anti-trust/competition law compliance statement
TRANSCRIPT
Anti-Trust/Competition Law Compliance Statement
INTERTANKO’s policy is to be firmly committed to maintaining a fair and competitive environment in the world tanker trade, and to adhering to all
applicable laws which regulate INTERTANKO’s and its members’ activities in these markets. These laws include the anti-trust/competition laws which the
United States, the European Union and many nations of the world have adopted to preserve the free enterprise system, promote competition and protect the public from monopolistic and other restrictive trade practices.
INTERTANKO’s activities will be conducted in compliance with its Anti-trust/Competition Law Guidelines.
The tanker market What to watch
Manager Research and ProjectsSingapore 20 April 2007
Tanker market – What to watch?
• Fragile demand?• Product taking market share from crude? • Chemical market – demand increasing• Supply growth -phase out 2010
Average annual tanker freight rates
$/day
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2001 2002 2003 2004 2005 2006 1Q07
VLCC Suezmax Aframax Clean
Tanker market
• What to watch ahead?– Economy
• US/China
– Demand for tankers• Increase oil demand – concentrated to few areas• New refineries - structural changes in trade?• Pipelines• Oil supply – more from Middle East?• New technology/politics (biofues)
– Supply of tankers• Orderbook• Phase out 2010• Productivity
GDP growth
%
What to watch: What to watch: No growth in oil demand OECD despite No growth in oil demand OECD despite positive growthpositive growth
!
-0.5
1.5
3.5
5.5
7.5
9.5
1978-2003 2003 2004 2005 2006 2007
USA
Europe
Japan.
OECD
Russia
China
India
World
Seaborne oil trade - wet and dry
bn tonne miles
What to watch: What to watch: Higher increase in product tanker Higher increase in product tanker demand than crude tanker demanddemand than crude tanker demand
!
1,000
3,000
5,000
7,000
9,000
11,000
13,000
15,000
17,000
19,000
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Wet Dry Crude Products
1994-2002 1.1% /0.9% /1.7%/ 4.3%
1987-1993 6.3%/6.7%/5.0% /3.1%
2003-2006 5.3% / 4.9%/6.5%/6.8%
Increase in world oil demand in ME*, USA, China and ROW**
mbd
Source: IEASource: IEA
FSU: +0.05FSU: +0.05Other Asia: +0.18Other Asia: +0.18L America: +0.09L America: +0.09Africa: +0.06Africa: +0.06
What to watch: What to watch: Major part of demand from few areasMajor part of demand from few areas!
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
3.2
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
** Rest of world
*Middle East
USA
China
23% 95% 50% 35% 28% 21% 54% 28%
Source: IEA
Sources of OECD Asian oil imports
mbd
To watch: To watch: Oil from SakhalinOil from SakhalinRussian pipeline EastwardsRussian pipeline EastwardsMalaysian pipeline?Malaysian pipeline?
!
0
2
4
6
1998 1999 2000 2001 2002 2003 2004 2005 2006
Middle East Others America
Europe Africa
Middle East
Others
Source: IEA
Chinese oil import by source
3 mbd
! To watch: To watch: Oil from VenezuelaOil from VenezuelaRussian pipelineRussian pipelineRefinery developmentRefinery development
Middle East 45%
Africa 32%
Europe/America
Asia Pacific
mbd
Source: IEA
Sources of US oil imports - mbd
! To watch: To watch: Oil from CanadaOil from CanadaDomestic productionDomestic production
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1998 2000 2002 2004 2006
N America
Europe
M. East
Ven/Ecu
Africa
Others
Source: IEA
mbd
Source: IEA
Sources of European oil imports - mbd
! To watch: To watch: N Sea oil production downN Sea oil production downFlat demandFlat demandProducts instead of crude?Products instead of crude?
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Europe
America
Europe
Middle East
Africa
FSU
OthersSource: IEA
World oil supply - mbd
Source: BP/INTERTANKO
mbd
!To watch: To watch: Middle EastMiddle EastNorth Sea declineNorth Sea decline Russia EastwardsRussia Eastwards
0
5
10
15
20
25
3019
65
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
N America
S/C America
N Sea
Middle East
W Africa
Other Africa
Asia Pacific
Others
FSU
FSU petroleum export
Source: BP/INTERTANKO
mbd
! To watch: To watch: New pipelines east/west/DruzhbaNew pipelines east/west/DruzhbaSakhalinSakhalin
0.0
0.5
1.0
1.5
2.0
2.5
2003 2004 2005 2006 Pr.07
Black Sea
Baltic Sea
Artic/FarEast
Druzba Pipeline
Other Routes
Products
BTC
Export outlets:
Product tanker demand
World product trade
m tonnes
Source: BP review! To watch: To watch:
Oil from VenezuelaOil from VenezuelaRussian pipelineRussian pipeline
400
440
480
520
560
600
1999 2000 2001 2002 2003 2004 2005
+9.6%+7.2%+1.0%+2.2%+5.6%+0.6%
World oil consumption and refinery capacity 1965 - 2011
mbd
Source: IEA
! To watch: To watch: Tightening refinery capacity until 2009Tightening refinery capacity until 2009New export refineries India/MENew export refineries India/ME
30
40
50
60
70
80
90
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
Oil consumption
Refinery capacity
Sources: BP review until 2004+1.8% increase oil consumption 2005-2009Increase refinery capacity, Petroleum Economist
World refinery developmentmbd
Source: BP Review/various! To watch: To watch:
New export refineries India/MENew export refineries India/MEWhere will the markets beWhere will the markets be
0
4
8
12
16
20
24
65 68 71 74 77 80 83 86 89 92 95 98 01 04 07 10
N America
S/C America
Europe
FSU
M. East
Africa
Asia Pacific
Source: BP Amoco.June 2005/Various
US gasoline imports
mbd
Source: EIA
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 1Q07
European products imports - mbd
mbd
Source: IEA
4.0
4.5
5.0
5.5
6.0
1999 2000 2001 2002 2003 2004 2005 2006
Product tanker demand
• What to watch?– Chinese product shortage?– Bio-fuels - US in particular
• 40% of US gasoline includes ethanol = 0.4 mbd – 2.3 mbd of ethanol by 2017?
– Refinery expansion• Middle East • India• China• US• …
Chemical tanker demand
Major capacity additions coming on-stream next yearExport ex Middle East Gulf/Pakistan/WC India
5
10
15
20
25
30
35
40
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
Million
ton
s
Other
Cumene
BTX
PX/ OX
Styrene
EDC
Caustic
Glycols
MTBE
Methanol
Source: Inge Steensland Shipbrokers
The Middle East Gulf build up of export capacity
50%31%16%(14% )(18% )(22% )(1% ) 10% 9% 7% (14% )(5% ) 9% 40% 47%-
5
10
15
20
25
30
35
40
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
Mill.
ton
s
Import
Export
Diff.
Adj. diff.
Adjusted difference in % of export
Source: Inge Steensland Shipbrokers
Middle East/WCI/Pak exports by destinationExcluding coastal India movements
Source: Inge Steensland Shipbrokers
1H-20061H-2005
Asia
MEG-WCI
Europe
Americas
OceaniaRSEA
AfricaWW
.0
.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Mil
lio
n t
on
s
Main products traded on chemical tankersAverage annual growth rate:
5% (assumed in 2006-2011 forecast)
0
20
40
60
80
100
120
140
160
180
200
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Other
Oil & Fats
Inorganics
Organics
Marpol Annex II reclassification
Source: Inge Steensland Shipbrokers
Some segments more popular than others…Core and swing chemical fleet by size, age, and orderbook
.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Ordered Existing Ordered Existing Ordered Existing Ordered Existing
3-10,000 dwt 10-17,000 dwt 17-30,000 dwt 30,000+ dwt
Mill
ion
dw
t
NB
1-15yr
15-19yr
20-24yr
25-27yr
28yr+
22%
66% 42%
50%
Source: Inge Steensland Shipbrokers
Chemical tanker demand
• What to watch?– Middle East expansion– Conversion to DH (80+ ships) – Ethanol – Fleet expansion
TankerSupply
Tanker contracting
$ bn$ bnm dwtm dwt
VLCC VLCC 13. 4 $ bn 13. 4 $ bnSuezmax: 5.9 ”Suezmax: 5.9 ”Aframax: 9.4 ”Aframax: 9.4 ”Panamax: 2.7 ”Panamax: 2.7 ”Handy: 22.9 ” (43%)Handy: 22.9 ” (43%)Source: INTERTANKO/Clarkson Shipyard MonitorSource: INTERTANKO/Clarkson Shipyard Monitor
0
11
22
33
44
55
0
17
34
51
68
85
Handy
Aframaxes
Suezmaxes
VLCCs
Series5
m dwt
Tanker fleet, orderbook and phase outtankers above 30,000 dwt
m dwtm dwt
0
50
100
150
200
250
300
350
SH - 23% Orders - 39% Fleet - 100%
VLCC
Suezmax
Aframax
Panamax
Handy
29%
42%
79 m dwt 133 m dwt
Phase out SH tankers above 30,000 dwt
m dwtm dwt
0
10
20
30
40
50
60
2007 2008 2009 2010 2011 2012 2013 2014 2015
Min phase out
Max
Actual??
MARPOL phase out assumes SH tankers to trade after 2010 until the age of 25 years old, EU+ phase out assumes that SH tankers all are removed from the market by end 2010 (except DB or DS ones)
VLCCmax phase out + 4.5% trade increase , assume balanced marked end 2006
numbernumber
Fleet: 142 m dwtOrderbook: 54 m dwt/177Single hull: 42 m dwt/154Order/SH: +12%Average age: 9.4 years
To watch: To watch: StorageStorageWaiting time SHWaiting time SH
!-145
-125
-105
-85
-65
-45
-25
-5
15
35
55
75
95
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuildingto balance
Max phaseout
Demolition
Delveries
Surplustonnage
Suezmaxesmax phase out + 4.5% trade increase , assume balanced marked end 2006
numbernumber
Fleet: 52 m dwt/348Orderbook: 20 m dwt/127Order/SH: +9%Single hull: 9 m dwtAverage age: 9.2 years
-45
-35
-25
-15
-5
5
15
25
35
45
55
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuildingto balance
Max phaseout
Demolition
Delveries
Surplustonnage
Aframaxesmax phase out + 4.5% trade increase , assume balanced marked end 2006
numbernumber
Fleet: 72 m dwt/713Orderbook: 30 m dwt/270Orders/SH: +17%Single hull: 14 m dwtAverage age: 10.2 years
-80
-55
-30
-5
20
45
70
95
120
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuildingto balance
Max phaseout
Demolition
Delveries
Surplustonnage
Panamaxesmax phase out + 4.5% trade increase , assume balanced marked end 2006
numbernumber
Fleet: 21 m dwt/309Orderbook: 9.6 m dwt/133Orders/SH: +10%Single hull: 5.3 m dwtAverage age: 10.5 years
-25
-15
-5
5
15
25
35
45
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuildingto balance
Max phaseout
Demolition
Delveries
Surplustonnage
Tankers 30,000 - 59,999 dwtmax phase out, + 6 % trade increase , assume balanced marked end 2006
numbernumber
-110
-85
-60
-35
-10
15
40
65
90
115
140
165
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuildingto balance
Max phaseout
Demolition
Delveries
Surplustonnage
Conversion to DH
Total 7. 2 m dwtTotal 7. 2 m dwt
Built 10-30 30-52 60-72 90-113 120-148 VLCCs Total
1970s 3 2 0 0 0 0 5
1980-84 8 36 9 1 0 0 54
1986-89 11 12 0 3 3 1 30
1990-98 2 9 1 18 2 2 34
Total 24 59 10 22 5 3 123
Conversion to FPSO/FSO/bulk carriers, heavy lift ….Conversion to FPSO/FSO/bulk carriers, heavy lift ….(1.9 m dwt in 2006, 1.2 m dwt so far 2007(1.9 m dwt in 2006, 1.2 m dwt so far 2007
Tanker deliveries, removals, min phase-out
m dwtm dwt
-30
-20
-10
0
10
20
30
40
50Newbuilding tobalance by2015Min phase out
Demolition
Delveries
Surplustonnage
* Assuming all SH tankers are phased out by 2010 and 4.5% increase in demand as from 2007 - a surplus is building up - balance by 2015
Tanker deliveries, removals, max phase-out
m dwtm dwt
-57
-47
-37
-27
-17
-7
3
13
23
33
43
53
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuilding to balance
Max phase out
Removals
Deliveries
Surplus tonnage
Assumptions: 1.8 m dwt removed annually by conversions in addition to phase out, an overhang of 4.6 m dwt of obsolete ships scheduled to be phased out before 2006, assumed to be phased ut by 2009, trade assumed to increase by
4.5%.
Fleet development
m dwtm dwt
0
100
200
300
400
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 P07 P08 P09
Tanker fleet double-hull development
%%
6
22
5159
67 68 72 76 79 82 85
94
78
4941
33 32 28 24 21 18 15
0
20
40
60
80
100
1991
1997
End 0
2
End 0
3
End 0
4
End 0
5
End 0
6
End 0
7
End 0
8
End 0
9
End 1
0
SH/DB/DS
DH
% dwt share*:
* Assumes phase out according to regulations (rounded upwards, 25 years after 2010.
Oil import by VLCCs - share of double hull
%
Source : Fearnleys
0
10
20
30
40
50
60
70
80
90
100
1998 1999 2000 2001 2002 2003 2004 2005 2006
Europe US Atlantic
Far East Others
Average
Based on figures from Fearnleys
Tanker supply
• Record investments 2006• Deliveries, phase out• Surplus building up? • Conversions• Two tier market – inefficiency• Increased docking time
Conclusion
• High economic growth• Changing environment for tankers?• Many wildcards• Things better than expected?