EXPANDED PANAMA CANAL GIVES MARKET NEW TRADING OPTIONS

On June 26, the newly expanded Panama Canal opened for business. While traders and analysts don't believe there will be an immediate impact on oil trade flows due to currently unfavorable arbitrage economics and infrastructure bottlenecks at some US ports and the canal itself, the expanded canal opens new shorter routes that will give the market more options on shipping oil from from one side of the world to the other. Time and the profit motive will tell just how the canal gets used. In the meantime here are some of the highlights to changes in the canal, vessel requirements and GwhatRE someENL AofN thoseD new trade routes are.

COMPATIBLE CARRIER SIZES BEFORE AND AFTER CANAL EXPANSION PANAMA’S TRANSIT TIME ADVANTAGE FROM HOUSTON TO CHIBA, JAPAN 30 days via Panama Canal Max dimensions (m) Typical carrier* dimensions (m) 47 days via Suez Canal Current 2016 Aframx/ Suezmax VLCC VLGC LNG Q-Flex Q-Max 51 days via Cape of Good Hope expansion LR2 (LPG) standard (LNG) (LNG) 54 days via Cape Horn Length 294.30 366.00 245.00 275.00 333.00 230.00 280.00 315.00 345.00 LPG, LNG Beam 32.20 49.00 42.80 48.50 60.00 36.60 42.00 50.00 55.00 USGC LPG to Asia $12-$15/mt lower than via Cape of Good Hope SWEDEN Draft 12.00 15.24 14.90 17.00 22.00 11.50 11.30 12.00 12.00 Sabine Pass LNG to Japan, Korea falls toI $1/MMBtu,CELAND from $1.30/MMBtu Cargo 65,000RUSS mtIA 130,000 mt FINLAND SUEZMAX, AFRAMAX CRUDE OIL TRANSIT NORWAY Compatible after expansion Non Compatible after expansion Compatible half-laden Draft prevents fully loaded Suezmax crude cargoes Source: IEA Partially loaded Suezmas cargoes could work ESTONIA Fully loaded condensate cargoes on Suezmax can make it CANADA UNITED KINGDOM LATVIA Full Aframax tankers can make it with crude, condensateDENMARK LITHUANIA NETH. IRELAND GERMAPONLYABNEDLARUS BECLLZ.UEXC.H REP. AUSSLTORVIA KIA SWITHZ.UNGARY MONGOLIA SLCORVOEARNTOIAIMAANIA FRANICTEALBYOSS.E RB.& HEBRUZL. GARIA N. KOREA PORTUGAL ALBA&NM IMAAOCNET.. JAPAN UNITED STATES SPAIN GREECE S. KOREA 1 ROUTES TO ASIA MACLYTPARUS CBrazilHIN toA Asia TUNISIA LEBANON US Gulf Coast to Asia 3 MOROCCO ISRAEL US Gulf Coast to West Coast Latin America to Asia ALGERIA (Condensate, LPG, LNG) WESTERN SAHARAAtlantic LIBYA 2 MEXICO BAHAMAS Ocean BUR2MROUTESA TO US WEST COAST (OCCUPIED BY MOROCCO) LAOS CUBA DOM. REP. MAURITANIA Brazil to US West Coast JAMBAEILCIAZHEAITI MALI US Gulf Coast to USPH WestILIP CoastPINES HONDURAS CAPE VESREDNE GAL NIGECRHAD THAILAND GUATEMALA CAColombiaMBODVIIA EtoT USNA WestM Coast Pacific EL SALVADOR NICARAGUA GAMBIA BURKINA FASO TRINIDADG &U TINOEBAA-GBOISSAU BENIN ROUTES TO US GULF COAST Ocean CO5STA RICPAANAMA GUINEA COTTEOGNOIGERIA 3 PALAU VENEZUELGAUYANA SIERRA LEONE EcuadorBRUN EtoI US Gulf Coast FRENCH GUIANALIBERIDA'IVGOHCIREANECTAARMAEL RAOFORNICAN REPUBLIC MALAYSIA PANAMACOLOMBIASURINAME EQUATORIAL GUINEA 4 ROUTES TO PERU SAO TOME & PRINCIPE CONGO US Gulf Coast to Peru ECUADOR GABDORENMW.A RNEDPA. ROUTESI TOND LATINONE SAMERICAIA PAPUA 5 SOLOMON ISLANDS PERU OF CONGO Brazil to West Coast ELatinAS NTAmerica ETWIM GOURINEA 1 BRAZIL SOMOA ANGOLA VANUATU ZAMBIA DIMENSIONS OF LOCKS AND SHIPS FIJI BOLIVIA NAMIBZIAIMBABWE (m) TONGA PARAGUAY BOTSWANA 500 4 CHILE AUSTRALIA Length 427 m (1,400 ft) SOUTH AFRICA 400 ARGENUTRINUGAUAY Caribbean Sea PANAMA CANAL 12.04 m (39.5ft) 300 Length 304.8 m NEW ZEALAND (1,000 ft)

200 Bay of PANAMA 100 Panama Width 33.5 m (110 ft) Width 55 m (180 ft) Height 12.8 m (42 ft) Height 18.3 m (60 ft) 0 Existing locks New locks 15.20 m (50 ft)

Source: Platts