Russian oil export and tankers by Erik.Ranheim@INTERTANKO Manager Research and Projects Russian shipping 2008 St. Pete

1. Russian oil export andtankersbyErik.Ranheim@INTERTANKO.comManager Research and ProjectsRussian shipping 2008St. Petersburg17 June 2008

2. Russian oil • World largest exporter • World strongest expansion • Europe’s largest supplier • West, South, East, North • Large tanker companies Enormous energy infrastructure ports, trains, rivers, pipelines

3. World largest oil exporters – 30.3 mbd35% of consumption - 58% of export Pemex PdVSA KOTC Statoil NIOC/NITC Saudi Aramco/VELA Gasprom/Sovcomflot mbd Independent major oil companies losing control of resources?

4. World largest net oil exporters mbd

5. Increases in world oil demand supplied by FSU, Saudi Arabia and others mbd Since 2000, FSU has contributed with supply 55% of the oil demand increase, Saudi Arabia 18% and others 27% Source: IEA

6. FSU oil consumption and production mbd Russia oil reserves 7th in the worldR/P ration 22 years(world 42) Source: BP Review/IEA

7. FSU total net petroleum export 1994 - 2008 mbd Source: IEA

8. FSU petroleum export by export outlet mbd Source: IEA

9. Russian Crude oil export by outlet 4.2 mbd 1.26 mbd 0.86 mbd 1.26 mbd Source: OECD

10. Oil consumption per capita Liters per year

11. Sources of European crude oil - mbd mbd Source: OECD

12. Sources of European crude oil - mbd mbd Source: OECD

13. Russian oil production stagnating? • May Russian oil production of 9.95 mbd (year-on-year decline for the 5th straight month • IEA Russian production flat in 2008 at 10.1 mbd • Higher and potentially year-round production from Sakhalin 2 counteracts (decline expected from Sakhalin 1) • Other 2008 increments from Vankor* and Salym W Siberia (0.12 mbd) • Rosneft expects: • 2.02 to 2.23 mbd in 2008 • 2.6 mbd in 2010 • 3.2 mbd in 2015, and • 3.4 mbd by 2020 Stagnation, geological or institutional? (*The Vankor oil will have to make the distance of 5,800 km (including 3,300 km – along the newly constructed pipelines) to come to the border with China near Skovorodino where the first stage of ESPO ends )

14. FSU petroleum Black Sea export 07 324 tankers 13.4m ts 154 tankers 6.2m ts Yuzhny 250 tankers 9.7 m ts 957 tankers 75.8m ts Tuapse 451 tankers 12.7 m ts 153 tankers 2.8 m ts 214 tankers 9.1 m ts mbd Tanker transits >200M2,140 per year 95% double hulls 31% Suezmaxes 96% take pilot • 56,000 ships/10,000 tankers (incl. 800 LPG), 150 m ts liquid cargoes

15. Turkish Straits – transit profiles – 4Q06/07 Number ships A slight decrease in overall traffic, more so by “hazardous vessels” and a significant drop in Gas Carriers, but….., (Note; all LNG carriers are >200m)

16. Turkish Straits – Transit Profiles 4Q07 Number Source: Chevron

17. 2007 Black Sea crude outlets Total 108.3 m ts/year Approx. 14-15 m ts/yearCrude Oil “remain” in Black Seaas import to Black Sea Countries

18. 2007 Black Sea crude exporters

19. Russia opening new frontier The first tanker was loaded September 2006. Since then, on average every 3-4r days tankers have been departing with the Sakhalin-1 crude oil, Sokol, delivering the oil to global markets. Each tanker carries up to 720,000 barrels (100,000 tons) of crude.. Yuzhno-Sakhalinsk, Russia, September 27, 2007 To ensure safe export of crude in the severe winter conditions of the Tatar Strait, a dedicated fleet of double hull Aframax class tankers is made of cold weather steel to protect against fractures.

20. Pipeline Eastwards threat to tanker shippingEastern Siberia Pacific Ocean Pipeline (ESPO): Taishet - Skovorodino - Kozmino Bay 2 Stg: 1,300 miles1.6 mbd 1 Stg: 1,200 miles0.6 mbd Dec 2009? $12.5 bn/fill 1.5 m bbls 1 Stg: 1,200 miles0.6 mbd Dec 2009? $12.5 bn/fill 1.5 m bbls 43-mile, 0.3 mbd spur from Skovorodino to the Chinese border 1 mbd PG - Japan 20 VLCC, Nakhodka - Japan 6 VLCCs

21. Seaborne Crude Oil Trade Flows 2006

22. Exporting from difficult areas • Baltic - narrow waters, ice • Black Sea - narrow waters, weather - politics • North - weather and ice • East – long pipelines – short sea routes • Druzba - political Enormous infrastructure ports, trains, rivers, pipelines – tankers often a small part

23. Market effect (pipeline effect) of one mbd transported various trades

24. Russian tanker owners Average 6.6 years Sovcomflot and Novoship among 15 largest tanker owners in the world Average 6.8 years Average 12.5 years World average age tankers 12.2 years Average 25.8 years + some 150 other tanker owners with mainly small tankers Average 27 years Total average age Russian tankers 22.5 years m dwt

25. Conclusion • Russia the energy superpower economic political • Energy and politics goes hand in hand oil east and/ or westwards? • New frontiers may be expensive and slow to open • Strong Russian tanker companies Future? I cannot forecast you the action of Russia. It is a riddle wrapped in a mystery inside an enigma; but perhaps there is a key? The key is Russian national interests. Sir Winston Churchill, 1939