Manager Research and Projects Russian oil Export in Baltic Sea transits Stockholm 3 November 2005 Russian/CIS oil Setting the Scene I cannot forecast you the action of Russia. It is a riddle wrapped in a mystery inside an enigma; but perhaps there is a key? The key is Russian national interests. Sir Winston Churchill, 1939 Setting the Scene Scene 2004 Russian oil prevented a 3rd oil crises Safety record of tankers from FSU high Europe completely dependent on Russian oil Change of Scene? Scene 2005 Russian oil export slowing tension in the oil market Safety record continue to be excellent - no new major tanker casualties Increasing oil export from special projects (Primorks (soon peaking?), Sakhalin, Northern areas) and pipelines? Overinvestment in ice-classed tonnage? Oil Export World increase in oil demand supplied by FSU and the rest mbd World largest crude oil exporters - mbd FSU crude oil and products export - mbd European crude oil import mbd Sources of European oil import 1H05 12.9 mbd Source: IEA (The US 0.32 mbd from FSU 1H05) 4.4 mbd Oil export from FSU 1H05 Source: IEA Market effect (pipeline effect) of one mbd transported various trades Safety Performance Tanker incidents World wide and FSU related Collisions, grounding, Hull & Machinery, Fire & Explosions, others Tanker incidents and pollution Baltic, Black Sea, Bosporus, East Med Tanker trade by hull -1Q00-2Q05 tankers above 50,000 dwt Baltic Sea Black Sea m dwt Source: Fearnleys/INTERTANKO Tanker trade by hull -1Q00-2Q05 tankers above 50,000 dwt Baltic Sea Black Sea% Source: Fearnleys Tanker trade by hull -1Q04-2Q05 tankers above 50,000 dwt number m dwt Source: Fearnleys/INTERTANKO Baltic transits18,000-50,000 dwt Q05 Dirty cargoes Source: Riverlake/INTERTANKO YearTransits 65% Transits 12 ms 100% m cargo ts 65% m cargo ts 12 ms 100% ms ,87512, ms861652,5454,893 YearTransitsTransits 12 ms 100% m cargo ts 65% m cargo ts 12 ms 100% ,2429, ,67613, ,33011,685 Clean cargoes Baltic transits18,000-50,000 dwt Q05 Source: Riverlake/INTERTANKO Clean cargoes UK Continent 34352% Continent11517% W Africa 55 8% Mediterranean 34 5% UK Med 25 4% UK W Africa 5 1% Others 87 13% Total666100% Tanker trade by hull -1Q00-2Q05 tankers above 50,000 dwt from Murmansk area m tonnes Source: Fearnleys Tanker trade by hull -1Q00-2Q05 Aframax tanker spot fixtures from Murmansk area Source: Riverlake Movements Movements Movements total92 Russian ships:48 (52%) Average cargo size 99,377 tonnes Average tanker size 109,078dwt Average age years in 2004 Average age years All double hull tankers + a limited number of small tankers carrying products (some 20/year) Oversupply of ice-class? Ice Class Number of Aframaxes available and needed for Primorsk trade (including 1A/1B/1C tankers) Number Source: Riverlake, Geneva 2003/04 addition 17 handysize tankers available 1C tankers may have problems in January/February Conclusion S lower expansion in FSU oil export, but M ost Russian oil goes to Europe P ipelines will in medium to long term take market shares S afety record very good, trade served by modern tonnage M any projects u ncertainty with regard to technical, geological, commercial as well as political factors