Paperless Trade in Oil Industry UNe Docs Conference

Paperless Trade in Oil Industry UNe. Docs Conference Kuala Lumpur, 21 Feb 2006 © 2003 -6 Electronic Shipping Solutions. All rights reserved.

Agenda • Background to ESS and its approach - Overview of ESS - Timing right for e. Docs - Commodity Trade Problem - ESS’ Solution • Why we chose UNe. Docs • Oil e. B/L Pilots - Hurdles in building pilots - e. B/L Pilots Overview - BP Pilot details • Future work with UNe. DOcs © 2003 -6 Electronic Shipping Solutions. All rights reserved.

ESS Overview • ESS is an e. Docs services provider for the trade finance, commodity trading and shipping industries Company • Established in early 2003 by two shipping executives • Management Team has 105 years of IT and Shipping experience • Offices in Philadelphia (Sales), Dallas (Engineering) & London (Sales). Hong Kong (Sales) to open in late 2006 • Industry neutral company - Not owned or controlled by any interested party, stakeholder group or government entity • BP pilot started this month Product • Product developed in-house • Web application, integrated or OEM solution • Part I: e. Docs Solution - IT Platform (. Net 2. 0 & SQL Server) - User Agreement - e. Risks Insurance - 24/7 Support & Training - Part II: Clearinghouse Solution - UNe. Docs data model - Web Services - Other adapters for legacy and ERP systems • Several other e. Docs pilots planned for 2006 © 2003 -6 Electronic Shipping Solutions. All rights reserved.

Timing right for e. Docs Solution • Recent trends make the adoption of an industry standard for electronic documents the imminent solution to paper inefficiencies Past solutions failed because … Ø Ahead of their time - No longer an issue Ø Lack of neutrality - Not an issue for ESS Ø Fundamentally altered existing processes - Not an issue for ESS is supported by positive recent trends ü Industry acceptance that electronic documents are the solution ü E-Signature Acts worldwide ü Adoption of e. UCP ü Revised Kyoto Convention (e-Customs) ü Adoption of best practices by ship operators ü Electronic disclosure requirements post 9/11 Clear trend towards electronic documents as the solution © 2003 -6 Electronic Shipping Solutions. All rights reserved.

The Commodity Trade Problem • Paper inefficiencies creates very expensive problems for all trade participants Problem Working Capital costs Cause • Trading & discharge LOIs Solution • Delays signing & sending paper • Demurrage costs • Slow credit line turnover Inefficient use of human resources • Re-keying data • Correcting document errors • Amending documents for trade reasons Other unnecessary costs • Secure e. Docs including e. B/Ls • Data Interoperability • Automated L/C reconciliation • Monthly reconciliations • Non-timely information • Courier costs • Printing costs Fraud risks • Lack of security devices in paper B/Ls © 2003 -6 Electronic Shipping Solutions. All rights reserved.

ESS Solution: Databridge • The Databridge provides a full-service, on-demand e. Docs Service by combining an IT platform with a robust User Agreement, e. Risk insurance & 24/7 support • Databridge allows users to create and transmit any original trade and shipping documents electronically • Paper uniqueness replaced by strict access rights limited to legal Holder -. NET 2. 0 - SQL Server • Original e. Doc: - XML Template - Trade Data - Digital signature(s) - UNe. Docs - XML - Web Services • Documents can be viewed as PDFs or using Databridge viewer © 2003 -6 Electronic Shipping Solutions. All rights reserved.

ESS & UNe. Docs • Past failures and a desire not to “re-invent the wheel” led ESS to UNe. Docs • Need to start with paper and existing processes • Need data interoperability • Need a standard: - Proprietary standards is problematical · Expensive to develop and maintain · Creates significant pushback from users - Developing your own standard is problematical · Takes significant time to create · Need broad-based support before you have demonstrated proof-ofconcept ESS has adopted UNe. Docs as its internal data model and default integration standard © 2003 -6 Electronic Shipping Solutions. All rights reserved.

Hurdles with Oil e. B/Ls • ESS faced a number of hurdles in tackling oil B/Ls Buy-in from customers § Oil e. B/Ls require working with two of the worlds most conservative industries at the same time: banking and shipping § A number of failures of prior e. B/L projects made obtaining buy-in more difficult § e. B/L pilots require participation from a full trade chain for any type of meaningful trial Legal § Lack of any international treaty (standard) requires ESS to adopt a robust legal framework to deal with the transfer of title Insurance § Dealing with extremely high value cargoes – up to $120 MM necessitates significant insurance cover Practical § Need to resolve issues of obtaining Master’s signatures when the majority of vessels are not internet enabled § Need to solve issue of dual medium – paper and e. Docs © 2003 -6 Electronic Shipping Solutions. All rights reserved.

e. Docs Oil Pilots • ESS is in the process of running a series of pilots which should lead to commercial rollout in the oil & petrochemical segment • Running approximately 5 -8 oil and petrochemical pilots in 2006 - First part of series is underway with BP, Shell, Hess and possibly Exxon - involves simple trade chains (involving 5 -10 parties) - Second part will commence in 2 H 2006 – involves complex trade chains (20+ parties) • Commence with pilots involving oil terminals, leading oil majors tanker operators, ship agents, cargo surveyors, commodity traders and banks • Initial pilots involve several stages: - Training & Proof-of-concept - Simulations - Dry runs (i. e. e. Docs in parallel to paper) - Production pilot (i. e. , no paper) • Later pilots involve integration using UNe. Docs, XML or Web Services with users trading and scheduling systems • Pilots supported 24/7 by our Technical Support and Professional Services Departments © 2003 -6 Electronic Shipping Solutions. All rights reserved.

Pilot Example: BP-Supsa • Cargo: Azeri Light Crude • Route: From Supsa, Georgia to Trieste, Italy • Start Date: Commenced February 2006 • Timeframe: Approximately 6 months • Participants: - BP Oil International (shipper) & BP Germany (receiver) - BP Shipping and possibly others (tanker operator) - • Georgia Pipeline Company (terminal operator) Barwil Agency (ship agent) Documents Involved: - Negotiable bill of lading - Certificate of Origin - Certificate of Quality & Quantity - Cargo Manifest - Master Receipt of Samples © 2003 -6 Electronic Shipping Solutions. All rights reserved.

Future Work with UNe. Docs • ESS is committed to support UNe. Docs in developing a trade facilitation standard • Important work from ESS’ standpoint includes: - Developing standards around specific shipping documents not presently included in UNe. Docs, such as the e. CQQ - Developing a standard for rendering e. Docs (e. Forms) - Convergence of UNe. Docs and both WCO standards and emerging single window standards - Ensuring that UNe. Docs conforms with the UNCITRAL draft Instrument on transfer of rights of e. Docs © 2003 -6 Electronic Shipping Solutions. All rights reserved.

ESS Contact For more information on ESS or the oil pilots contact: Name: Tel: Email: Alexander Goulandris +44 20 7754 5984 alexander. goulandris@essdocs. com © 2003 -6 Electronic Shipping Solutions. All rights reserved.

“Our Age of Anxiety is, in great part, the result of trying to do today's jobs with yesterday's tools. . ” - Marshall Mc. Luhan © 2003 -6 Electronic Shipping Solutions. All rights reserved.

3624 Market Street, Suite 300 s Philadelphia, PA 19104 United States Tel: +1 (866) ESS-DOCS Fax: +1 (806) 214 -9148 Email: nsca@essdocs. com Web: www. essdocs. com 18 Mansell Street, 4 th Floor London, E 1 8 AA United Kingdom Tel: + 44 (20) 7754 -5984 Fax: +44 (870) 129 -6428 Email: emea@essdocs. com © 2003 -6 Electronic Shipping Solutions. All rights reserved.