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INTERTANKO Market SeminarHong Kong - 4 November 2002
Tim Huxley, Clarkson Hong Kong The Pros and Cons of Building Ships in China
Giles Lane, Clarkson, Singapore The Prospects in the Tanker Market with Focus on Asia
Erik Ranheim, INTERTANKO The State of the Industry
Japan's devastated banks
On the agenda
YUKOS’ OIL PRODUCTION UP 18.0% IN THE FIRST 9 MONTHS OF 2002
Mikhail KhodorkovskyChairman and CEOYUKOS Oil Company
The state of the industry
Status
Performance Market
The state of the industry Status
Vital to world economy Anonymous Improved relations to
other industry players
Accountable to Society
0 100 200 300 400
1General Electric World's largest company
Microsoft2
3ExxonMobil, World's largest oil company
BP
Shell
TotalFinaElf
ChevTex
8
10
25
32
Source: FT500
Largest shipping co. Oslo Stock Exchange
World largest companies $ bn market value
Largest charteres - cargo tonnes
- 15 30 45 60 75
EXXMOB
SHELL
ChevTex
BP
TotFinElf
Alpine
Repsol
SK Oil
Koch
Vitol These 10 charterer represent 33% of total reported f ixtures according to EA Gibson. The ExxonMobil market share is 6% of total
13%13% share
10%
9%
4%
Oil companies reducing fleets
0
10
20
30
40
50
60
1974 1978 1984 1990 1995 1997 1999 2002
ExxonMobil
Chevron/ Texaco
BPAmoco
Shell
Texaco
Mobil
Exxon
Chevron
BP
Amoco
dwt
A proficient oil transportation system means shared
responsibility
All market participants must focus on their main activity
Oil transportation=shared risk venture
Cargo/bunker propertiesLiability for pollution
Safe port/Under Keel Clarence SecurityTraffic Control Systems/Pilotage
Performance
Accidental oil pollution reduced by 78% 2nd/1st part 90s
Accidental oil pollution from tankers
0
225
450
675
900
1990-95 1995-01
0
17,500
35,000
52,500
70,000
000 ts spilt
bn tonne-miles
99.998% of the oil arrives
safely
No major spill since Erika
Accidental oil spill from tankers tonnes spilt per billion tonne mile transported
0
10
20
30
40
50
60
70
US oil spills into the sea - gallons
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00
Non shipping
All other shipping
Barges
Tankers
US oil spills into the sea - number
0
2000
4000
6000
8000
10000
12000
73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00
Non shipping
All other shipping
Barges
Tankers
Continuous decline in tanker incidents
0
200
400
600
800
1000
1200
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
Tanker incident by cause 1978-2002
0
100
200
300
400
500
78 80 82 84 86 88 90 92 94 96 98 00 02
CollisionFire/ExplFounderedTechnicalMisc WarGrounded
132 tanker incidents 2001
Collision37%
Fire/Exp.16%
Misc14%
Grounding19%
Technical14%
Miscellanous:6 terminal related3 smugglers2 highjacket/attcked by terrorists
Technical:11 engine trouble2 steering2 hull
Port State ControlAll ships versus tankers
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
1998all
1998tank
1999all
1999tank
2000all
2000tank
2001all
2001tank
2001Estimate
Detentions
Inspections
Port State Control- detention ratio All ships versus tankers
Port State ControlPercentage of inspected ships detained
0%
2%
4%
6%
8%
10%
12%
14%
20012000199919981997
0%
2%
4%
6%
8%
10%
12%
14%
Tankers
All ships
Market
The state of the market
Volatile freight market, declining prices
Tonnage balance relatively tight, high scrapping
Fundametals uncertain
Average monthly VLCC rates andMiddle East crude oil production
5,000
17,000
29,000
41,000
53,000
65,000
77,000
89,000
Jul-9
9
Nov-99
Mar
-00
Jul-0
0
Nov-00
Mar
-01
Jul-0
1
Nov-01
Mar
-02
Jul-0
2
US
D/d
ay18.0
19.0
20.0
21.0
22.0
23.0
24.0
25.0
Mb
d
Middle East crude oil production
VLCC rate AG-East
Tanker spot rate trends VLCC 280,000 dwt, AG-West until end Oct.
010,00020,00030,00040,000
50,00060,00070,00080,000
Source: Fearnleys
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000Source: Fearnleys
It all depends on your
perspective
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Aug-02 Sep-02 Oct-02
Source: Fearnleys
Supply
Modernisation tankers
622
51
75 81
9478
49
25 19
0
20
40
60
80
100
1991 1997 End 02 End 07 End 10
SH share (%)
DH share (%)
ERIKA I – Phase outMARPOL 13G single-hull tanker phase-out
tanker fleet 5,000 dwt and above
0
5
10
15
20
25
30
35
40
45
<1970
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
Millions
Dw
t
0
5
10
15
20
25
30
35
40
45Existing double-hull
Existing single-hull
For delivery
MARPOL 13G phase-out
Tanker deliveries and deletions
-150
-100
-50
0
50
100
150
200
250
300
1997 1998 1999 2000 2001 2002 2003 2004
178
71
3528
138
Tanker recycling by receiver country
0
5
10
15
20
25
30
84 86 88 90 92 94 96 98 00 02
Others/NN
Bangladesh
Pakistan
India
Taiwan
Korea
China
10 months
Demand
Crude oil seaborne trade - Indices
40
60
80
100
120
Tonne-miles
Tonnes
Miles
Based on f igures from Fearnleys
OPEC/non-OPEC crude oil production 1971-2002 (Proj.)
15
20
25
30
35
40
45
50
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
Mbd
Non-OPEC
OPEC
Europe
European crude oil imports
9.50
10.00
10.50
11.00
11.50
12.00
12.50
13.00
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
mbd
Europe
European products oil imports
3.50
4.00
4.50
5.00
5.50
1988
1990
1992
1994
1996
1998
2000
2002
mbd
European crude oil imports - mbd
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
1995 1996 1997 1998 1999 2000 2001 1Q02
Norway
UK
Middle East
W Africa
N Africa
FSU
Others
FSU oil exports
0.5
0.9
1.3
1.7
2.1
2.5
1994 1995 1996 1997 1998 1999 2000 2001 2002
Black Sea**Baltic Sea**
Druzhba Pipeline
**seaborne
N Sea oil production, mbd
0
1
2
3
4
5
6
7
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
Netherland
Denmark
Norway
UK
USA
US oil products imports
1.60
1.80
2.00
2.20
2.40
2.60
1994 1995 1996 1997 1998 1999 2000 2001 2002
mbd
USA
US crude oil imports
6.50
7.00
7.50
8.00
8.50
9.00
9.50
1994 1995 1996 1997 1998 1999 2000 2001 2002
mbd
US crude oil production and net crude oil imports1983-2003 (est.), monthly
Source: EIA
2
3
4
5
6
7
8
9
10Ja
n-83
Jan-
85
Jan-
87
Jan-
89
Jan-
91
Jan-
93
Jan-
95
Jan-
97
Jan-
99
Jan-
01
Jan-
03
Mb
d
US crude oilproductionUS net crude oilimportsLinear (US netcrude oil imports)Linear (US crudeoil production)
US Imports from Persian Gulf – mbd/%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1973 1976 1979 1982 1985 1988 1991 1994 1997 20000
2
4
6
8
10
12
14
16
As % share of total oil supplied
mbd
Oil consumption in selected Asian countries
0.00
2.00
4.00
6.00
8.00
10.00
80 82 84 86 88 90 92 94 96 98 00 02
mbd
China
India
Thailand
Korea
Taiwan
Seaborne chemical trades - mil tonnes
0
20
40
60
80
100
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Other
VegOils
Inorganics
Organics
Source: Drewry
Prospects
0
400
800
1200
160029
/06/
1990
29/0
6/19
91
29/0
6/19
92
29/0
6/19
93
29/0
6/19
94
29/0
6/19
95
29/0
6/19
96
29/0
6/19
97
29/0
6/19
98
29/0
6/19
99
29/0
6/20
00
29/0
6/20
01
29/0
6/20
02
World shares
Shipping
N American
Morgan Stanley Capital Index 1990-2002
..added uncertainty..
..Cheney Report…US National Energy Policy..
Source: BMW WWWsite
Oil - a Sunset Industry?The Future is Here Today
” Powered with Sun and
water The BMW 750hL, the youngest member of the
BMW hydrogen vehicle family”
8
12
16
20
24
28
321
97
0
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
4
6
8
10
12
14
16
Middle East Oil Prod mbd
Tonne miles
mbd'000bil tm
ProjectionIEA/EIA
Source: Fearnleys, IEA, INTERTANKO
Will the strong growth continue?
Medium term oil trade development
More short haul oil, FSU, W Africa, Mexico (-N Sea)
US oil production decline halted – long term up?
Increase in trade depend on Asia
Overall OECD oil demand flat
Short-term, cheap capacity lies in the Middle East
IEA: The pace of economic activity is the single most important driver of energy demand, but
Politicians may set a different scenario
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