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Latin American Panel November 1, 2011

Latin American Panel November 1, 2011. TANKER MARKET OVERVIEW JOSEPH ANGELO MANAGING DIRECTOR. The state of the Tanker Industry . Weak market, uncertain/weak fundamentals Oversupply of tankers slow steaming (ballast) Lowering of C/P speed Suez Canal less used

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Latin American Panel November 1, 2011

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  1. Latin American PanelNovember 1, 2011 TANKER MARKET OVERVIEW JOSEPH ANGELO MANAGING DIRECTOR

  2. The state of the Tanker Industry • Weak market, uncertain/weak fundamentals • Oversupply of tankers • slow steaming (ballast) • Lowering of C/P speed • Suez Canal less used • Piracy effect – longer routes/inefficiency • Waiting • Increased Middle East export has not helped freight rates

  3. Tanker MarketWorld GDP and oil demand change % Oil/tanker demand correlates with Economic growth IMF forecast positive growth projected – but there is great uncertainty Because the extra barrel is taken from the Middle east, tonne-miles growth is stronger Source. IMF/BP/IEA/Fearnleys

  4. Recent Tanker Rates $/day Rates improved by slow steaming/backhauls Source: Baltic: Exchange/BITR

  5. Tanker MarketOil price and freight rates 1970-2011 $ per barrel

  6. Tanker MarketVLCC newbuilding prices and break even rates m $ $/day

  7. Tanker Demand

  8. Middle East oil production mbd Year

  9. Tanker DemandIncrease in world oil demand mbd Based on data from IEA

  10. Tanker DemandSeaborne Oil Trade and Middle East Oil production mbd 000 bn tonne-miles Based on Fearnleys/IEA

  11. Tanker DemandCrude oil seaborne trade 38 mbd in 2010 3057 bn tonne miles in 2010

  12. Tanker DemandOil balance: production - consumption mbd Source: INTERTANKO / IEA

  13. Tanker DemandMiddle East Oil production Jan-2000 to Aug-2011 Primo Oct. 2011negative VLCC Rates mbd Based on Fearnleys/IEA

  14. Tanker DemandTrade movements mbd Based on BP

  15. Tanker Supply

  16. Tanker SupplyTanker fleet development m dwt number Assumed orderbook August 2011, include chemical tankers Tanker fleet increase 2003-2013 some 72%

  17. Tanker SupplyTanker phase out, deliveries, scrapping tankers 10,000 dwt+ balance assuming various demand increases m dwt Under above assumptions, 6% growth necessary to regain market balance by 2014 or more removal of DH tankers

  18. Tanker SupplyNewbuilding Orders (Clarkson)

  19. Average age tanker fleet above 10,000 dwt Years Based on LRFairplay

  20. Tanker Values

  21. VLCC value - 15 years old and scrap value m $ Source: Clarkson/SIW

  22. Conclusion

  23. ConclusionsOil demand, tonne-mile, and tanker fleet indices Tanker fleet increase 2002-2010: 46% Source: IEA, Fearnleys, INTERTANKO

  24. ConclusionsSlowing Growth, Rising Risks • Fundamentals uncertain or weak • Recovery in the US and Europe and debt problems are aggravating situation • Chinese growth is threatened partly by weakening world economy but also by a domestic debt burdened industry • Oil demand growth still positive, but weakening • Surplus of tankers will continue to increase

  25. ConclusionsStrategic tanker consideration • China and Asia expected to drive demand and the Middle East has the reserves • Successful Green House Gas reduction will mean reduced oil consumption • High oil prices dampen growth in world economy and a stimuli to fuel saving • Substantial opportunities for both owners and charterers with regard to vessel speed • Costs reduction needs carful risk management

  26. Thank You For more information, please visit www.intertanko.com

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