Newsmagazine for Leif Höegh & Co ASA (LHC) No 1 - 2002

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CONTENTS

China

LHC joinsWBCSD

Opinions

ISO 14001

Environmentalreport

The SnøhvitFairytale

HUAL

HFS Billboard

Market Outlook

The water of life Snøhvit LNG contract

Leif Höegh & Co. is the firstinternational shipping companyto join WBCSD (World BusinessCouncil for SustainableDevelopment). There is agrowing concern about theenvironment, the socialresponsibility and the poverty in developing countries.Customers, consumers,politicians, i.e. society at large,are wondering what measuresare taken by the businesscommunity.

-In order to be in the forefront, webelieve it is important to engage inthe dialogue with other industrialleaders, who want to share theresponsibilities looking for newsolutions and developments, thusmaking the world a better place tolive also for future generations,Westye Høegh says. -Pro-activestands, trying to find solutions tomany different questions and alsostrike the balance betweenincreased living standards and thetaxing of our natural resources in a sustainable way.

The potential of Chinese industry and economy is ofapproximately the same size as the Great Wall. LHCrealised this already several years ago, and now theNorwegian business community and the rest of theinternational society are coming to the same conclusion. In late January, Norwegian Prime Minister Kjell MagneBondevik headed a delegation on a round trip in China.The delegation, consisting of more than 100 businessexecutives, is eager to learn more and to position theircompanies. LHC was represented by President Tor JørgenGuttormsen and Chief Financial Officer Roar Flom.

But this is just a milestone in a long process for LHC. Back in 1996the company opened its first representative office in Shanghai withChinese staff. The company has established long termrelationships with Chinese steel mills in the bulk trade and worksclosely with Chinese energy plants developing new projects.

Furthermore, Höegh Fleet Services has employed Chinese sailorsfor several years. HFS has now obtained a Business Licence andhas established HFS China Ltd., the first Chinese-foreign jointventure member of CCOSEC (Co-ordination Council for OverseasSeamanship Employment of China). (See also Opinions and HFSBillboard in this issue of Höegh Dialogue.)

Towards the end of 2001, HUAL signed an agreement withCOSCO, the leading Chinese RO/RO shipping company. Theagreement covers joint marketing, tonnage co-operation andexchange of staff.

Westye Høegh visited China recently, not only to follow up on thisRO/RO agreement, but also to visit the office and recognize theemphasis on China from a strategic point of view. Alltogether, thisreflects the trust LHC has in the potential and the futuredevelopment of the People’s Republic of China (PRC).

-We are looking with particular interest at the RO/RO segment inPRC, President Tor Jørgen Guttormsen says. -Both import andexport will be of significance, the building of infrastructurethroughout the country will call for import of cranes, excavatorsand other high and heavy vehicles. But also LNG import will beimportant in the future, and we will do our best to position LHC inthis trade as well, Guttormsen adds.

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Published by: Leif Höegh & Co ASAEditorial staff: Charles Jensen, John S. Vestby and Mot Vandenberghe. Tel. 22 86 99 56, fax 22 86 99 45,

e-mail: mav@hoegh.no Journalist/editing: Stian Aakre, e-mail: saakre@online.noLayout/graphic design: BRAVE Reklamebyrå asCirculation: 2,800

HöEGH DIALOGUE:

Newsmagazine for Leif Höegh & Co ASA No 1- 2002 Newsmagazine for Leif Höegh & Co ASA No 1 - 2002

Although the books for 2001 are not closed at the timeof writing, it is clear that 2001 was a good year for LHC.This confirms our confidence in the focused strategy ofthe last years, a strategy which has been strengthenedby steps taken in 2001.

On the ro/ro side, HUAL’s acquisition of Kiwi Car Carrierswill give a leading role in the used car trade from Japanto New Zealand. Important cargo contracts have beenrenewed, and a joint venture agreement with Cosco willgive HUAL a strong foothold in the Chinese market. Theorganisation has been strengthened, and considerableresources have been devoted to the Chain and eClairinformation system projects. For our LNG activities, 2001has been a year of considerable expansion. In March, theHöegh Galleon was delivered to charterers aftersuccessful repairs of the cargo tanks and increased thenumber of LNG vessels under LHC’s operation from 3 to4. Just before Christmas, LHC’s secured its first LNGnewbuilding since Höegh Gandria was delivered in 1977,when a 20-year time charter agreement was signed withthe partners in the Snøhvit field, subject to the NorwegianParliament’s approval of the Snøhvit field development.

After the delivery of the liner service to its new owners,Höegh Lines is now able to focus solely on open hatchactivities. An important contract with Arauco wasrenewed during the year, and both the open hatchactivities and the reefer vessels made valuablecontributions to the strong result of 2001. Our focus onbeing a quality operator was confirmed when HöeghLines was awarded ISO 9002 certification and HöeghFleet Services was awarded ISO 14001 certificationduring the year.

Our efforts to reduce the negative environmental impactof our activities, have been in focus in 2001. Through theISO 14001 process, specific improvement targets havebeen set and will be monitored closely. We will this year,for the first time publish a separate EnvironmentalReport. In 2001, LHC was accepted as a member of theWorld Business Council for Sustainable Development.

In the last edition of Höegh Dialogue, I expressedconcern for the development in 2002 after the tragicevents of 11 September. As far as we are able to seetoday, the new year has got off to a good start for us.With your support and efforts, I feel confident that weare well set to continue our success also this year.

I wish all our readers the very best for 2002!

T.J. GuttormsenPresident Leif Höegh & Co ASA

A strong 2001

LHC joins WBCSDChina - a growing market

The World Business Council forSustainable Development (WBCSD)is a coalition of 150 internationalcompanies united by a sharedcommitment to sustainabledevelopment via the three pillars:economic growth, environmentalprotection and social equity. Ourmembers are drawn from morethan 30 countries and 20 majorindustrial sectors. We also benefitfrom a Global Network of 30national and regional businesscouncils and partner organizationsinvolving some 700 businessleaders globally.

(Source: www.wbcsd.org )

Brooke Au from the Shanghai office and Westye Høegh at the Great Wall in China at eight o'clock in the morning!

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Newsmagazine for Leif Höegh & Co ASA No 1 - 2002Newsmagazine for Leif Höegh & Co ASA No 1 - 2002

In this coloumn we intend to let the readers speak freely their opinions.(Opinions may be edited due to shortage of column space.) OP!N!ONS

The company's Gold Watch is awarded employees with25 years of service. On 12 December last year, ThorJørgen Guttormsen presented the watch to thirteen ofthe office staff during a pleasant dinner party at ourfounder's home in Oslo.

Some of the awards were quite overdue, as this was the firstarrangement of its kind since HUAL became part of the

organisation. Here were employees who joined Leif Höegh &Co as seamen or office staff as early as 1958 or later and whohave since then moved around in different parts of theorganisation, including HUAL and BONA.

As Thor Jørgen Guttormsen put it when he addressed theguests and thanked them for their loyal contribution to thecompany's success: "The 13 recipients of the Gold Watchtonight represent close to 400 years of experience!"

It was early July 2001 when I received a call from theManila office HFS-P. The proposal was not an ordinaryjob as ship’s Master, but to train the first batch ofChinese crew under my command. I was on vacation forjust a week and I had just signed off from my last vesselHUAL Tricorn. At first I was in doubt. ’Why should I haveto do that job? They are replacing us and why would Iteach them?’ It didn’t take long to realise that wasunfair. Most of the learning and training during mycareer was taught by foreigners. Very often Europeans.

Accepting the job would mean a challenge to me and to those ofmy team who were assembled to be responsible for training theChinese crew on board the HFS Car Fleet. Five key personnelwere assigned – four senior officers and a bosun. In the earlymorning of 22 October 2001 at the port Pyongtaek, a group ofChinese dressed in long sleeve shirts, slack pants and somewearing coats came aboard. You could not recognise theofficers amongst the crew. Unlike most of the Filipinos, you willfind them in blue jeans and polo shirts. A complete crew changetook place and was supervised by Fleet Manager Stein Eriksen,Human Resources Manager Jan-Erik Hofsli & Supt. SveinPedersen.

The day was very long and very hectic with a lot of peoplemoving around on board. Filipinos were teaching the Chinese,while simultaneously rushing the very limited time of turnover.The cargo operation was going on while others were attendingthe annual survey by the DNV. Late at night, when the cargooperation was completed, the vessel sailed to Japan.

During the first couple of days communication was very bad. Iam usually cool and calm. But this time I had to raise my voice inorder to attract attention. My nerves were on edge as I did notwant a simple mistake to jeopardise an entire operation or tolead to an accident. They are experienced seamen, however thenormal routine and operations on a car carrier is different inmany aspects, compared to other types of vessels. We haveexplained and demonstrated tasks to make sure theyunderstand. So the first week was used on familiarisation,understanding the operation on deck and the engine equipmentand its machinery and marine terminology in English.

In one month time, we’ve conducted a lot of safety drills, notonly once but sometime twice to familiarise them with our safetyequipment and how to respond in case of emergency. Theinstructions for SEMS were given top priority for within a monthwe will be audited for the renewal of the expiring SMC. Everyinstruction was interpreted and that takes time. The training paidoff and the Internal Audit conducted by lead auditor Capt.Johannes Mikalsen was successful. It was a great relief toeveryone that we passed the External Audit by the DNV.

Second month was a repetition and review of the first month.The officers are good in English, but sometime difficult to

understand. So we give orders first to the officers and its up tothem to execute the instructions.

In the final stage, we let them work by themselves and we onlyfollow-up with minor supervisory work. Now we are confidentthat they can handle and run the vessel under HFS-HUALstandard. Although communication has been the primarydifficulty, it has never been a hindrance for good co-operationand co-ordination of both party. As most of the crew havedifficulties in communicating, they are eager to learn the Englishlanguage.

For the Chinese crew, this is just the beginning. May youcontinue to improve the good performance that we haveestablished during the past years. There will always be room forimprovement and it is up to you as a group or as an individual toachieve the goal our Company has set for us.

The Filipino crew should not feel insecure that they are takingour job, but remember that our Company has invested a lot inour training to be more competitive. You don’t have to worryabout loosing a job if you know your own capability under themanagement of HFS. The Chinese are our colleagues in thisprofession.

On behalf of my team, Choff A.Romero, Cheng J.Lape, Eng2R.Victoria and Bosun R.Romero,

Good Luck and Welcome to HFS!

Capt. Odnesor C. MapaMaster, HUAL Tracer

Our Chinese colleagues

ISO 14001

Gold watch awardees

Höegh Fleet Services has just completed the first yearunder the ISO 14001 regime. Although the certificate didnot arrive until June 2001, operations in HFS have beenrun according to the standard the entire year. Toillustrate how the ISO 14001-process can be of help indeveloping procedures and operations, we have lookedat results from garbage handling on board ships in 2001.

-Garbage is divided into two main categories, Jan Høgmo in HFSexplains. -Garbage originating from cargo and cargo holds isrecorded separately from the garbage originating from "life onboard". I would also like to point out that by this work we are notnecessarily trying to minimise the magnitude of garbage, but weare trying to improve handling in order to meet the objective ofno disposal at sea in 2002, Høgmo says.

The numbers collected in 2001 indicate a total of 1,450 m3

garbage from cargo holds, and 400 m3 of this was dischargedinto the sea.

In the "life on board"-category, 1,000 m3 of garbage wasdischarged into the sea, a number not including beveragecontainers like bottles and cans. According to the ISO 14001record 22,600 bottles and 42,500 cans were thrown overboard

during 2001. 1,800 m3 of domestic waste was delivered to shore-based reception facilities, along with 38,700 bottles and 91,200cans.

-Our sailors’ efforts in 2001 have enabled us to put togetherthese results, Høgmo continues. -And we see from the numbersthat we have significant amounts of garbage, which justifies thework we do to ensure proper waste handling.

-In 2002 we are continuing the ISO 14001 process in HFS withnew objectives for the environmental aspects we have chosen. Inaddition we will take over the management of 11 HUAL vesselsfrom IUM, and all these ships must start to operate compliant toour SEMS (Safety and Environmental Management System)which incorporates the ISO 14001 procedures, Jan Høgmo says.

Regarding ballast water handling, HFS developed a specificballast water management plan in 2001. In 2002, a committeefrom HFS will look into all available ballast water handlingtechnologies, and report their findings towards the end of theyear. -There are still several aspects to be clarified when itcomes to ballast water policies, regulations and technologies.We want to be able to choose the best possible solution whenwe decide, Jan Høgmo concludes.

From left: Jan Ellingsen, Markus Markussen, Jan A. Høgmo,Marie Almklov, Sven Rise, Gunnar Andresen, Brynhild Rekvin,

Bjarne Blomberg, Geir Haugen, Trond Evju, Karl K. Hauger,Helge Solheim, Harald Christensen.

Leif Höegh & Co will in February 2002present its first Environmental Report inconjunction with the Annual Report 2001.Previously pertinent environmentalinformation was included as a chapter inthe Annual Report, but this year aseparate report is presented. This is aninitiative to increase the focus on theefforts being made to improve the overallenvironmental focus in the company.Höegh Dialogue peeked at the sketch…

-We want to use this report to send a messageto the shipping industry comprising clients,agents, competitors, authorities etc that we actupon our environmental responsibility, KristianSandem says. He has been part of the teamworking to put the report together.

-Our environmental contributions are of coursevery much reflected by the fact that HöeghFleet Services was awarded the ISO 14001-certificate in 2001 and in the way ISO 14001-procedures systemise our efforts, Sandemcontinues. -Ballast water management,use/escape of freon gases, emission ofexhaust gases, garbage disposal, consumptionof paper and consumption of one-time-usearticles are the issues the ISO-process focuseson presently.

-In addition to these aspects, we are alsoworking with three other projects: adding waterinto the fuel emulsion in order to reduce NOxemissions, sludge treatment of heavy fuel oilsludge and finally fuel oil additives to reduceemissions and consumption, Sandem explains.

The final Environmental Report will bepublished mid February 2002 along with theAnnual Report for 2001.

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Newsmagazine for Leif Höegh & Co ASA No 1 - 2002 Newsmagazine for Leif Höegh & Co ASA No 1 - 2002

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Environmental report

Passenger on boardPer Albert Lund from Bergen in Norway has always been veryinterested in shipping and shipping history. In October andNovember 2000 he travelled on board Höegh Dyke on a roundtrip from New York via several ports along the US East Coastand in the Gulf of Mexico back to New York.

He writes in a letter to LHC that it was like a dream come true to be onboard the liner, and he submitted some pictures from the voyage, one ofthem being tragically outdated…

Numbers for the three environmentalparameters Energy Consumption (kWh/tonskm), SOx and CO2 from 1999 through 2001for the bulkcarriers SG Enterprise and SGProsperity serve here as examples andshow that environmental consciousnesspays off through better results. Forcomplete numbers, see the final LHCEnvironmental Report.

Kristian Sandem and Anita Henriksen working with the EnvironmentalReport. Karine Pignatel was not present when the picture was taken.

Höegh Dyke docked in Savannah, Georgia.

Höegh Dyke departing New York Bay

LHC’s environmental policy is an integral part of the strategy and our way to do business.

LHC’sambition is to be at the forefront when it comes to environmental protection at sea.

LHC will continously seek to improve the environmental performance, in order to keep theenvironmental impact, both atmospheric emissions and emissions to the marine environment,

to a minimum.

LHC - environmental policy

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Newsmagazine for Leif Höegh & Co ASA No 1 - 2002 Newsmagazine for Leif Höegh & Co ASA No 1 - 2002

LNG transportation has for a long time been a key elementin Leif Höegh & Co's strategy, and this successful processis now getting a major boost as LHC has entered anagreement with Statoil on behalf of the Snøhvit fieldpartners (excluding TotalFinaElf and Gaz de France) fromthe Snøhvit field to southern Europe and the USA. Thecontract was signed in December 2001. An agreement withMitsubishi Heavy Industries, Ltd. was entered at the sametime for the construction of a 145 000m3 LNG carrier, theworld’s largest vessel of this type. The agreements wereentered into through a joint venture with Mitsui O.S.K. LinesLtd, and the overall Snøhvit Project is subject to ratificationin the Norwegian Parliament (Stortinget), 1st quarter 2002.

The Norwegian oil and gas company Statoil is the main operator ofthe Snøhvit gas field in the Barents Sea. (Snøhvit is Norwegian forSnow White as in the fairytale.) The gas reservoir was discovered inthe early 80's, but it was not until 1990 that the scheme to exploitthe gas started to evolve.

Several novel features are included in the imminent development.Not only will the gas be transported from the shore terminal in theworld largest LNG-carriers, but the plans for the gas field reveal thatthere will be no visible offshore installations at all, and all 21production wells will deliver to a 160 km long pipeline for transfer tothe shore terminal at Melkøya close to Hammerfest. As the BarentsSea is an important area for Norwegian fish stocks, it is interestingto learn that all seabed installations can be over-trawled.Construction work for the Snøhvit field is due to commence inspring 2002, and the gas deliveries will commence late 2005 and

last for at least 20-30 years.

Many LNG shipping companies were invited to compete for theSnøhvit contract, and in the first step around 10 contenders wereshort-listed for further participation. In spring of 2001 these pre-qualified companies received the final tender invitation, and the longprocess that followed came out with two selected parties;LHC/Mitsui O.S.K. Lines and K-Lines (Japan) will build two vesselseach.

The LHC's LNG Division has had a special focus on the Snøhvitdevelopment for several years, but since January 2001, adesignated Project Team has been working towards the gratifyingresult we now know. The Project Team decided to enter thecompetition teamed with LHC's long term liaison partner MitsuiO.S.K. Lines (MOL) in Japan. In the Snøhvit context the co-operation was established to increase the overall competitiveness ofthe tender, but also in order to strengthen the relations to Japaneseyards.

-LHC and MOL are equal partners in this project, Senior VicePresident Stephan Tschudi-Madsen explains. -We have beenproject managers and MOL has focused on the shipbuilding partthrough their Japanese residency.

-We will build the vessel at the Mitsubishi Heavy Industries,Nagasaki Shipyard in Japan, Tschudi-Madsen continues. -In fact,we are going to build the largest LNG carriers in the world so far,namely 145,000 m3. In comparison, our largest LNG-tanker today -Höegh Gandria - is 126,000 m3. The new vessel will be equippedwith Moss Spherical LNG-tanks, and will enter a 20 + 5 + 5 timecharter in 2005. A second vessel will be required by TotalFinaElf for

The Snøhvit Fairytale

Photo competition

the project. LHC and MOL are at an advanced stage in thenegotiations for this vessel.

-It is fair to say that this has been a challenging, yet rewardingprocess, Tschudi-Madsen sums up, keeping in mind that the mainchallenge is starting now and will continue for more than 20 years.-The Project Team has consisted of people from many parts of our

organisation: Finance, Höegh Fleet Services, BusinessDevelopment, the Legal Department and of course LNG - parallel to what has taken place in MOL. -I would also like to take thisopportunity to emphasise that the Project Team has been motivatedby the strong enthusiasm shown throughout our organisation,Stephan Tschudi-Madsen concludes.

Behind from left Stephan Tschudi-Madsen, LHC, Naohiko Yamaguchi, Mitsui OSK Lines, Steinar Thomassen, Statoil, Erik Grinnes,LHC, Thor Jørgen Guttormsen, LHC, og Otto Granli, Statoil

LNG-carrier built by Mitsubishi, similar vessel to the Snøhvit carrier.

- Snøhvit will be the largestindustrial project ever in northernNorway, says Henrik Carlsen,Executive Vice President forStatoil Exploration and ProductionNorway business area.

During the peak constructionperiod, the equivalent of 1200 ull-time workers will be needed at Melkøya, where the landbased terminal and the operatingcentre for the production will belocated. Operating the facility willcreate some 180 permanent jobsin the area.

The winner of our annual photo contest isCapt. Agustin Rodolfo G. Garfin with hispicture from an unusual deck cargo onboard Mascot. The jury finds that thispicture tells a good story about thechanging reality on board our vessels.Technical execution is not superior, and themast up front should be avoided. But theoverall impression is: an interesting picturefrom life at sea in the LHC fleet.Congratulations!

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Newsmagazine for Leif Höegh & Co ASA No 1 - 2002 Newsmagazine for Leif Höegh & Co ASA No 1 - 2002

HUAL in the air Service, service, service...

HUAL in France

HUAL Trophy 1:200

The agreement implies the building of a RO/RO newbuildingespecially designed for carrying large components to the newaircraft range A380. The vessel will be delivered in thebeginning of 2004, and the agreement includes an optionalvessel for delivery in 2007.

-This is of course a prestigious agreement and will involveinteresting challenges in the engineering phase, Helge Solheimin HUAL says. -The required deck height will be the mostobvious difference from a regular RO/RO vessel. In addition tothe deck height needed for the large aircraft parts, we wantthe vessels to be flexible, meaning they should betransformable into regular RO/RO vessels when needed.

The Airbus A380 is truly a large aeroplane and will beobtainable in both passenger and cargo versions. The maidenflight is planned for 2004. The passenger version will seat upto 555 people and the range will be 14,800 kilometres.

The maximum take-off weight will be 560 tons, and thewingspan is 80 meters. No wonder the components need seashipping rather than road transportation!

In order to further increase the quality of its services andprofessionally respond to the increasing number ofcustomers requiring combined services, HUAL hasentered into a Share Purchase Agreement with GroupeNavitrans to acquire a majority stake in its subsidiaryAutotrans.

Autotrans is a forwarding company fully dedicated to thelogistics of both new and used vehicles. They have offices in LeHavre and Paris with a present staff of 17. In addition Autotransowns a 50 % stake in SMR, a stevedoring company specialisedin RO/RO operations, also being HUALs stevedore in Le Havre.

This acquisition will give HUAL the opportunity to further expandand co-ordinate its range of services in France, adding a fullrange of services including forwarding/logistics and stevedoringto the present deep sea and short sea operations.

Source: Airbus

CaptainPonciano P.

Acuña Jr. withhis impressive

model ofHUAL Trophy.

HUAL’s subsidiary CETAM has through a joint venture with FR.E.T (a French subsidiary of Louis DreyfusArmateurs (LDA) signed a Memorandum of Agreement with Airbus Industrie to provide maritime transportationservices for the Airbus A380 program.

This miniature of HUAL Trophy is a four-year-project created by CaptainPonciano P. Acuña Jr. The ship model is an exact copy in a scale of1:200 and is made of cardboard found on board the original vessel.

The Captain started the model 4 years ago and continued when he boarded July2001. It is now on display on the ship's bridge and many visitors have beenphotographed together with the miniature, whenever the original is in port.

General Manager in Kiwi Car Carriers Terry Riches (left)with previous owner of Kiwi Peter Bisset.

In the previous issue of Höegh Dialogue weintroduced the news that HUAL had acquired KiwiCar Carriers Limited, the leaders in carrying carsfrom Japan to New Zealand. The signing of thepurchase agreement took place in early December2001. Kiwi carries today about 40 % of the 125,000pre-owned vehicles moved along this route annually.

-We want to be constructive owners, take part in futuredevelopment, and we believe there are substantial synergypotentials between the companies in the years to come,HUAL President Karl Terjesen states. -We clearly see thatKiwi is a company with a well developed strategy and soundobjectives. There are several aspects we find veryinteresting, e.g. insurance procedures developed for thespecialised trade Kiwi operates in. All cars shipped with Kiwiare automatically insured under a specialist marine policydesigned to meet the total need of vehicle importers. OtherKiwi innovations include Electronic Vehicle Survey, recordingthe condition of every vehicle prior to loading and re-surveying at destination.

The Kiwi motto is simple: service, service, service! KiwiPresident Terry Riches explains: -We have set high customerservice standards, created a distinct brand, and we have toplevel marketing executives who liase on a personal basis withthe customers in order to understand their strategic needs.

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Newsmagazine for Leif Höegh & Co ASA No 1 - 2002 Newsmagazine for Leif Höegh & Co ASA No 1 - 2002

Junior Officers’ Conference IIISenior Officers’ Conference III

The third senior officers’ conference of the year 2001 was held on 26-30 November with twenty-nine (29) participants. The conference was based on the SHIP-SHAPE program. Discussions focused on crisis management, teambuilding, trainingmotivation, technical experience feedback and how to prevent accidents. On Thursday HUAL and LauritzenCool met theirrespective officers and discussed operational matters. During the last day of the conference, a fellowship was held in theInter-Continental Hotel, where the officers together with their wives and the staff get acquainted. Throughout the conferenceproductive discussions and group work were developed.

We are happy to announce that, effective 20September 2001, HFS China Ltd. (HFSC) was,as the first Chinese-foreign joint venture,admitted to CCOSEC (Coordination Councilfor Overseas Seamen Employment of China).CCOSEC has a total of 57 members -including HFSC.

As a result of this membership, HFSC will obtaintheir Business License, which is required in order torecruit and train Chinese seafarers.

The third junior officers’ conference was conducted in HFS Philippines, Inc. in the new wing of the Hoegh Building , 4677Arellano Avenue, Palanan Makati City on 20-21 November 2001. Twenty-eight (28) junior officers and career developmentcandidates attended the said conference. Lectures, discussions and group work focused on SHIP-SHAPE with trainingmotivation, shipboard management, safety issues and teambuilding. There was a good participation from those present.

The Crisis Management Trainingwas conducted by the NorwegianHull Club in HFS Philippines, Inc.with twenty-five (25) participants,held on 22-23 November 2001with both senior and juniorofficers. We worked withsimulated cases like grounding,collision, oil spill and reportingprocedures. The training wasbased on different cases withdiscussions and role-plays. Theresults were very good and eachrole-play was concluded with adebriefing. There was a lot ofresponse from the participants,followed by lively discussions.

Crisis Management Training

HFS China established in Guanzhou Junior Officers’ loyalty awards

Loyalty award winners:Standing (Left to Right) Capt.Roberto Satiada, 3/E JuanitoButed, 3/O RogelioDumaguit, 3/E DomingoJacob, Capt. Delfin Lopez Jr.,4/E Avelino Mendez, 2/OCamelo Besario, 2/O DaniloCruz, Terje Lorentzen. Sitting(Left to Right) 3/E HenilitoBulawan, 3/O JonathanPachica, 4/E Ally Bornillo,3/O Mariano Loyola, 2/O PioLambuson, 2/O FernandoDialogo, 2/O Pablo Dela Cruz,3/O Alexander Ceballos.

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Newsmagazine for Leif Höegh & Co ASA No 1 - 2002 Newsmagazine for Leif Höegh & Co ASA No 1 - 2002

World Economy And World TradeThe economic aftershocks of the 11 September attackaccentuated the global downturn, and world economicgrowth in 2001 was reduced to levels not seen since theearly 1980s. This weak economic situation is set to lastthrough the first half of 2002. However, the macroeconomicpolicy response has been rapid and substantial, particularlyin the United States. Barring more unforeseen events, arecovery in world economy is now forecast to take place inthe second half of 2002. The growth in world trade, whichfell from 12.8% in 2000 to only 0.3% last year, is expected torebound strongly in the latter part of this year (see graph 1).

The Oil MarketOil prices fell back sharply in early October last year, as marketsbecame more concerned about a global recession than aboutpotential supply disruptions. Prices are currently a few dollarsbelow the lower end of OPEC’s price band, and the cartel hasannounced further cutbacks to shore up prices. However, weakglobal oil demand and growing non-OPEC supplies combined withgrowing production capacity within OPEC itself, is going to put thecartel’s discipline to test. It is expected that average prices thisyear will be lower than those in 2001, which will assist a recoveryof economic activity.

The Car Carrier MarketGlobal new-car sales are forecast to fall by around 2% in 2002. FarEast exports of factory-new cars are thus likely to decline to NorthAmerica and Europe, whereas European exports of both factory-newcars and used cars are expected to remain relatively stable. Theslowdown in industrial activity world wide during the first half thisyear is likely to have a negative impact on the demand for some high& heavy Ro/Ro cargoes. Shipments of used cars, however, areexpected to grow as they increasingly become acceptable lower-cost alternatives to new cars in emerging markets. It is expected thatthe demolition of car carriers will increase this year. There is a largescrapping potential in the existing car carrier fleet and severalvessels have already been earmarked for demolition by early 2002.

The Reefer MarketAlthough there is still some excess capacity in the reefer vessel fleet,2001 seems to have been a year when some sort of stabilityreturned to the industry, helped by the recent consolidations. Thedemand for reefer tonnage is expected to remain at a high level also

this year, with volumes of key import and export cargoes set to equalif not surpass those shipped in the previous season. Russia and theBaltic region, in particular, are expected to increase their imports ofvarious reefer commodities. In the European market, both applecrops and inventories are lower than year-ago levels, which couldbode well for increased imports. A negative factor is the surge ofreefer container capacity coming onto the market during the year.

The Open Hatch MarketThe downturn in economic activity is expected to lead to fallingdemand for forest products, including paper and paperboard,particularly during the first half this year. In the key Japanesemarket, a projected 5% decline in housing starts will have anegative impact on the country’s lumber imports. China will be oneof the few growing markets during this difficult period. The country’spulp imports are expected to grow substantially also this year,following the 20% growth witnessed in 2001. With demandexpected to pick up again in the second half this year, seabornetrade in forest products is forecast to grow by around 1.3% on anannual basis, compared with the 2.3% decline witnessed in 2001

The LNG MarketThe trade in LNG has now surpassed 105 million tonnes annually,accounting for close to a third of the global trade in natural gas.Excess LNG production capacity continues to find its way out onto the market leading to growing sales of LNG on spot and short-term timecharters. These sales now amount to 5-6% of the totaltrade in LNG. Expansion of existing facilities in several countries,combined with new LNG projects under construction, will ensure acontinued strong growth in the trade, even if 2002 is affected byworld recession. The contracting activity continued in 2001, and atend year the total orderbook had reached 56 units, with options forfurther 20-21 vessels, the value of which is questionable due to thenewbuilding market.

The Dry Bulk MarketGiven the slowdown in global industrial activity expected during thefirst half this year, the growth in demand for dry bulk tonnage is likelyto remain weak. Steel production is forecast to fall in most steelproduction countries, with China appearing to ride out the downturnreasonably well also in 2002. Although the global steam coal trade isexpected to grow substantially also in 2002, Chinese exports willcontinue to displace longer-haul shipments to a certain extent.However, dry bulk seems to be the market where a turnaround couldtake place in late 2002/early 2003 when the present wave ofnewbuilding deliveries subsides and the world economy could hopefor improvement. This will set the stage for higher fleet capacityutilisation levels and improved freight rates (see graph 2).

By Mona Boug Kristiansen

Market outlook The water of life

The custom of aquavit carried across the equator found its originwhen the tall ship Trondhiems Prøve returned from the East Indianislands with unsold barrels in 1805. Opening these barrels revealeda better tasting product, and it was concluded that the journey wasthe reason. However, it is also very important that the aquavit iscarried across the equator in sherry casks, adding a certainsmoothness to the product.

In LHC, the tradition of making Equatorial Aquavitae dates back tothe mid 1950’s. In co-operation with the national distillery in Norway,a senior test committee developed the recipe for this particularaquavit through extensive testing. The committee consisted of Dr.Carl Høegh, Jacob Bull, Odd Gogstad and Leif Høegh himself.

Over the years, Equatorial Aquavitae was mainly carried on boardvessels in the West Africa line. After the culmination of this trade inthe 1970’s, other modern ships has carried the valuable cargo. Dueto the increased speed of modern vessels, and also shorter portcalls, the aquavit is now carried two roundvoyages to get thedesired maturity in the taste.

The shipment during spring and summer 2001 was on board theopen hatch vessel Höegh Musketeer, and the voyage was twice

Antwerpen - Panama - CapeHorn - Mediterranean -Antwerpen. 17 February2002 Höegh Musketeerloads another 10 barrels,each 250 litres, for the next"water of life mission".

It is a fact, though, thattoday Vinmonopolet - thenational distiller - is nolonger in the position toproduce the small quantitiesin question from the originalHöegh recipe. Today LHCreceives a special version ofthe Løiten*** aquavit, butfrom then on the procedureis similar to the good olddays.

Aqua vitae, eau de vie, water of life, is an important element in Norwegian cultural heritage, treasured byconnoisseurs through centuries. Back in 1805, the somewhat odd concept that shipping the liquor across theequator and back enhanced the taste, was discovered. To this day aquavit is shipped in barrels across "theline" to flavour our national swig. Höegh Lines is a proud participant in this process, carrying the EquatorialAquavitae for 4 to 6 months before it is bottled in Norway and provided with a label designed by former LHCsuperintendent Bang Braathen.

HFS Purchaser Per G. Hemming with a bottle of the 2001 Höegh Lines Equatorial Aquavitae.

Newsmagazine for Leif Höegh & Co ASA No 1 - 2002

HFSVESSEL MASTER CHIEF ENGINEER CHIEF OFFICERSG ENTERPRISE NG, CHOR KUEN TANG, HING KONG JERRYSG PROSPERITY HSING, NAN YEN WANG, ZHI YI MAK, CHU POONHÖEGH GANDRIA HANSEN, LEIF STEINAR PAULSEN, TARJEI BERG, JOHNHÖEGH GALLEON GANGDAL, HANS PETTER MALMØ, BJØRN DAHL, TOMMY JOHANNORMAN LADY ZAAL, PER HENRY HAMMERVOLD, KARSTEIN GRØTTING, KÅREMATTHEW SANDIK, INGE SVENNING, TRULS ALBERT THUNEM, BÅRDAUGUST OLDENDORFF SORIANO, FRANCO LAPIDARIO BATAC, VIRGILIO DAVID ASTILLO, FELIX LUENGOHÖEGH MONAL NAZ, ELMER DE JESUS PAGULAYAN, REYMUNDO BANGAYAN CARO, BERTRAND MHÖEGH MORUS MACADAGDAG, ROMULO MIEDES CASAMA, FIDEL HERNANDEZ SY, RENATO JR PIOLHÖEGH MARLIN CHIONG, HENRY ALVAREZ SANTIAGO, ARNEL SR DEL VALLE BONDOC, BENITO PANGANHÖEGH MERCHANT ESTABAYA, GILBERT JOHNS CIRERA, LEOPOLDO AGPAWA LACANLALI, ROBERTO ROWANHÖEGH MERIT SIBYA, RAFAEL DIANSEN TERAZONA, FRANK PENAFIEL JARAMILLO, MARIO DELLA CUADRAHÖEGH MUSKETEER PALACA, FILOMENO JR. IDULSA ALEGRADO, SOCRATES REGIDOR TAGHAP, HERMENEGILDO JR. BETHØEGH MISTRAL LUMA-AD, PIPO UY PABULAYAN, DELFIN SAQUIBAL DESABILLE, DENNIS PASTORMASCOT GARFIN, AGUSTIN RODOLFO GONZ PATUNGAN, ALFREDO BOQUIRIN SEDONIO, JOEBERT VILLACENDAMAX OLDENDORFF SABADO, ALFREDO RIMANDO HUFALAR, CARLITO OFIAZA SOLATORIO , FRANCISCO JR JUANERCRYSTAL PRIDE ORACION, OSCAR MARQUEZ RABAYA, NORMANDO C ROLLO, EDGARDO OZUESCRYSTAL PRIMADONNA TAN, BERNARDO DIAMANTE CHING, CHARLES BADONG CABANLIT, WILSON MAROLLANOCRYSTAL PRINCE BALAN, JOSE JR TABUDLONG UMEREZ, GABRIEL VILISANO DEMEGILLO, BENHUR ABERDECRYSTAL PRIVILEGE STA CRUZ, LUISITO ARGARIN IGNACIO, ALDEN GALANG BAGUIO, ULYSSES UYIVORY DAWN OYALES, GEORGE GESULGA CARPIO, EDWIN DOMINGO CATUBIG, ISMAEL ALBERT TIUSUMMER MEADOW MISA, RICARDO DIAZ JIMENEZ, ALEX PEREZ PASAPORTE, HARLEY ZAYCOSUMMER WIND VIOLANGO, ADRIAN DALIT NOLOS, MARCELO MAGAHIS TENA, RADITO SURASPRING BRIDE PUNAY, FERNANDO MONTERDE ALON, ROY YAP CORTES, KIM PADORSUMMER BAY HARE, JESSEL CALDEA ABARINTOS JR, ALIPIO DOLOR DAYMIEL JR, BIENVENIDO MUITSUMMER FLOWER MASNAYON, WILLARD EDWARD PUNO CATOLICO, ELY CIERVO GARGANERA, EUSEBIO MAYO LOPEZCARIB STAR PILAPIL, ALBERTO SANORIA YORO, RAMONITO JABASA RIEGO, ANACLETO ROLLEHUAL ASIA LACSON, PACIFICO JR. DAGUIA LALIM, CONRADO WONG JOSE, EDGARDO ABRIGOHUAL TRICORN REYES, JOSELITO DOLAR MAIQUEZ, MARIO ALVARO CRUZ, APOLINARIO SAN PEDROHUAL TRACER YU , ZHI MING HONG, JIN ROMERO, ARNALDO BUSTALINOHUAL TRACER MAPA, ODNESOR CRUZHUAL TRAPPER MANGOHIG, QUINTIN ABANGAN ALOJADO, VICTORIANO AMILANGAN LADINES, EUCLYDES CAMBALHUAL TRAPPER ZHAO, BO LONG QIN, JING LU WANG, QIN PINGHUAL TRAVELLER CLEMENTE, WILFREDO JAVIER NAPILOT, GILBERTO LARGA CUETO, INGEMAR P.HUAL TRIBUTE GULLIAB, BENEDICTO CASIGURAN LUMOCSO, ELEUTERIO BENDANILLO ATIAN, SALVADOR NOHUAL TRIDENT SOMOSOT, JEREMIAS CORBITA CRUDO, RENATO ALARCON CASIANO, DANILO NAVARROHUAL TROOPER CULAJARA, ZALDY CERVANTES BALIDOY, JOSE BALANE GABAYNE, JOSEPH COLLADOHUAL TROTTER LICUDAN, EUSEBIO JULATON PAJATIN, JOVENCIO JR CALPO ESTOLAS, BENJAMIN MABUTASHUAL TRANSIT CABALLES, RAYMUNDO MAGHANOY POLLENTES, CLAUDIO BASIL P TALAMAN, DANILO CRUZHUAL TRADER CABARLES, RODRIGO JR DUMARAY MASOCOL, EDWIN DENUM ELPEDES, DANTE MORADAHUAL TRANSPORTER TINIO, MANUEL JR FRANCISCO LEDESMA, REDEMTOR PUNZALAN ANG ESPINA, MAXIMINO JR OPPUS

IUM VESSEL MASTER CHIEF ENGINEER CHIEF OFFICERHUAL TRAILER BONIFACIO, ROMMEL HIPOLITO ALTURA, RUBEN MORALES MAQUIRAN, NOE GREGORIO RAMOSHUAL TRAMPER LORENZO, JESSIE MAGDAUG MORALINA, ROMEO QUIROZ ENCLONA , MARIO JR AGAOHUAL TRAPEZE GUZMAN , ROLANDO BALDERAS BARNACHEA, DOMINADOR BELARDO LAGLEVA, ERWIN ROMEROHUAL TRINITY BALDOMAR, AVELINO GUBAN PALMES, FERNANDO PANES EVANGELISTA, NECITO TADEOHUAL TRITON TAYO, GORGONIO IZON PERALTA, ISAGANI DAMASCOHUAL TRIUMPH ALCARAZ, REYNALDO LOPEZ CASTELLANO, WENIFREDO CASTOR PLANTINOS, EDGAR MACAHILOHUAL TROPHY PEREZ, RIZALDO MAGBANUA TRASPORTE, ARNULFO MANZANO CHIONG, BERNARD BOGOHUAL TROPICANA CANDAVA, ROGELIO ILAGAN LEGASPI, DANI FAVILA ALISEN, NESTOR ALBAYHUAL EUROPE SULIBET, MANUEL NOEL SOLLORANHUAL TREKKER

HFS and IUM fleet personnel onboard 15 January 2002