Zearth 265353 1995 DH Y Suzuka 269581 1992 SH Y 2010 Universal Peace 299700 1995 DH Y Titan Uranus 254351 1992 SH Y 2010 Alphard Star 301858 1995 SH Y 2010 Tohzan 255396 1992 SH Y 2010 Astro Luna 264340 1995 SH Y 2010 Astro Lyra 284410 1995 SH Y 2010 1993 C Navigator 277798 1995 SH Y 2010 C Planner 278157 1995 SH Y 2010 Arosa 291381 1993 DH Y El Junior 258096 1995 SH Y 2010 Chios 301824 1993 DH Y Gemini Star 301862 1995 SH Y 2010 Crude Guardian 290927 1993 DH Y Golden Stream 275616 1995 SH Y 2010 Eagle 284493 1993 DH Y Hebei Mountain 301665 1995 SH Y 2010 Folk Star 299999 1993 DH Y Hyundai Star 281199 1995 SH Y 2010 La Esperanza 299700 1993 DH Y Katori 261031 1995 SH Y 2010 La Prudencia 298900 1993 DH Y Navix Azalea 269141 1995 SH Y 2010 New Wisdom 298033 1993 DH Y Pherkad Star 301389 1995 SH Y 2010 Olympic Loyalty 303184 1993 DH Y Savoie 306430 1993 DH Y Sebu 293239 1993 DH Y 1996

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Bourgogne 296230 1996 DH Y Tenryu 281050 1999 DH Y Crown Unity 300482 1996 DH Y Tokachi 280973 1999 DH Y Ghawar 300361 1996 DH Y Hampstead 298306 1996 DH Y 2000 Hawtah 300361 1996 DH Y A. I. Angelicoussis 306085 2000 DH Y Iran Nabi 298731 1996 DH Y Asian Progress II 314026 2000 DH Y Iran Najm 298731 1996 DH Y Bandaisan 281037 2000 DH Y Iran Nesa 298731 1996 DH Y British Pride 305994 2000 DH Y Iran Noah 298731 1996 DH Y British Progress 306397 2000 DH Y Iran Noor 298732 1996 DH Y British Purpose 306307 2000 DH Y Majestic Unity 300549 1996 DH Y C. Dream 298570 2000 DH Y Navix Astral 275644 1996 DH Y Effie Maersk 307190 2000 DH Y Ohminesan 267812 1996 DH Y Eli Maersk 259999 2000 DH Y Olympic Legacy 302789 1996 DH Y Ellen Maersk 308491 2000 DH Y Os Arcadia 298960 1996 DH Y Else Maersk 308491 2000 DH Y Os Concord 301345 1996 DH Y Front Commodore 298620 2000 DH Y Ramlah 300361 1996 DH Y Front Tina 298824 2000 DH Y Raven 301653 1996 DH Y Hawk 306324 2000 DH Y Sovereign Unity 309892 1996 DH Y Ibukisan 299999 2000 DH Y T. M. Harmony 264992 1996 DH Y Ikomasan 299986 2000 DH Y Tajima 265539 1996 DH Y Kestrel 306278 2000 DH Y Watban 300361 1996 DH Y Lucky Trader 298677 2000 DH Y Hyundai Banner 281074 1996 SH Y 2010 M. A. Angelicoussis 300000 2000 DH Y Maritime Jewel 299364 2000 DH Y 1997 Mars Glory 299089 2000 DH Y C Bright 309636 1997 DH Y Namur 298552 2000 DH Y Courtenay Bay 300955 1997 DH Y Nordmillennium 301429 2000 DH Y Equatorial Lion 300349 1997 DH Y Nysa 299543 2000 DH Y Meridian Lion 300349 1997 DH Y Oscilla 302561 2000 DH Y Regal Unity 309966 1997 DH Y Overseas Donna 309498 2000 DH Y Safaniyah 300361 1997 DH Y Patris 298543 2000 DH Y Tantramar 300955 1997 DH Y Raphael 308700 2000 DH Y Universal Brave 299997 1997 DH Y Regulus Voyager 310138 2000 DH Y Universal Prime 299985 1997 DH Y Ryuohsan 281050 2000 DH Y Sanko Unity 298920 2000 DH Y 1998 Takasuzu 279989 2000 DH Y Al Salheia 310453 1998 DH Y Tenyo 281050 2000 DH Y Al Shegaya 310513 1998 DH Y Tenzan 281050 2000 DH Y Antares Voyager 309995 1998 DH Y Titan Glory 308491 2000 DH Y Front Century 311189 1998 DH Y Ubud 279999 2000 DH Y Front Champion 311286 1998 DH Y Ulan 299325 2000 DH Y Front Vanguard 300058 1998 DH Y Ural 279999 2000 DH Y Front Vista 300149 1998 DH Y Venus Glory 299089 2000 DH Y Hyundai Sun 301178 1998 DH Y Washusan 281050 2000 DH Y Millennium 301171 1998 DH Y Yohteisan 281050 2000 DH Y Neptune Glory 299127 1998 DH Y Orion Trader 259997 1998 DH Y 2001 Saturn Glory 272700 1998 DH Y Antonis 309371 2001 DH Y Takachiho II 280889 1998 DH Y Ariake 298530 2001 DH Y Ti Creation 298324 1998 DH Y Arion 309459 2001 DH Y Artois 298330 2001 DH Y 1999 Astipalaia 305965 2001 DH Y Algarve 298969 1999 DH Y Astro Castor 306344 2001 DH Y Alrehab 301620 1999 DH Y Astro Chorus 305704 2001 DH Y Ascona 299198 1999 DH Y Astro Cygnus 306344 2001 DH Y Ashna 301438 1999 DH Y Famenne 298412 2001 DH Y Astro Callisto 299167 1999 DH Y Formosapetro Ace 281395 2001 DH Y British Pioneer 306397 1999 DH Y Formosa. Challenger 281395 2001 DH Y Christina 309344 1999 DH Y Formosa. Discovery 281434 2001 DH Y Diamond Jasmine 281050 1999 DH Y Harad 303115 2001 DH Y Elisabeth Maersk 307190 1999 DH Y Kos 305870 2001 DH Y Emilie Maersk 308571 1999 DH Y Kumanogawa 299988 2001 DH Y Front Chief 311224 1999 DH Y Mercury Glory 298990 2001 DH Y Front Comanche 300133 1999 DH Y Mogamigawa 299999 2001 DH Y Front Commander 311168 1999 DH Y Overseas Ann 309327 2001 DH Y Front Crown 311168 1999 DH Y Overseas Chris 308700 2001 DH Y Gemini Voyager 310138 1999 DH Y Pluto Glory 298911 2001 DH Y Golden Victory 300155 1999 DH Y Sakura I 296000 2001 DH Y Kou-Ei 279999 1999 DH Y Sarah Glory 298628 2001 DH Y Luxembourg 299150 1999 DH Y Shinyo Kannika 281395 2001 DH Y Nichihiko 281705 1999 DH Y Stena Victory 312638 2001 DH Y Ocana 300144 1999 DH Y Stena Vision 312679 2001 DH Y Omala 306009 1999 DH Y Utah 299498 2001 DH Y Opalia 302193 1999 DH Y Utik 299450 2001 DH Y Osprey 284893 1999 DH Y Pacific Lagoon 305839 1999 DH Y 2002 Phoenix Voyager 310137 1999 DH Y Abqaiq 302986 2002 DH Y Ryuho Maru 281050 1999 DH Y Amantea 309287 2002 DH Y Takasago Maru 281050 1999 DH Y Astro Challenge 299222 2002 DH Y Takase 259993 1999 DH Y Britanis 304732 2002 DH Y

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Charles Eddie 305460 2002 DH Y E. I. Angelicoussi 306229 2004 DH Y Cosgreat Lake 298833 2002 DH Y Eneos Tokyo 300976 2004 DH Y Crude Crest 300000 2002 DH Y Erha Fpso 368000 2004 DH Y Crude Progress 300000 2002 DH Y Flandre 305704 2004 DH Y Crude Topaz 319430 2002 DH Y Formosapetro Empire 299170 2004 DH Y Eagle Vermont 306999 2002 DH Y Fujikawa 299984 2004 DH Y Eagle Virginia 306999 2002 DH Y Iran Darab 299500 2004 DH Y Front Eagle 309064 2002 DH Y Iran Dena 299500 2004 DH Y Front Falcon 308875 2002 DH Y Irene Sl 319247 2004 DH Y Front Page 299164 2002 DH Y Isuzugawa 299984 2004 DH Y Front Serenade 299152 2002 DH Y Kai-Ei 299997 2004 DH Y Front Stratus 299157 2002 DH Y New Century 299031 2004 DH Y Iran Delvar 299500 2002 DH Y Nichioh 303994 2004 DH Y Iran Hormoz 299261 2002 DH Y Nissho Maru 300544 2004 DH Y Iran Huwayzeh 299242 2002 DH Y Oriental Jade 306352 2004 DH Y Kaimon II 314014 2002 DH Y Sea Energy 305318 2004 DH Y Koho I 301045 2002 DH Y Sea Force 305442 2004 DH Y Leo Star 316501 2002 DH Y Starlight Venture 317970 2004 DH Y Marjan 302977 2002 DH Y Taga 303430 2004 DH Y Neptune 319360 2002 DH Y Takamine 306206 2004 DH Y Nichinori 298414 2002 DH Y Toba 299980 2004 DH Y Nippon 298399 2002 DH Y World Lake 298564 2004 DH Y Otina 298465 2002 DH Y World Lion 298563 2004 DH Y Overseas Mulan 319029 2002 DH Y Xin Jin Yang 297376 2004 DH Y Pisces Star 316808 2002 DH Y Younara Glory 320050 2004 DH Y Safwa 303138 2002 DH Y Sky Wing 299997 2002 DH Y 2005 Taizan 300405 2002 DH Y Xin Ning Yang 298000 2005 DH Y Tanabe 298561 2002 DH Y Aquarius Wing 300500 2005 DH Y Tateyama 300373 2002 DH Y Bunga Kasturi Dua 300542 2005 DH Y Ti Africa 441893 2002 DH Y Tokio 306206 2005 DH Y Ti Asia 441893 2002 DH Y Eagle Valencia 306999 2005 DH Y Ti Europe 441893 2002 DH Y Toyo 310309 2005 DH Y Tsurusaki 300838 2002 DH Y Desh Ujaala 316217 2005 DH Y Chrysanthemum 318000 2005 DH Y 2003 Athina 318658 2005 DH Y Apollonia 308200 2003 DH Y Seaking 318669 2005 DH Y Aries Star 316476 2003 DH Y Spyros 319000 2005 DH Y Astro Carina 306314 2003 DH Y Andromeda Voyager 320472 2005 DH Y Astro Corona 305870 2003 DH Y Australis 299095 2003 DH Y Bunga Kasturi 298100 2003 DH Y C. Champion 317614 2003 DH Y Capricorn Star 316507 2003 DH Y Cosbright Lake 299079 2003 DH Y Cosglory Lake 299145 2003 DH Y Crude Sun 309233 2003 DH Y Crudestar 318692 2003 DH Y Eneos Breeze 301013 2003 DH Y Iran Damavand 299500 2003 DH Y Iran Daylam 299500 2003 DH Y Iran Hamoon 279400 2003 DH Y Iran Harsin 299229 2003 DH Y Iran Hengam 299214 2003 DH Y Iwatesan 300667 2003 DH Y Kaminesan 303896 2003 DH Y Nordenergy 319174 2003 DH Y Nordpower 319012 2003 DH Y Olympic Legend 308500 2003 DH Y Olympic Liberty 304992 2003 DH Y Overseas Rosalyn 317972 2003 DH Y Perseus Trader 299992 2003 DH Y Rokkosan 300257 2003 DH Y Samco America 304996 2003 DH Y Samco Asia 305000 2003 DH Y Sea Fortune 299097 2003 DH Y Selene Trader 299991 2003 DH Y Ti Oceania 441585 2003 DH Y Tsurumi 300838 2003 DH Y Vega Trader 299985 2003 DH Y Venture Spirit 298287 2003 DH Y World Luck 298717 2003 DH Y World Luna 298555 2003 DH Y

2004 Ardenne Venture 318000 2004 DH Y Asian Progress III 306352 2004 DH Y C. Emperor 317650 2004 DH Y C. Vision 317614 2004 DH Y Eagle Vienna 306999 2004 DH Y

www.crweber.com 20 CHARLES R. WEBER TANKER REPORT CONTACT RESEARCH:07

Charles R. Weber Company, Inc. is one of the oldest and largest ship brokerage firms in the United States. Established in 1940, the company is an independent full- service shipbroker and marine consultant.

Based in Greenwich, Connecticut, Charles R. Weber offers a broad range of maritime brokerage and consulting services to international marine, trading and financial clients worldwide.

From tanker voyage charter, bare boat, and time charter to sale and purchase of all vessel types and marine projects in the tanker, off shore and specialist sectors of the market.

Charles R. Weber with their broad and diverse global part- nerships are able to develop marine projects, whatever their size or complexity, from concept to completion, providing their clients with over fifty years of maritime experience and expertise in all sectors of the marine industry.

After reading our quarterly If you would like further information or bespoke market analysis we would be happy to discuss your needs. Please feel free to contact us:

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Marine Projects Charles R. Weber Company Inc. Greenwich Office Park One Greenwich, Connecticut 06831 United States of America