LORENTZEN STEMOCO _______________________ INTERTANKO 24 OKTOBER 2001

LORENTZEN & STEMOCO _______________________ INTERTANKO 24. OKTOBER 2001 OUTLOOK FOR 20/50. 000 DWT PRODUCT TANKERS FINN ENGELSEN JR LORENTZEN & STEMOCO AS

LORENTZEN & STEMOCO _______________________ HOW CAN YOU FORECAST ANYTHING DURING THESE UNCERTAIN TIMES ?

LORENTZEN & STEMOCO _______________________ UNDERSTANDING THE PRESENT IS THE KEY TO FORECASTING THE FUTURE!

LORENTZEN & STEMOCO _______________________ ELEMENTS OF FORECASTING • The basic picture • Trade generating factors • Shipping consequential analysis

LORENTZEN & STEMOCO _______________________ THE BASIC PICTURE THE WORLD POLITICAL SITUATION THE GENERAL ECONOMIC OUTLOOK REGIONAL ECONOMIC GROWTH .

LORENTZEN & STEMOCO _______________________ THE BASIC PICTURE • THE WORLD POLITICAL SITUATION • THE GENERAL ECONOMIC OUTLOOK • REGIONAL ECONOMIC GROWTH • THE COST OF ENERGY • OPEC’S MANAGEMENT OF THE OIL PRICE

LORENTZEN & STEMOCO _______________________ TRADE GENERATING FACTORS • DEVELOPMENTS IN WORLD OIL DEMAND

LORENTZEN & STEMOCO _______________________ TRADE GENERATING FACTORS • DEVELOPMENTS IN WORLD OIL DEMAND • TRENDS IN WORLD OIL REFINING • ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS • CAPACITY STUDIES AND PRODUCT BALANCES

LORENTZEN & STEMOCO _______________________ TRADE GENERATING FACTORS • DEVELOPMENTS IN WORLD OIL DEMAND • TRENDS IN WORLD OIL REFINING • ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS • REGIONAL CAPACITY STUDIES AND PRODUCT BALANCES

LORENTZEN & STEMOCO _______________________ TRADE GENERATING FACTORS • DEVELOPMENTS IN WORLD OIL DEMAND • TRENDS IN WORLD OIL REFINING • ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS • REGIONAL CAPACITY STUDIES AND PRODUCT BALANCES • TRADE ANALYSIS

LORENTZEN & STEMOCO _______________________ TRADE GENERATING FACTORS • DEVELOPMENTS IN WORLD OIL DEMAND • TRENDS IN WORLD OIL REFINING • ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS • REGIONAL CAPACITY STUDIES AND PRODUCT BALANCES • TRADE ANALYSIS • US IMPORTS GASOLINE • EUROPE IMPORTS JET/KERO • BOTH US/EUROPE IMPORT HEATING OIL • ASIA IMPORTS NAPHTA • ASIA REQUIRES NAPHTA FROM MEG, BUT IS SURPLUS LOWGRADE GASOLINE/GASOIL • MEG EXPORTS LOW GRADE GASOIL+JET TO ATLANTIC BASIN

LORENTZEN & STEMOCO _______________________ TRADE GENERATING FACTORS US natural gas - low production and very tight stocks caused prices to rise sharply last winter Henry Hub Natural Gas USG 1 pct Fuel oil …. . Recent high filling rates suggests a better balance

LORENTZEN & STEMOCO _______________________ SHIPPING CONSEQUENTIAL ANALYSIS • INITIAL ASSESSMENT OF DEMAND • ARBITRAGE ANALYSIS AND INITIAL FREIGHT RATE ASSESSMENT

LORENTZEN & STEMOCO _______________________

LORENTZEN & STEMOCO _______________________ SHIPPING CONSEQUENTIAL ANALYSIS • INITIAL ASSESSMENT OF DEMAND

LORENTZEN & STEMOCO _______________________ SHIPPING CONSEQUENTIAL ANALYSIS • INITIAL ASSESSMENT OF DEMAND • ARBITRAGE ANALYSIS AND INITIAL FREIGHT RATE ASSESSMENT

LORENTZEN & STEMOCO _______________________ SHIPPING CONSEQUENTIAL ANALYSIS • INITIAL ASSESSMENT OF DEMAND • ARBITRAGE ANALYSIS AND INITIAL FREIGHT RATE ASSESSMENT • DETAILED KNOWLEDGE OF FLEETSTRUCTURE • SIZE & AGE DISTRIBUTION • OWNERSHIP • FUTURE FLEETDEVELOPMENT • NEWBUILDING DELIVERIES • ANTICIPATED SCRAPPING

LORENTZEN & STEMOCO _______________________ SHIPPING CONSEQUENTIAL ANALYSIS Current fleet size: 917 / 33, 32 mill dwt. (12 OBO carriers) Newbuildings on order: 162 / 6, 4 mill dwt There are 64 vessels / 2, 4 mill dwt under US Flag. Nr. of units to be phased out by: 2003: 58 2004: 84 2005: 78 2006: 59 Total vessels to be phased out 2003 -2006: 281 vessels / 8, 83 mill dwt.

LORENTZEN & STEMOCO _______________________ SHIPPING CONSEQUENTIAL ANALYSIS (CONTINUED) • MARKETBALANCE & RATEFORECAST

LORENTZEN & STEMOCO _______________________ HANDY PRODUCT CARRIERS EVENT SHEET • 1997 THE END OF THE ASIA BOOM • 1998 VERY DRAB MARKET CAUSED BY COLLAPSE IN ASIAN DEMAND • 1999 EVEN MORE DRAB MARKET CAUSED BY CONTINUED SLACK DEMAND OVERSUPPLY • 2000 BIG RECOVERY DUE TO LOW PRODUCT STOCKS AND HUGE US GAS SUBSTITUTION DEMAND • 2001 GLORIOUS START, MASSIVE ORDERING FOLLOWED BY DRAB END • 2002 VERY WEAK DEMAND, SCRAPPING ACCELERATES BUT THE FLEET IS GROWING • 2003 US/ASIA RECOVER CAUSING SWIFT UPSWING IN DEMAND RATES • 2004 DEMAND STABILIZES AS THE FLEET CONTINUE TO GROW. • 2005 LETS HOPE ITS OK……. .

LORENTZEN & STEMOCO _______________________ OSLO TANK GAS DRY CARGO SALE & PURCHASE NEW BUILDINGS OFFSHORE / PROJECTS CONSULTING FUTURES SHANGHAI NEWBUILDINGS SALE & PURCHASE HONG KONG DRY CARGO SINGAPORE DRY CARGO

LORENTZEN & STEMOCO _______________________ THANK YOU FOR YOUR ATTENTION

LORENTZEN & STEMOCO _______________________ YOUR FUTURE OUR CHALLENGE

LORENTZEN & STEMOCO _______________________ FURTHER CONSEQUENTIAL SHIPPING ANALYSIS • DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ?

LORENTZEN & STEMOCO _______________________ FURTHER CONSEQUENTIAL SHIPPING ANALYSIS • DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ? • PRODUCTION FORECAST

LORENTZEN & STEMOCO _______________________ FURTHER CONSEQUENTIAL SHIPPING ANALYSIS • DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ? • PRODUCTION FORECAST • ANALYSIS OF FORWARD COVER

LORENTZEN & STEMOCO _______________________ FURTHER CONSEQUENTIAL SHIPPING ANALYSIS • DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ? • PRODUCTION FORECAST • ANALYSIS OF FORWARD COVER • EVALUATION OF SHIPBUILDING CURRENCIES

LORENTZEN & STEMOCO _______________________ FURTHER CONSEQUENTIAL SHIPPING ANALYSIS • DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ? • PRODUCTION FORECAST • ANALYSIS OF FORWARD COVER • EVALUATION OF SHIPBUILDING CURRENCIES • REGIONAL CAPACITY ANALYSIS

LORENTZEN & STEMOCO _______________________ FURTHER CONSEQUENTIAL SHIPPING ANALYSIS • DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ? • PRODUCTION FORECAST • ANALYSIS OF FORWARD COVER • EVALUATION OF SHIPBUILDING CURRENCIES • FORECAST NEWBUILDING PRICES

LORENTZEN & STEMOCO _______________________ PROVIDE ADVISE • INVESTMENT STRATEGIES • BUY OR SELL TONNAGE • NEWBUILDING OR SECONDHAND? • CHARTER IN OR OUT • TIMING • HEDGING STRATEGIES

LORENTZEN & STEMOCO _______________________

LORENTZEN & STEMOCO _______________________ ARE JAPANESE BUILDERS GOING TO SUFFER MORE THAN KOREAN BUILDERS ? LET US LOOK AT THE CROSS YEN/WON. . .

LORENTZEN & STEMOCO _______________________ FURTHER CONSEQUENTIAL SHIPPING ANALYSIS • DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ? • PRODUCTION FORECAST • ANALYSIS OF FORWARD COVER • EVALUATION OF SHIPBUILDING CURRENCIES • FORECAST NEWBUILDING PRICES

LORENTZEN & STEMOCO _______________________ KOREAN YARDS MAINTAIN A COMPETITIVE ADVANTAGE

LORENTZEN & STEMOCO _______________________

LORENTZEN & STEMOCO _______________________ INVESTMENT IN 5 YEAR OLD TONNAGE IS INTERESTING IF YOU ARE ON THE RIGHT SIDE OF THE CYCLE……. . .

LORENTZEN & STEMOCO _______________________ THREE PREREQUSITES FOR STABILE BUILDING PRICES VESSEL DEMAND FORECAST BUILDING CAPACITY LOCAL CURRENCIES = USD BUILDING PRICE FORECAST ?

LORENTZEN & STEMOCO _______________________ LORENTZEN & STEMOCO AS BROKERS AND CONSULTANTS FOR THE SHIPPING INDUSTRY OSLO SINGAPORE SHANGHAI

LORENTZEN & STEMOCO _______________________ THE BASIC PICTURE • THE WORLD POLITICAL SITUATION • THE GENERAL ECONOMIC OUTLOOK • REGIONAL ECONOMIC GROWTH • THE COST OF MONEY

LORENTZEN & STEMOCO _______________________ WHY DO WE NEED SHIPPING ANALYSTS ?

LORENTZEN & STEMOCO _______________________ “IF YOU ARE NOT A BUYER YOU ARE A SELLER”

LORENTZEN & STEMOCO _______________________ TO EXPLAIN WHY THINGS DID NOT DEVELOP AS THEY PREDICTED?