Market Outlook 2005-2008 - PDF by etssetcf

VIEWS: 87 PAGES: 63

More Info
									Q
Mc
McQuilling Services



                      Tanker Market Outlook: 2008 – 2012
                      The Interaction of Fundamentals

                      Tanker Derivatives Forum, New York                                             March 2008
                      The Baltic Exchange




                             The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008            Slide 1
Q
Mc
                                                                                                  Preface


                      ► The Year in Review: 2007
McQuilling Services


                      ► The Influence of Fundamentals

                      ► Development of Tanker Demand

                      ► Development of Tanker Supply

                      ► Outlook for the Forecast Period: 2008-2012

                      ► Summary




                          The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008      Slide 2
Q
Mc
                          BDTI      Russia halts oil exports to
                                    Belarus/Europe
                                                                       Cyclones off Australia shut in
                                                                           175 MBD for 8 days
                                                                                                        The Year in Review: 2007

                                                                                                         Riots in Iran over gasoline
                                                                                                                   rationing
                                                                                                                                                             2007 WS
                          3500                                                                                                                                          350
                                       Russia resumes oil exports to   Shell cuts Nigerian production    Japan shuts 3 nuclear spill OPEC incr. prod. by 500 MBD
                                                                                                               Hebei Spirit oil
McQuilling Services

                                              Belarus/Europe                      187 MBD                reactors after 6.8 earthquake      to 27.2 MMBBL/Day
                                                                                                         - incremental 150 MBD
                                           OPEC cuts production 500       Enbridge Canadian pipeline     demand through mid-08               Bunker price high for 2007:
                          3000                      MBD                      spur shut - 490 MBD                                              IFO 380 @ US$ 507.5/MT    300
                                                                                        US Thankgiving Day
                                                                                                             Tropical storm Humberto                 (Houston)
                                                                                            market spike shuts 4.8% US ref. cap. spot rate for
                                                                                                                     Max. VLCC in
                                                                                                                      2007 WS285 AG/China
                                                                                                                       USG
                          2500                                                 OPEC incr. prod. by 500
                                                                             Cyclone Gonu closes Mina al                                                                250
                                                                                                                             $262 K/Day
                                                                               Fahal inMBD to 27.2
                                                                                       Oman - 650 MBD              Min. VLCC spot rate for 2007
                                                                                       MMBBL/Day                     WS40 AG/USG $9.8K/Day
                                                                                                                                                     Hebei Spirit oil spill
                                                                            Min. VLCC spot rate for
                          2000                                               2007 WS40 AG/USG
                                                                                                                                                                      200
                                                                                                                                               US Thankgiving Day market
                                                                                  $9.8K/Day
                                                                                                                                                        spike

                          1500                                                                                                                                        150

                                                                                                BDTI - Baltic Exchange Tanker Index
                          1000                                                                                                                                        100


                              500                                                                                                                                     50
                                                  TD 3 - VLCC AG / East                                                                Max. VLCC spot rate for 2007
                                                                                                                                       WS285 AG/China $262 K/Day


                          0    0                                                                                                                                      0
                                                    1Q                        2Q                               3Q                               4Q

                      Source: Baltic Exchange

                                              The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                                                    Slide 3
Q
Mc
                      4Q 2007 Effect
                                                                                   The Year in Review: 2007


                      Percent of Average Annual Spot Rate                            Last 40 days
McQuilling Services


                         VLCC AG EAST                                                         ► End-year surge
                        VLCC AG WEST
                                                                                                influenced large
                                                                                                tanker sectors the
                      SUEZ WAFR USAC
                                                                                                most, as much as
                       SUEZ BSEA MED                                                            20%
                       AFRA CARIB USG
                                                                                              ► Rates across dirty
                      PANA CARIB USAC                                                           sectors increased
                          AFRA AG JAP
                                                                                                on average 11%

                          PANA AG JAP                                                         ► Rates across
                                                                                                clean sectors
                       MR CARIB USAC
                                                                                                increased on
                           MR SING JAP                                                          average 3%
                                         0%     20%      40%      60%      80%      100%


                                   The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008        Slide 4
Q
Mc
McQuilling Services
                      Supply & Demand Summary, 2007
                                                                              The Year in Review: 2007



                       (Growth, %)                           Demand                        Supply
                       VLCC                                    0.4                           1.7      Surplus
                       Suezmax                                 3.3                           4.7      Surplus
                       Aframax                                 3.0                           6.1      Surplus
                       Panamax                               (4.5)                           8.6      Surplus
                       MR                                      2.4                           6.3      Surplus
                       Overall                                 1.2                           5.5      Surplus

                      Increasing tonnage surplus relative to demand in 2007


                              The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008             Slide 5
Q
Mc                    Average Spot Rates (2008 WS)
                                                                             The Year in Review: 2007


                                                                                2007
                                                                              YTD Nov 21             2006
McQuilling Services


                       VLCC (East) 265 MMT – TD 2/3                                  58               74
                       VLCC (West) 280 MMT – TD 1                                    51               65
                       Suezmax 130 MMT – TD 5                                      102               120
                       Aframax 70 MMT - TD 9                                       154               152
                       Panamax 50 MMT – TD 10                                      188               184

                       Aframax 75 MMT - TC 1                                      138                158
                       Panamax 55 MMT – TC 5                                      166                185
                       MR (Caribs) 38 MMT – TC 3                                  197                194
                       MR (Far East) 30 MMT – TC 4                                208                246


                             The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008          Slide 6
Q
Mc                    Average Spot Rates (2008 WS)
                                                                             The Year in Review: 2007



                                                                                   2007              2006
McQuilling Services


                       VLCC (East) 265 MMT – TD 2/3                                  72               74
                       VLCC (West) 280 MMT – TD 1                                    61               65
                       Suezmax 130 MMT – TD 5                                      116               120
                       Aframax 70 MMT - TD 9                                       168               152
                       Panamax 50 MMT – TD 10                                      198               184

                       Aframax 75 MMT - TC 1                                      142                158
                       Panamax 55 MMT – TC 5                                      174                185
                       MR (Caribs) 38 MMT – TC 3                                  198                194
                       MR (Far East) 30 MMT – TC 4                                218                246


                             The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008          Slide 7
Q
Mc                       Average TCE Revenues
                                                                                                The Year in Review: 2007


                         US$ / Metric Ton                                      2007
                         600
McQuilling Services

                                                                                       (US$ 000 / Day)                  2007   2006
                         500
                                                                                       VLCC (East) 265 MMT              40     50
                         400                                                           VLCC (West) 280 MMT               35     47

                         300
                                                                                       Suezmax 130 MMT                  39     43
                                                                                       Aframax 70 MMT                   34     37
                         200

                                                                                       Panamax 50 MMT                   28     27
                         100



                                                                                       Aframax 75 MMT                    27     35
                           0
                               J   F   M    A   M    J    J   A   S    O   N       D
                                                                                       Panamax 55 MMT                    26     30
                                       New York Harbor Residual Fuel Oil 1.0 %
                                       Sulfur LP Spot Price CIF (US$/MT)

                                       Gulf Coast Residual Fuel Oil 1.0 % Sulfur
                                                                                       MR (Caribs) 38 MMT                20     22
                                       LP Spot Price CIF (US$/MT)

                                       Rotterdam (ARA) Residual Fuel Oil Sulfur        MR (Far East) 30 MMT              16     22
                                       <= 1.0 Spot Price FOB (US$/MT)


                      Source: US EIA
                                                The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008            Slide 8
Q
Mc
                      Tonnage Supply and Demand Fundamentals
                                                                                Freight Rate Projections



                      ► The interaction of tonnage supply and demand is
McQuilling Services


                        a key determinant of observed tanker market
                        behavior

                      ► We model this interaction with a construct called
                        “Capacity Index”, a measure of the relative
                        surplus or deficit of tonnage supply as compared
                        to demand




                            The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008   Slide 9
Q
Mc
                      Tonnage Supply and Demand Fundamentals
                                                                                         Freight Rate Projections


                      Average Spot Rate                                     Capacity Index
McQuilling Services

                      (2008 WS)                                                 (Percent)
                      120                                                           30%
                                                                                              ► Average annual
                                                                                                freight rates in the
                      100                                                           20%
                                                                                                VLCC sector have
                       80                                                           10%         been found to be
                                                                                                highly correlated
                       60                                                           0%          to the Capacity
                                                                                                Index
                       40                                                           -10%

                                                                                              ► As the Capacity
                       20                                                           -20%
                                                                                                Index decreases,
                        0                                                           -30%
                                                                                                rates tend to rise
                             2001   2002    2003    2004    2005    2006    2007

                            VLCC AG EAST        VLCC AG WEST         CAPACITY INDEX


                                    The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008       Slide 10
Q
Mc
McQuilling Services
                          Seaborne Transport Demand
                          Billion Ton Miles – 2007/2006
                                                                                            Freight Rate Projections



                                                                              ►       86% of transport demand in 7
                                                                                      major trades
                                                                              ►       70% of transport demand
                                                                                      originating from Middle East
                                                                              ►       Single purpose deployment of
                                                                                      VLCCs against crude transport
                                VLCC                                              2007          2006       Change (%)   2007 Share
                                Middle East / Far East-SE Asia                 2,731.6       2,784.7            -1.9%         46%
                                Middle East / Carib-USG-USAC                     960.2         950.4             1.0%         16%
                                Middle East / USWC                               214.3         245.8           -12.8%          4%
                                Middle East / Europe                             210.2         230.2            -8.7%          4%
                                West Africa / Far East-SE Asia                   466.0         495.1            -5.9%          8%
                                West Africa / Carib-USG-USAC                     323.0         248.9            29.8%          5%
                                Carib-Samerica / Far East-SE Asia                203.0         157.5            28.9%          3%
                                Other                                            858.3         831.2             3.3%         14%
                                Total                                          5,966.7       5,943.6             0.4%        100%
                      Source: LMIU, McQuilling

                                        The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                Slide 11
Q
Mc
                      Tonnage Supply and Demand Fundamentals
                                                                                        Freight Rate Projections


                      Capacity Index
McQuilling Services

                      Average Annual Spot Rate                    AG / East
                      (2008 WS)
                      120
                                                                  Expon. (AG / East)
                                                                                               ► The utility of the
                                                                                                 Capacity Index in
                      100
                                                                                                 predicting VLCC
                                                                     y = 58.21e-2.81x            average annual
                                                                        R2 = 0.82
                       80                                                                        freight rates is
                                                                                                 quite strong
                       60



                       40



                       20



                        0
                        -30%       -20%      -10%        0%        10%        20%       30%




                                    The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008        Slide 12
Q
Mc
                      Tonnage Supply and Demand Fundamentals
                                                                                              Freight Rate Projections


                      Capacity Index – Clean markets
McQuilling Services

                      Spot Rate (WS 2008)                                         Series1
                                                                                  Expon. (Series1)   ► High correlation
                      300
                                                                                                       of freight rates in
                      275
                                                                          y = 471.86e-0.01x            clean products
                                                                             R2 = 0.95
                                                                                                       tanker sectors to
                      250
                                                                                                       the ratio of
                                                                                                       tonnage supply
                      225                                                                              versus tonnage
                                                                                                       demand is also
                      200                                                                              observed

                      175



                      150
                         100                125          150                175                200
                                                  Dwt / Mill. Ton-Miles




                                    The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                Slide 13
Q
Mc
                      Tonnage Supply and Demand Fundamentals
                                                                                       Freight Rate Projections


                      Capacity Index
McQuilling Services

                      Suezmax Average Annual Spot Rate
                      (2008 WS)                                                               ► Capacity Index
                      200

                                                          y = 1.54x + 17.31
                                                                                                not a strong
                                                              R2 = 0.98                         predictor of rate
                      160
                                                                                                levels in smaller
                                                                                                dirty tanker
                      120                                                                       sectors
                                                                                              ► High correlation
                       80
                                                                                                of freight rates in
                                                                                                smaller dirty
                       40                                                                       tanker sectors to
                                  VLCC AG/West - Suezmax Wafr/USAC
                                                                                                freight rates in
                                  Linear (VLCC AG/West - Suezmax Wafr/USAC)
                        0                                                                       VLCC sector
                            0         25           50            75           100
                                VLCC Average Annual Spot Rate (2008 WS)


                                   The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008          Slide 14
Q
Mc
                          Development of Outlook
                                                                                                  Freight Rate Projections


                          Past Performance
McQuilling Services

                          Overall Performance - 5 Trades
                          Outlook                          < Undercast Overcast >
                                                                                                             ►     Our 2007 Outlook
                          Jan 2007                              -1.4%                                              undercast the market
                                                                                                                   over five trades by
                          July 2006                                                                                1.4%
                                                                                                             ►     For 10 trades we
                          Jan 2006
                                                                                                                   undercast the market
                           Jul 2005
                                                                                                                   by 3% on an annual
                                                                                                                   basis, 9% for clean
                          Jan 2005
                                                                                                                   trades and 0% for dirty
                                                                                                                   trades
                           Jul 2004                                                                          ►     On a monthly basis our
                                                                                                                   performance was 8%
                          Jan 2004
                                                                                                                   undercast over 10
                                                                                                                   trades (12% for clean,
                           Jul 2003
                                                                                                                   8% for dirty)
                                 -100% -80% -60% -40% -20%           0%   20%       40%   60%   80%   100%

                      Source: McQuilling

                                           The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                     Slide 15
Q
Mc
McQuilling Services



                      Development of Tonnage Demand




                       The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008   Slide 16
Q
Mc
                      HISTORICAL              HISTORICAL
                                                                                            Tonnage Demand


                      TOTAL OIL               SEABORNE OIL
                      DEMAND
McQuilling Services

                                              TRANSPORT



                      HISTORICAL                  PROJECTED                            TOTAL OIL
                      MARINE                      MARINE                               DEMAND
                      FRACTION                    FRACTION                             PROJECTION



                                                                                      TANKER DEMAND:
                                                                                         ►VLCC
                                              PROJECTED
                                                                                         ►SUEZ
                                              SEABORNE OIL
                                                                                         ►AFRA
                                              TRANSPORT
                                                                                         ►PANA
                           The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008      Slide 17
Q
Mc                        Marine Fraction
                          Historical
                                                                                                            Tonnage Demand


                                                    World Oil Demand
                          100%
McQuilling Services

                                                                                              ► Over half of world
                                                                                                crude oil demand is
                           80%
                                                                                                transported by sea
                                                                            Non-
                                                                            Seaborne
                                                                            Transport
                                                                                              ► This marine fraction
                           60%                                                                  has generally been
                                                                            Panamax
                                                                                                increasing with time

                                                                            Aframax           ► In the past the VLCC
                           40%
                                                                                                sector was increasing
                                                                            Suezmax
                                                                                                in its share of the total
                           20%
                                                                                                marine fraction
                                                                            VLCC



                            0%
                                 2001 2002 2003 2004 2005 2006 2007

                      Source: McQuilling

                                           The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008       Slide 18
Q
Mc                        Marine Fraction
                          Projected
                                                                                                            Tonnage Demand


                          TOTAL MARINE FRACTION
McQuilling Services

                                                                       ACTUAL-FORECAST
                          0.61
                                                                       Log. (Series1)         ►      In 2007 the marine
                           0.6
                                                                                                     fraction dropped to 57%
                                                                                                     from 57.9% in 2006
                          0.59
                                                                                              ►      Going forward we
                          0.58                                                                       continue to assume a
                                                                                                     growing marine fraction,
                          0.57                                   2007                                albeit at a reducing rate
                          0.56
                                                                                                     of increase
                                                                                              ►      In 2008 we expect to see
                          0.55
                                                                                                     a marine fraction of
                          0.54                                                                       57.6% and by 2015 a
                                                                                                     marine fraction of 59.5%,
                          0.53
                                                                                                     down from 60%
                          0.52
                                                                                                     estimated last year
                                 0    2           4   6      8    10       12       14   16
                                                          Year

                      Source: McQuilling

                                           The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008            Slide 19
Q
Mc
McQuilling Services
                      Demand Expectations 2008-2012
                                                                                              Tonnage Demand



                      (Growth, %)                                         CAGR 08-12
                      VLCC                                                               3.8
                      Suezmax                                                            3.2
                      Aframax (uncoated)                                                 3.5
                      Panamax (uncoated)                                                 3.8
                      Aframax (CPP)                                                      4.4
                      Panamax (CPP)                                                      4.4
                      MR                                                                 4.4
                      Tanker demand growth of 3-5% p.a. over next 5 years

                             The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008      Slide 20
Q
Mc
McQuilling Services



                      Development of Tonnage Supply




                      The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008   Slide 21
Q
Mc
                      Current Context
                                                                                                      Tonnage Supply



                      ► Three factors determine tonnage supply available to
McQuilling Services

                        transport existing demand at any given time:


                            Additions of new vessels delivering from shipyards

                            Vessels that are removed from trading for
                            scrapping or conversion

                            Significant reductions of supply due to factors that
                            limit the actual availability or utilization of vessels.




                              The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008             Slide 22
Q
Mc                       Additions to the Fleet
                         Contracting
                                                                                                                                       Tonnage Supply


                         Firm Tanker Orders

                                                                                                                           ►
McQuilling Services

                         120
                                                                                                                               The pace of tanker
                                                                                       CSR
                                                                                                                               ordering accelerated
                         100                                                                                                   dramatically prior to the
                                                                                                                               CSR deadline of 1 April
                          80
                                                                                                                               2006
                                                                                                                           ►   During the first half of
                          60                                                                                                   2006, an average of 57
                                                                                                                               newbuilding contracts per
                          40
                                                                                                                               month were recorded
                                                                                                                           ►   By the second half of
                          20                                                                                                   2006 the pace of ordering
                                                                                                                               had dropped to 42
                           0
                                                                                                                               contracts per month and
                                                                                                                               a year later to 22.
                               200401

                                        200406

                                                 200411

                                                           200504

                                                                    200509

                                                                              200602

                                                                                       200607

                                                                                                200612

                                                                                                         200705

                                                                                                                  200710




                               VLCC                  SUEZ                    AFRA               PANA               MR
                      Source: McQuilling

                                                          The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                            Slide 23
Q
Mc                       Additions to the Fleet
                         Orderbook
                                                                                                                    Tonnage Supply


                                                                                                               ►      As a result of the
                         No. of Vessels
McQuilling Services

                                      <- HISTORICAL DELIVERIES                 ORDERBOOK ->
                                                                                                                      orders placed,
                         500                                                                                          deliveries in 2008
                                                                                                                      will be 74% greater
                                                                                             455
                                                                                                                      than the average
                         400
                                                                                                                      for 2000-2007
                                                                                                               ►      In 2009 annual
                         300                                                                                          deliveries are
                                                                                                                      projected 129%
                                                                                                                      greater than the
                         200                                           MR                                             2000-2007 average
                                                                       PANA                                    ►      The total orderbook
                         100                                           AFRA                                           in 2009 now stands
                                                                                                                      at 455 vessels, 199
                                                                       SUEZ
                                                                                                                      which are MR
                                                                       VLCC
                           0                                                                                          tankers (end 2007)
                               2000       2002   2004     2006                 2008      2010      2012      2014




                      Source: McQuilling

                                            The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                   Slide 24
Q
Mc
McQuilling Services
                         Additions to the Fleet
                         Shipyard Capacity
                                                                                                               Tonnage Supply



                         Thousand CGT                                     Capacity Growth (%)         ►        By 2012 there will
                         70,000
                                                                                                               be about 50%
                         60,000                                                                                more shipyard
                                                                                                               capacity than
                         50,000
                                                                                                               exists currently
                                                                       Available
                         40,000
                                                                       capacity                       ►        As new shipyard
                         30,000                                                                                capacity comes on
                                                      28.0%
                                                                                                               line, there will be
                         20,000
                                                                                                               tremendous
                         10,000                Current                                                         pressure by
                                                                   6.0%        5.1%
                                              Orderbook                                    5.0%                shipyards to fill it
                                0
                                      2008       2009         2010        2011         2012




                      Source: Worldyards

                                       The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                   Slide 25
Q
Mc
McQuilling Services
                      Deletions from the Fleet
                                                                                                      Tonnage Supply



                      ► IMO 13 G – Second accelerated phase out of single
                        hull tankers and double-bottomed / double-sided
                        tankers entered into force 5 April, 2005 - limited
                        impact during 2006 – 2009 timeframe


                      ► Single hull tanker conversion program to dry bulk
                        carrier, FSO/FPSO, heavy lift vessel, double hull




                              The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008             Slide 26
Q
Mc                     Deletions from the Fleet
                       ►          Uncertainty in 13-G exit profile due to unknown future CAS
                                                                                                                    Tonnage Supply


                                  acceptances, whether vessels will trade to their maximum trading year
McQuilling Services

                                  on passing CAS, and unknown position of some flag states
                            VLCC                                                            Medium Range
                           Number of Vessels                             VLCC               Number of Vessels                 MR (COATED)
                                   STRICT          LENIENT         REFERENCE                       STRICT           LENIENT   REFERENCE
                             0                                                                0


                                                                                            -10
                            -20


                                                                                            -20
                            -40

                                                                                            -30

                            -60
                                                                                            -40


                            -80
                                                                                            -50


                           -100                                                             -60
                                   2008 2009 2010 2011 2012 2013 2014 2015                        2008 2009 2010 2011 2012 2013 2014 2015

                      Source: McQuilling

                                            The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                      Slide 27
Q
Mc
                         Deletions from the Fleet
                                                                                                                   Tonnage Supply


                          Conversion Projects*
                          (number of vessels)
McQuilling Services

                                   2007          2008        2009          2010
                             0
                                                                                      ►       A significant number of exits
                                                                                              from the trading fleets to
                           -20                                                                conversion projects occurred
                                                                                              in 2007. An even larger
                                                                    MR
                           -40                                                                program is anticipated for
                                                                    Panamax
                                                                                              2008.
                                                                    Aframax
                           -60                                      Suezmax           ►       However, changes in market
                                                                    VLCC                      outlook in the liquid and dry
                           -80                                                                bulk trades could
                                                                                              substantially alter the number
                          -100
                                                                                              of planned exits for
                                                                                              conversion in 2008 and
                                                                                              beyond
                          -120
                          * excluding conversion to double hull


                      Source: McQuilling
                                           The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008             Slide 28
Q
Mc
McQuilling Services
                      Reductions in Tanker Supply
                                                                                                     Tonnage Supply



                                                                   ►      The marine transportation system
                                                                          described by the global carriage of
                                                                          crude oil and petroleum products
                                                                          is imperfect and highly inefficient
                                                                   ►      If it were perfectly efficient,
                                                                          tankers would be able to load their
                                                                          next cargoes in the same location
                                                                          as where they discharged their
                                                                          last cargoes and sail loaded to full
                                                                          capacity all the time
                                                                   ►      In reality, tankers spend a
                                                                          significant portion of their lives
                                                                          sailing around empty or otherwise
                                                                          inefficiently deployed


                             The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008             Slide 29
Q
Mc
                      Reductions in Tanker Supply
                                                                                                           Tonnage Supply


                      UTILIZED                                         UNUTILIZED
McQuilling Services

                      ► Full cargo on board in transit at              ► Ballasting underway, no cargo on board;
                        optimum speed or vessel in port                ► Scheduled or unscheduled maintenance;
                        loading or discharging consuming               ► Weather delays and slow steaming delays not
                        laytime or on demurrage                          part of regular laden transit time or ballast time;
                                                                       ► Awaiting laydays;
                                                                       ► Less than full cargoes;
                                                                       ► Out of position
                      Voyage Timeline:
                                                      Theoretical Full Utilization – 100%

                                UNDER CARGO Laden, at                                            BALLAST
                                    sea or in port

                                   Actual utilization                             Capacity Reduction (10-21%)
                                  achieved in practice                                        UNAVAILABLE:
                                                                               Maintenance & Repair (2-3%)
                                                                                         Lost Time (2-3%)
                                                                                       Waiting Time (3-6%)
                                                                                       Dislocation (5-10%)


                                                                                                 Unutilized

                                   The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008               Slide 30
Q
Mc
                       Reductions in Tanker Supply
                       Fuel Consumption                                     Speed / Fuel
                                                                                                                        Tonnage Supply


                       (MT / Day)                                      Consumption Curve
                       120                                                                       ►       In an environment of
McQuilling Services

                       100
                                                                                                         inexpensive bunkers,
                        80
                                                                                                         optimum speed was most
                                                                                                         always full speed for motor
                        60
                                                                                                         ships
                        40
                        20                                   Laden                Ballast
                                                                                                 ►       As bunkers increased in cost,
                         0
                                                                                                         the downside of the optimum
                             10       11    12       13   14    15           16       17    18
                                                      Speed (knots)                                      speed curve was again
                      TCE Earnings                                   Optimum Speed Curve                 observed
                      (US$ / Day)

                       75,000                                                                    ►       As vessels are slowed down,
                       70,000
                                                                                                         it reduces available tonnage
                                                                                                         supply
                       65,000

                       60,000
                                                            optimum speed                        ►       In the VLCC sector a 1 knot
                       55,000                                                                            speed cut across the fleet
                       50,000
                                                                                                         equals between 10-20 vessel
                                  8        10        12        14       16           18     20           reduction in tonnage supply
                                                          Speed (knots)
                      Source: McQuilling

                                                The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008              Slide 31
Q
Mc
McQuilling Services



                                   Outlook for the Future




                      The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008   Slide 32
Q
Mc
McQuilling Services
                      Expectations for 2008
                      Tonnage Supply & Demand
                                                                                       Outlook for the Future



                       (Growth, %)                          Supply                    Demand
                       VLCC                                    (1.0)                       3.3
                       Suezmax                                 (1.1)                       2.8
                       Aframax (uncoated)                       6.2                        1.2
                       Panamax (uncoated)                       6.8                        4.1
                       Aframax (CPP)                            5.1                        4.4
                       Panamax (CPP)                            7.5                        4.4
                       MR                                     14.4                         4.4
                      Demand exceeds large ship supply in 2008, other
                      sectors in surplus
                              The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008     Slide 33
Q
Mc                    Expectations for 2008
                      Spot Rates
                                                                                      Outlook for the Future


                                                                          2008            2007
McQuilling Services

                      VLCC (East) 265 MMT                                    85             72
                      VLCC (West) 280 MMT                                    70             61
                      Suezmax 130 MMT                                     120             116
                      Aframax 70 MMT                                      180             168
                      Panamax 50 MMT                                      200             198

                      Aframax 75 MMT                                       145            142
                      Panamax 55 MMT                                       180            174
                      MR (Caribs) 38 MMT                                   205            198
                      MR (Far East) 30 MMT                                 220            218



                             The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008     Slide 34
Q
Mc                    Expectations for 2008
                      TCE Revenues (US$ 000/Day)
                                                                                      Expectations for 2008


                                                                                              2008
McQuilling Services

                                                           2007         @ US$400 / MT @ US$ 450 / MT
                      VLCC (East) 265 MMT                    40                   51.4               47.1
                      VLCC (West) 280 MMT                    35                   41.6               37.2
                      Suezmax 130 MMT                        39                   37.7               35.0
                      Aframax 70 MMT                         34                   32.7               30.7
                      Panamax 50 MMT                         28                   24.9               23.2

                      Aframax 75 MMT                         27                   26.2               24.1
                      Panamax 55 MMT                         26                   25.0               23.3
                      MR (Caribs) 38 MMT                     20                   18.5               17.2
                      MR (Far East) 30 MMT                   16                   13.9               12.4


                             The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008          Slide 35
Q
Mc
                      Tonnage Supply & Demand Compare
                                                                         Tonnage Supply & Demand


                      CAGR 2008-2012, %
                                                         Demand                    Supply
McQuilling Services


                      VLCC                                   3.8                       3.5
                      Suezmax                                3.2                        6.1
                      Aframax (uncoated)                      3.5                       7.2
                      Panamax (uncoated)                      3.8                       2.0
                      Aframax (CPP)                           4.4                       4.3
                      Panamax (CPP)                           4.4                       4.8
                      MR                                      4.4                       9.5
                      Tonnage surplus developing in certain
                      sectors over forecast period
                             The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008   Slide 36
Q
Mc                     Annual Freight Rate Projection 2008-2012
                       Spot Rate, Selected Trades (2008 Worldscale)
                                                                                                                     Summary



                         Spot Rate, (2008 WS)
McQuilling Services

                         250
                                                                                                          ►Driven mainly by
                                                                                                           reduced tonnage
                         200
                                                                                                           supply the market
                                                                                                           should rebound in
                         150                                                                               2008 over 2007

                                                                                                          ►From 2009 the impact
                         100
                                                                                                           of a large number of
                                                                                                           new vessels
                          50                                                                               delivered into the
                                                                                                           fleet will drive a
                                                                                                           declining market
                           0
                                2007        2008       2009      2010       2011      2012
                                                                                                           through 2012
                                  VLCC AG / East                    Suezmax WAFR / States
                                  Aframax Caribs/USG                Aframax CPP AG / JAPAN
                                  MR CPP CARIB / USAC

                      Source: McQuilling

                                           The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008           Slide 37
Q
Mc                     Forecast Sensitivity
                       VLCC AG / East, 2007-2015
                                                                                                                     Summary


                        Projected Spot Rate (2008 WS)               High Market Case
                                                                                                 ►Last year we saw the
McQuilling Services

                        200                                         Reference Case
                                                                    Low Market Case
                                                                                                  potential for a post-2010
                                      2007                                                        “bounce” in rate levels due
                        160                                                                       to the mandated 13-G exits
                                                                                                  in the reference case
                                      2008
                        120                                                                      ►This year the effect is no
                                                                                                  longer anticipated due to
                                                                                                  expected tonnage surplus
                         80
                                                                                                  conditions

                                                                                                 ►There is still the possibility
                         40
                                                                                                  of a spike in the high
                                                                                                  market case, but the
                          0                                                                       magnitude has been
                              2007 2008 2009 2010 2011 2012 2013 2014 2015                        reduced substantially

                      Source: McQuilling

                                           The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008            Slide 38
Q
Mc
                      Observations & Conclusions
                                                                                                      Summary


                      Demand outlook unimpressive
McQuilling Services

                      ► While the reference case anticipates moderate oil
                        demand growth there are downside risks in the global
                        economic outlook that may substantially reduce oil
                        demand growth going forward


                      ► We believe clean products transport demand growth
                        will to moderate over the forecast period from previous
                        growth rates due to increasing biofuels consumption;
                        conservation; refining capacity additions and
                        rationalization



                              The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008      Slide 39
Q
Mc
                      Observations & Conclusions
                                                                                                      Summary


                      Tonnage supply concerns
McQuilling Services

                      ► In 2008 a large tanker conversions program should
                        reduce tonnage supply while demand increases
                        moderately - This interaction should lead to increases in
                        freight rates over 2007 levels


                      ► In 2009 a record orderbook will deliver into the trading
                        fleet, overwhelming exits and demand; and initiating a
                        steady decline in rates through the balance of the
                        forecast period




                              The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008      Slide 40
Q
Mc
                      Observations & Conclusions
                                                                                                        Summary


                      Uncertainty will continue
McQuilling Services

                      ► World economic outlook uncertainty
                      ► The full impact of the Hebei Spirit oil spill has yet to
                        be felt
                      ► At what pace will tanker ordering continue?
                      ► What will be the performance of new Chinese
                        shipyards?
                      ► Will the tanker conversions program maintain,
                        increase or decrease?
                      ► Will owners decide to scrap prior to mandatory
                        phase-out dates?

                                The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008      Slide 41
Q
Mc
                      Observations & Conclusions
                                                                                                        Summary


                      Individual results will vary
McQuilling Services


                       ► Asset prices and lower TCE revenues are already
                         putting pressure or acquisition projects, tighter
                         financing will further reduce attractiveness
                       ► Operators will tend to slow their vessels down to
                         conserve fuel and reduce fuel expense – thus
                         reducing tonnage supply
                       ► Aggressive deployments (backhaul, triangulation)
                         will improve profitability for individual operators – in
                         some cases significantly – while increasing tonnage
                         supply overall


                                The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008      Slide 42
Q
Mc
                      McQuilling Services, LLC
                      Marine Transport Advisors
McQuilling Services

                      Ocean House ~ 1035 Stewart Avenue ~ Garden City, New York 11530
                      Tel: +1.516.227.5700 ~ Fax: +1.516.745.6198

                          ► Management consulting
                          ► Marine systems analysis
                          ► Project analysis
                          ► Market analysis
                          ► Information technology applications
                          ► Shipbuilding consulting
                          ► Personnel training


                      www.mcqservices.com
                                Thank you for your attention
                               The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008   Slide 43
Q
Mc
McQuilling Services




                                                   Supports




                      The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008   Slide 44
Q
Mc
                      World / Regional Economic Growth
                                                                                                    Economic Context


                      World GDP Growth
                      6.0%
                                                                                       ►
McQuilling Services

                                                                                             Long term world GDP
                                                           5.1%                              growth trend ~ 4.1%
                      5.0%


                                                  4.2%
                                                                                       ►     Short-term:
                                                                     4.1%
                                               4.0%
                      4.0%                                        3.8%
                                                                                                   ► 2006 – 5.4%

                      3.0%
                                                                                                   ► 2007 – 5.2%
                                                                                                   ► 2008 – 4.8%
                      2.0%
                                                                                       ►     Significant downside
                      1.0%
                                                                                             risks to short-term
                                                                                             growth forecast
                      0.0%
                                Historical      Forecast Period      Long-Term
                                                  (2008-2012)

                        US EIA IEO JUN 2006: Periods 1978-2003; 2005-2015; 2003-2030
                        US EIA IEO MAY 2007: Periods 1980-2004; 2007-2015; 2004-2030
                        OPEC WOO JUN 2007: Periods ; 2006-2010; 2006-2030
                        IEA WEO NOV 2007: Periods 1980-2005; 2005-2015; 2005-2030
                        IMF WEO OCT 2007: Periods 1989-2004; 2005-2012


                                   The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008            Slide 45
Q
Mc
                          World / Regional Economic Growth
                                                                                                             Economic Context


                          GDP Growth 2007-2015, Percent
                          12.0
McQuilling Services

                                                                 Size of bubble = size of          ►   The Chinese economy
                                                                 economy in US$ billions

                          10.0
                                                                                                       continues to expand,
                                                                                                       surpassing OEDC North
                                                                                                       America by 2015
                           8.0

                                                                                                   ►   Developed economies
                                                                                                       grow at 2.5%
                           6.0

                                                                                                   ►   In the short-term
                           4.0
                                                                                                       developing economies are
                                                                                                       providing the momentum
                                                                                                       for growth as developed
                           2.0
                                                                                                       economies struggle to
                                                                                                       regain
                           0.0
                             1980      1990     2000      2010     2020       2030          2040

                                    OECD North America            OECD Europe
                                    OECD Asia                     China
                                    India                         Middle East

                      Source: US EIA

                                            The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008              Slide 46
Q
Mc
                         World / Regional Economic Growth
                                                                                                            Economic Context


                           Cars per 1,000 People
McQuilling Services

                           600
                                                                                         ►       Car ownership growth in
                                    2030
                                   2020                                                          North America estimated at
                                                                                                 1.1% per year during the
                                 2010
                                 2005



                           500

                                                                                                 period 2005-2030
                           400                                                           ►       Chinese car ownership in
                                                                                                 the same period to
                           300
                                                                                                 increase by 7.9%
                                                                                         ►       South east Asian car
                           200
                                                                                                 ownership grows by 8.9%
                                                                                                 annually during 2005-2030
                           100




                             0
                                  North  Europe      OECD     China   South   Middle
                                 America              Asia            Asia    East &
                                                                              Africa
                      Source: OPEC

                                           The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008         Slide 47
Q
Mc
                          Short Term Outlook
                                                                                                          Economic Context



                            ► “A possibly deeper economic downturn in the US or
McQuilling Services

                              elsewhere could widen the crisis beyond the subprime
                              sector, as credit deteriorates more broadly”

                            ► “Emerging markets have been resilient so far but face
                              challenges ahead – emerging market equity prices in
                              some markets have declined steeply since the start of
                              2008”

                            ► “Signs of spillover are most evident in the sharp fall in
                              private emerging market bond issuance, particularly in
                              some emerging European economies”




                      Source: “Global Financial Stability Report – Market Update” IMF, January 2008

                                         The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008        Slide 48
Q
Mc
                          Short Term Outlook
                                                                                                         Economic Context



                           ► “Following strong growth through the 3rd quarter of 2007
McQuilling Services

                             the global economic expansion has begun to moderate
                             in response to continuing financial turbulence”

                           ► “Global growth is projected to decelerate from 4.9% in
                             2007 to 4.1% in 2008”

                           ► “Projected growth in the US in 2008 has been lowered
                             to 1.5% on a year-on-year basis, down from 2.2% in
                             2007”

                           ► “In China, growth is projected to decelerate from 11.4%
                             in 2007 to 10% in 2008 which should alliviate
                             overheating concerns”

                      Source: “World Economic Outlook Update” IMF, January 2008

                                        The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008        Slide 49
Q
Mc
                          Oil Demand Growth
                                                                                                           Economic Context


                          Thousand Barrels per Day
                                                                                                  ►   Oil demand registered at
McQuilling Services

                          120,000
                                                                                                      85.8 million barrels per
                                                                                                      day in 2007
                          100,000

                               85,780                                                    97,300   ►   The reference case
                                                                                                      anticipates growth of
                           80,000
                                                                                                      1.6% in 2008 followed by
                                                                                                      2.0% in 2009
                           60,000
                                                                                                  ►   By 2015 oil demand
                                                                                                      grows to 97.3 million
                           40,000                                                                     barrels per day in the
                                                                                                      reference case but only
                                                                      Reference Case                  86.3 million barrels per
                           20,000                                     Low Market Case
                                                                      High Market Case
                                                                                                      day in the low market
                                                                                                      case
                                0
                                2007    2008   2009   2010   2011   2012   2013   2014    2015

                      Source: US EIA / McQuilling

                                          The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008             Slide 50
Q
Mc
McQuilling Services
                          Seaborne Transport Demand
                          Billion Ton Miles – 2007/2006
                                                                                                         Tonnage Demand




                                VLCC                                              2007          2006       Change (%)   2007 Share
                                Middle East / Far East-SE Asia                 2,731.6       2,784.7            -1.9%         46%
                                Middle East / Carib-USG-USAC                     960.2         950.4             1.0%         16%
                                Middle East / USWC                               214.3         245.8           -12.8%          4%
                                Middle East / Europe                             210.2         230.2            -8.7%          4%
                                West Africa / Far East-SE Asia                   466.0         495.1            -5.9%          8%
                                West Africa / Carib-USG-USAC                     323.0         248.9            29.8%          5%
                                Carib-Samerica / Far East-SE Asia                203.0         157.5            28.9%          3%
                                Other                                            858.3         831.2             3.3%         14%
                                Total                                          5,966.7       5,943.6             0.4%        100%
                      Source: LMIU, McQuilling

                                        The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                Slide 51
Q
Mc
McQuilling Services
                          Seaborne Transport Demand
                          Billion Ton Miles – 2007/2006
                                                                                                         Tonnage Demand




                                Suezmax                                           2007          2006      Change (%)   2007 Share
                                West Africa / Carib-USG-USAC                     195.5         248.3          -21.3%         13%
                                West Africa / Europe                             126.3         131.1           -3.7%          8%
                                Middle East / Far East-SE Asia                   151.8         176.4          -13.9%         10%
                                Middle East / Europe                              54.3          58.6           -7.3%          3%
                                Mediterranean / Europe                           127.0         111.7           13.7%          8%
                                Mediterranean / Carib-USG-USAC                   104.9         110.7           -5.2%          7%
                                North Sea / Carib-USG-USAC                        49.1          50.3           -2.4%          3%
                                Carib-SAmerica / Europe                           49.6          55.6          -10.8%          3%
                                Carib-SAmerica / Far East-SE Asia                 38.8          46.1          -15.8%          3%
                                Other                                            655.7         514.7           27.4%         42%
                      Source: LMIU, McQuilling

                                        The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                Slide 52
Q
Mc
McQuilling Services
                          Seaborne Transport Demand
                          Billion Ton Miles – 2007/2006
                                                                                                         Tonnage Demand




                                  Aframax Dirty                         2007                     2006      Change (%)   2007 Share
                                  Carib-SAmerica / Carib-USG-USAC      161.4                    167.6           -3.7%         12%
                                  Far East-SE Asia / Far East-SE As    209.1                    208.0            0.5%         16%
                                  Middle East / Far East-SE Asia-ISC   182.2                    165.6           10.0%         14%
                                  Mediterranean / Europe               209.3                    204.6            2.3%         16%
                                  Mediterranean / Carib-USG-USAC        55.2                     61.6          -10.3%          4%
                                  North Sea / Europe                    44.4                     44.2            0.4%          3%
                                  North Sea / Carib-USG-USAC            42.2                     41.3            2.0%          3%
                                  Baltic / Europe                       32.9                     27.8           18.4%          3%
                                  Other                                374.2                    351.9            6.3%         29%
                                  Total                              1,310.8                  1,272.6            3.0%        100%
                      Source: LMIU, McQuilling

                                        The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                Slide 53
Q
Mc
McQuilling Services
                          Seaborne Transport Demand
                          Billion Ton Miles – 2007/2006
                                                                                                         Tonnage Demand




                                Panamax Dirty                                     2007          2006      Change (%)   2007 Share
                                Americas                                          55.1          67.0          -17.8%         21%
                                Far East-SE Asia / Far East-SE As                 24.3          22.7            6.9%          9%
                                North Sea / Carib-USG-USAC                        29.3          21.5           36.3%         11%
                                West Africa / Carib-USG-USAC                       9.3          13.6          -32.0%          4%
                                Other                                            143.0         148.3           -3.6%         55%
                                Total                                            260.9         273.2           -4.5%        100%



                      Source: LMIU, McQuilling

                                        The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008               Slide 54
Q
Mc                        Clean Products Demand
                          Exports
                                                                                                                Tonnage Demand



                           Million Ton Miles
                                                                                                   ► Clean products
McQuilling Services

                                                                Other
                           1,400,000
                                                                Americas

                                                                Eur BSea Med
                                                                                                     transport demand
                           1,200,000
                                                                NEur Baltic                          experienced a CAGR of
                                                                Far East - SE Asia

                                                                Middle East
                                                                                                     6.6% since 1998 (1.7%
                           1,000,000
                                                                                                     fundamentals and 4.9%
                                                                                                     arbitrage?)
                            800,000
                                                                                                   ► Increasing exports from
                                                                                                     Far East and Europe
                            600,000
                                                                                                     fuel growth during this
                                                                                                     period
                            400,000

                                                                                                   ► Growth has slowed in
                            200,000                                                                  recent years

                                   0
                                       1995      1997    1999     2001        2003   2005   2007
                      Source: IEA, McQuilling

                                               The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008      Slide 55
Q
Mc                        Clean Products Demand
                          North American Imports
                                                                                                                Tonnage Demand


                           Million Ton Miles              Other
                                                                                                    ► Clean products transport
McQuilling Services

                           450,000
                                                          Americas

                                                          Eur BSea Med
                                                                                                      demand growth
                           400,000
                                                          NEur Baltic                                 attributable to European
                                                          Far East - SE Asia
                           350,000                        Middle East
                                                                                                      and Far East exports
                                                                                                      increasing their share of
                           300,000
                                                                                                      North American demand
                           250,000



                           200,000



                           150,000



                           100,000



                            50,000



                                 0
                                     1995       1997    1999      2001         2003   2005   2007
                      Source: IEA, McQuilling

                                               The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008       Slide 56
Q
Mc                        Clean Products Demand
                          North American Imports
                                                                                                                Tonnage Demand


                           Billion Ton Miles                                Others
                           50                                               Trinidad and Tobago
                                                                                                   ► Declining role of South
McQuilling Services

                                                                            Netherlands Antilles

                           45                                               Argentina                American exports in
                                                                            Brazil
                                                                            Mexico
                                                                                                     North American supply
                           40
                                                                            Venezuela

                           35
                                                                                                   ► As these shorter-haul
                                                                                                     barrels have been
                           30
                                                                                                     replaced by trans-
                           25                                                                        Atlantic and trans-
                                                                                                     Pacific supply,
                           20
                                                                                                     transport demand
                           15                                                                        increased with
                           10
                                                                                                     increasing ton-miles

                            5


                            0
                            1995       1997        1999     2001     2003       2005      2007

                      Source: IEA, McQuilling

                                               The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008      Slide 57
Q
Mc
McQuilling Services
                          Seaborne Transport Demand
                          Billion Ton Miles – 2007/2006
                                                                                                         Tonnage Demand




                               Clean Demand                                 2007        2006     Change (%)     2007 Share
                               Middle East to Far East - SE Asia           118.3       128.2          -7.8%           10%
                               Middle East to Europe                        74.8         61.2         22.2%            6%
                               Middle East to Americas                      15.9        15.4           3.3%            1%
                               Far East - SE Asia to Far East - SE         143.5       146.2          -1.8%           12%
                               Far East - SE Asia to Americas              157.5       109.2          44.2%           13%
                               NEur Baltic to Europe                        71.8         76.6         -6.3%            6%
                               NEur Baltic to Americas                     185.1       180.6           2.5%           15%
                               NEur Baltic to Others                       113.7       104.9           8.4%            9%
                               Eur BSea Med to NEur Baltic                  80.7         76.5          5.6%            7%
                               Americas                                     21.2         23.5         -9.9%            2%
                               Others                                      250.0       281.9         -11.3%           20%
                               Total                                      1232.5      1204.2           2.4%          100%
                      Source: LMIU, McQuilling

                                        The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                Slide 58
Q
Mc                        Clean Products Demand
                          Biofuels Production
                                                                                                                                                                    Tonnage Demand


                                                                                      Thousand Barrels per day
                                                                                                                                                             ► Going forward,
McQuilling Services

                                                                                                                                                       600     increasing production
                                                                                                                                                       500     and consumption of
                                                                                                                                                               biofuels in the America
                                                                                                                                                       400
                                                                                                                                                               will reduce overall clean
                                                                                                                                                       300
                                                                                                                                                               products transport
                                                                                                                                                       200     demand
                                                                                                                                                       100   ► North American refining
                                                                                                                                                       0       capacity additions and
                         2006
                                2007




                                                                                                                                  OECD North America
                                                                                                                                                               conservation measures
                                       2008




                                                                                                                  Latin America
                                              2009




                                                                                                    OEDC Europe
                                                                                       Other Asia
                                                     2010




                                                                          OECD Asia
                                                            2011
                                                                   2012




                                                                                                                                                               will also negatively
                                                                                                                                                               impact clean products
                                                                                                                                                               transport demand
                                                                                                                                                               growth
                      Source: US EIA

                                                     The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008                                                         Slide 59
Q
Mc
McQuilling Services




                             Investment Attractiveness




                      The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008   Slide 60
Q
Mc
                          Asset Prices
                                                                                           Investment Attractiveness


                          VLCC
McQuilling Services

                          US$ Million                                                   VLCC
                          140                                                                    ►      Overall, asset prices
                                                                                                        (new & secondhand) rose
                          120                                                                           9.3% in the tanker sector
                                                                                                        over 2007
                          100
                                                                                                 ►      Prices have increased
                           80
                                                                                                        due to materials costs
                           60                                                                           increases but also as a
                                                                                                        result of strong market
                           40                                                                           sentiment
                                                                                                                             154
                           20                                                                    ►      Newbuilding:
                                                                                                        VLCC -       US$ 137 Mill
                            0
                                94 95 96 97 98 99 00 01 02 03 04 05 06 07
                                                                                                        Suezmax - US$ 89 Mill
                                                                                                        Aframax - US$ 70 Mill
                                Newbuilding        5 Years Old       10 years Old       Scrap
                                                                                                        Panamax - US$ 59 Mill
                                                                                                        MR -         US$ 50 Mill
                      Source: McQuilling

                                           The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008             Slide 61
Q
Mc
                      Excess Cash Flow
                                                                              Investment Attractiveness


                      US$ 000 / Day
McQuilling Services

                      ►   Newbuilding costs
                      ►   60% LTV finance, 10-year tenor, 7% note
                      ►   30% unamortized bullet at end of term
                      ►   TCE revenue assumption average of 5-year forecast

                                                          VLCC SUEZ                     AFRA PANA            MR
                      08-12 Ave TCE                        37.5           31.0           27.4         26.0   15.4
                      Finance Cost                         26.7           17.3           13.7         11.4    9.8
                      Operating Cost                       10.3              8.3           7.8         7.4    6.8
                      Total TCE Cost                       37.0           25.6           21.5         18.8   16.7
                      Excess Cash Flow                        0.5            5.4            5.9        7.2   (1.3)
                              The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008             Slide 62
Q
Mc
McQuilling Services
                      Internal Rate of Return on Investment
                                                                              Investment Attractiveness




                      ►   Return on 40% equity invested
                      ►   25-year project horizon, scrap residual value
                      ►   TCE revenues assumption for life of project



                      (IRR, %)                            VLCC SUEZ                     AFRA PANA            MR
                      2006                                 6.5            14.1           13.7         11.5   10.0
                      2007                                 4.0               9.4         10.9         13.5    3.3
                      Change 07/06 (%)                   (38%)            (33%) (20%)                 17%    (67%)




                              The Baltic Exchange Tanker Derivatives Forum, New York, 13 March 2008             Slide 63

								
To top