New Storage Play

Opportunities at

Port of Ulsan

Ulsan Port Authority

CEO Jong-yeol Kang

Presented at Platts Bunkering and Storage Asia

| New Storage Play Opportunities at Port of Ulsan

Contents

Market Outlook 01

02 About Port of Ulsan

03 North East Asian Oil Hub Project

| New Storage Play Opportunities at Port of Ulsan

Market Outlook

01

| New Storage Play Opportunities at Port of Ulsan

Recent Oil Market Development

Crude oil price

downturn and slow

recovery since the

end of 2014

In return, high level

of instability and

volatility

Power game Non-

OPEC and OPEC

countries

Crude Oil Price and Volatility (14’~16’)

※ Source : 15th International Energy Forum Ministerial, OPEC, 2016.

0

20

40

60

80

100

120

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

5.0%

3.0%

3.5%

4.0%

4.5% ORB Price (US＄/b)

ORB StdDev (US＄/b)

| New Storage Play Opportunities at Port of Ulsan

Expected total

primary energy

demand increase

by 40% in the

period to 2040 led

by developing

countries including

China, India, and

other Asian

countries

The average 0.1%

growth projected

for OECD countries

and the 0.6% for

Eurasia

Long Term Supply/Demand Outlook

Total Primary Energy Demand by Region

※ Source : World Oil Outlook, OPEC, 2016.

| New Storage Play Opportunities at Port of Ulsan

Imports into the

Asia-Pacific region

will grow by nearly

9 mb/d between

2015 and 2040.

Combined crude oil

imports into the US

& Canada, Europe,

Japan and

Australia will drop

by 3 mb/d between

2015 and 2040.

Pivoting to Asia!

Crude oil imports to the Asia-Pacific by origin from 2015 to 2040 (mb/d)

※ Source: World Oil Outlook, OPEC, 2016.

2015 2020 2025 2030 2035 2040

0

5

10

15

20

25

30

35 Middle East

Europe

Latin America

Russia & Caspian

Africa

US & Canada

| New Storage Play Opportunities at Port of Ulsan

Condensate is not crude, but a

crude equivalent!

The net increase in non-OPEC

crude and lease condensate

production led by a few countries:

Canada, the United States, and

Russia among others.

US condensates have reached

South Korea and Japan.

In April, 2016, of the 53,489 b/d of

condensate exports, 12% headed

to the Netherlands and 29% to

South Korea.

North America Crude and Condensate

Non-OPEC crude and lease condensate supply

million barrels per day

Other

Russia

United States

Canada

Brazil

Mexico

Kazakhstan

0 5 10 15 20

2010

2040

※ Source : EIA, International Energy Outlook 2016.

| New Storage Play Opportunities at Port of Ulsan

New Logistic Points

※ Source : Al Masah Capital Research, EIA

Danish Straits

Hamburg

Turkish Straits

Strait of Hormuz Suez Canal

Fujairah Bab el-Mandab

Jiangyin

Shandong

Amsterdam

Rotterdam

Dalian

Shanghai

Strait of Malacca Singapore

Panama Canal

Houston

Sao Paulo Locations of Major Oil Storage Terminals

World Oil Transit Chokepoints

Major Flows

| New Storage Play Opportunities at Port of Ulsan

About Port of Ulsan

02

| New Storage Play Opportunities at Port of Ulsan

Port of Ulsan - Overview

※ Depth of water : 7m~27m

※ 5thousand~32millionDWT

※ 5 Single Point Mooring Buoys

| New Storage Play Opportunities at Port of Ulsan

Tank Storage Facilities in Port of Ulsan

| New Storage Play Opportunities at Port of Ulsan

2 Hinterland Industrial Complexes

(Ulsan-Mipo National Industrial

Complex and Onsan National

Industrial Complex)

Refineries and Chemical

Complexes: SK Energy, S-Oil,

Lotte Fine Chemicals, LG

Chemicals, BASF, DOW Chemicals,

Hanhwa Chemical (Continuous

Import/Export Streams of Crude

and Products)

Global-level Petro-chemical Complex

| New Storage Play Opportunities at Port of Ulsan

World 4th

Largest Liquid Bulk Handling Port

In 2016, total cargo volume reached 197 million tons

Over 80% of cargo is liquid bulk – 161 million tons

Steady growth in annual throughput

Fourth largest liquid bulk handling port in the world

20

0

40

60

80

100

120

140

160

180

200

Mil Tons

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Year

Petro-Chemical (Including Petroleum Gas) Total ※ Source : Ulsan Port Authority

| New Storage Play Opportunities at Port of Ulsan

Port of Ulsan - Strength

Vision Developing a ‘Global Hub-Port’ for liquid bulk logistics

Economized Logistic Costs with port incentives.

Year-round Services of Handling Specialized

Liquid Bulk

Tailored Information Systems to Promote

Customer Satisfaction

Real-Time Port Management Information System

| New Storage Play Opportunities at Port of Ulsan

North East Asian Oil Hub Project

03

| New Storage Play Opportunities at Port of Ulsan

Introduction to North-east Asian Oil

Hub Project

SOUTH PORT SITE

NORTH PORT SITE

South Port

(2nd Phase)

Areas : 604 thousand m²

Storage Capacity : 18.5 Million

Barrels

Berth Capacity : 4 Berths & 1 Buoy

(200K & 300 K)

Crude & Product Focused

Construction Period : 2017 ~ 2025 North Port

(1st Phase)

Area : 302 thousand m²

Storage Capacity : 9,900 thousand

Barrel

Berth Capacity : 6 Berths

(10K ~ 120K)

Product Focused

Construction Period : 2010 ~ 2019

S-OIL

SK

Energy

KNOC

| New Storage Play Opportunities at Port of Ulsan

Development Project Overview

Start Land &

Infrastructure

Development

2013

Land & Infrastructure

Development

Completion

2017

Start Tank Terminal

Development

2017

Development

Completion &

Operation

2019

Land & Infrastructure

Development

Backyard Creation

Harbor Operation

Terminal and Facility

Development

Investor Invitation

Leasing Commitment Invitation

Ulsan Port Authority Korea National Oil Corp.

KEY PARTICIPANTS

| New Storage Play Opportunities at Port of Ulsan

Incentives

Liquid Bulk Incentive Program 1 Bunkering Incentive Program 2

Free of every ‘UPA Port Tariffs’ levied on the

consignee (Vessel Due, Dockage(Berth

Hiring Fee), Anchorage Due,

Wharfage(Cargo Due)) for new cargo

owners

Consignee of a B/L(Bill of Lading) which

designates ULSAN as the ‘unloading port.’

Applicants must use the commercial tank

terminals located in ULSAN region in

order to receive the incentive.

Applicants must not have any records of

using Port of Ulsan for imports, for the

period of last 5 years.

Free of ‘UPA Port Tariffs’ levied on the ship

owner (Vessel Due, Dockage(Berth Hiring

Fee), Anchorage Due)) to lie at berth for a

fueling purpose

Consignee of a B/L(Bill of Lading) which

designates ULSAN as the ‘unloading port.’

Applicants must use bunkering

companies located in ULSAN region in

order to receive the incentive.

| New Storage Play Opportunities at Port of Ulsan

Business Opportunities

Quality & Spec

Changing within

Bonded Areas

Exporting/

Importing

Domestic

Distributing

Domestic

Distributing

Retailing

Opportunity

Oligopoly in

domestic

petroleum product

market in Korea

Quality & Spec

Changing within

Bonded Areas

Blending within

General Bonded

Areas

Exporting

Exporters/

Importers

International

Oil Traders

Wholesalers/

Retailers

| New Storage Play Opportunities at Port of Ulsan

Storage Play Opportunities

Current

Short-term and Spot Trading

Available

More Customized Product

Offering

Logistic + Product-Spec

Focused

Access Third Party Cargoes

for Trading

Past

Long Term Contract

Refinery Production

Logistic Focused

Scale Based Benefits

| New Storage Play Opportunities at Port of Ulsan

Summary

North East Asia Regional Hub Port for Breaking and

Making Crude and Condensate Bulk

Center for Petroleum Products and Chemical Flows

Accessible to More than 30 Refineries within Korea,

China, and Japan

Center for Petrochemical Storages to Meet Flexible

Demands for Crude, Petroleum Products, and

Chemicals

| New Storage Play Opportunities at Port of Ulsan

Q&A