Gulf Stream Tanker Chartering LLC. Knut A. Scharning

828 Heights Blvd., Houston, Texas 77007 • Phone 713 869 4657 • Cell 713 291 0044

Methanol Conference Houston, Texas - June 10, 2015

What effect will the New & Expanded Panama Canal

have on the Methanol Market

True or False

The expansion of the Panama Canal is now scheduled for completion - Q2 , 2016

Will this be a game changer for the MEOH Market ?

.

Knut A. Scharning 828 Heights Blvd., Houston, Texas 77007 • Phone 713 869 4657 • Cell 713 291 0044

World Stability

Methanol World, Conversions

One Metric Ton (2,204.62 lbs) = 333 U.S. gallons of MEOH

10,000 bbls Barge = 1,254 MTon 1 ship = 32+ barges > 317,200 bbls > 40,000 MTon

Methanol Specific Gravity / SG = 0.7920

MEOH => is a cubic cargo, not a weight cargo in respect to ships and transportation

Meter/Ft LB/GAL LB/BBL BBL’s/MTon

3.28 6.62 278.06 7.93

World Fleet :

Total Number Of Ships, By Type And Size

The world merchant fleet in 2013 Source : Equasis (1) GT<500 - (2) 500≤GT<25.000 - (3) 25.000≤GT<60.000 - (4) GT≥60.000

Typical Chemical Carrier - A CPP Carrier - A Dirty Tanker

Vessel Size and Cargo Type

MR – about 40.000 Mton MEOH Cargo Max – old Panama Max

LR 1 or Post P-Max about 66,000 Mton MEOH max

60 % will be Post P-Max

85 % will be Post P-Max

Typical Large MEOH Ship MR or LR1:

M/T Fjellanger

• Main Dimensions: – LOA 183.22 m / 586.3 feet – Beam 32.24 m – Air draft SDWT condition 42.62 m

• Load-lines Draft Deadweight Displacement • Summer 12.32 m /40.05 feet 46,287 mt 56,661 mt

• Cargo tanks / pumping arrangements

– Number of cargo tanks / slop tanks 20 / 2 – Cubic capacity at 100% 53,457.50 m3 – MEOH Max Capacity about = 40,000 mt or 317,143 Bbls = > 13,320,000 Gallons – How many tanks over 3,000 m3 0 – Identify tank coating Inorganic Zinc - Jotun Resist GTI – Number / capacity cargo pumps 22 Submerged, Centrifugal – Number of pumps able to run simultaneously 6 – Number of natural segregations (2 valve) 12 – Number and capacity of N2 generators 1 / 4500 m3/hr

• © 2008 Waterfront Shipping

Typical LR 1 vessel :

M/T JO PROVEL - 75 022 DWT

• Tanker for Oil Flag: NIS • Summer DWT: 75,022 • Year: 2013 • No. of tanks: 14 • Tank Average Size: 7,111 m3 • Hull: Double • Shipyard: • STX Offshore & Shipbuilding Co. • Total capacity: 84,500 m3 • Pure Epoxy: 84,500 m3 • IMO no.: 9592692 • Class: DnV •

• DIMENSIONS/DISTANCES: Meters / Feet

• Length overall 228.00 • Breadth moulded 32.24 • Depth moulded to main deck 20.65 • Draft on summer load line 14.30 / 46.48 • Bow to centre manifold 114.40 • Stern to centre manifold 113.60 • Rail to manifold connection 4.60 • Keel to top of mast 49.20 • Parallel body 140.30

• Max MEOH cargo 64,500 mt 511,393 Bbls 21,478,500 Gallons

Restrictions • Cargo Restrictions

• Last Cargo – Cleanliness – hydrocarbon residue - Chlorides • IMPCA Methanol Reference Specifications • Inert tanks - cargo class IMO I, II, III - 3000 m3 • Carriage of chemicals in bulk is covered by regulations in SOLAS Chapter VII

– Carriage of dangerous goods and MARPOL Annex II - Regulations for the Control of Pollution by Noxious Liquid Substances in Bulk.

• International Maritime Organization (IMO): MEOH Class 3(6.1), UN1230, P.G. II, Flash Point = 12 oC

• Port & Terminal Restrictions

• Draft deep and air - Traffic /waiting – weather / season • Terminal capacity - ships and tanks • Hurricane or local weather / Cargo in tank

• Trade Restrictions

• Trading backhaul cargoes • Ships in rotation - timing • Customers receiving capacity • Trading second port • Time Spent in rotation • Size - ship, cargo, finance • Port Easiness – Congestion, Local Corruption • Cost – bank, port, Canal Fees and Bunker cost • Government Stability – new laws – efficiency – Tax

Channel Depth USG & USEC Ports 2012

Port Requirements

• Ports have to be flexible enough to cope with volatile economic cycles, and adjust their respective capacities accordingly. Dry Cargo’s has more room to jump.

• An upcoming trend ‘smart ports’.

• Connection to & from the Hinterland is vital.

• Integration of the global supply

• Rival Ports. This highly dynamic environment requires port authorities and terminal operators to be more adaptable to the changing needs of its customers,

• Houston, Rotterdam and Singapore are the Largest, most dynamic and efficient Liquide Ports in the world.

Texas – Clear Lake Celanese

Louisiana – Geismar Methanex I & II

Louisiana - Port of South LS MEOH

Louisiana – St Charles Refinery - Valero

Texas – Beaumont OCI P LP

Louisiana – L Charles G2X Energy

LS - LCh, LCh Clean Energy

Washington – Colombia River, Kalama N West Innovation Works – BP China

Oregon - Colombia River, Kalama N West Innovation Works – BP China

In addition you have LyondellBasell expansion and Discussion on TX City MEOH

METHANOL

Louisiana - Yuhuang Chemical – St James Parish

Shipping Economics Spring 2015

• Freight - USG to EC China – 10,000 mt US $ 68.00 pmt - as part cargo

– 20,000 mt US $ 63.00 pmt - as part cargo

– 40,000 mt US $ 69.00 pmt - empty home

– 65,000 mt US $ 55.00 pmt - empty home

• Numbers of Vessels needed to handle 1 MM/y – 80 % export to China + 80 days R/T

• 10,000 mt > 80 sailings > load every 4.5 days 17.7 ships

• 20,000 mt > 40 sailings > load every 9.1 days 8.7 ships

• 40,000 mt > 20 sailings > load every 18.25 days 4.3 ships

• 65,000 mt > 12.3 Sailings > load every 30.1 days 2.6 ships

estimated cost — US$40 billion

New Canal Locks Water Reservoirs

exceed $7 billion from estimated 5.2 billion

Panama Canal Construction

Cape Good Hope

NY to Ningbo > 10,564 nm @13 knots > 33.86 days

LA to Ningbo > 5,729 nm @13 knots 18.36 days

to Ningbo > 5,098 nm @13 knots 16.34 days

to Ningbo via > 10,117 nm @13 knots > 32.43 days

Houston TX to Ningbo via SUEZ Canal is > 13,749 nm @13 knots 44.07 days

China’s Internal Distribution

• In 2012, China’s total logistics volume had grown by 10% (compared

to the previous year), to a value of about 177 trillion RMB. • Efficient distribution of goods remains a crucial element for China

to sustain current economic growth levels.

• The major challenge China is facing is that it’s total logistics costs account for almost 18% of its GDP, while this figure averages around 10% in most OECD countries. Additionally, compared to more developed countries (e.g. United States, Japan), China’s logistics sector scores relatively low on some relevant quality indicators.

• The Chinese government, has committed itself to invest 250 billion USD by the year 2035 to improve the country’s infrastructure level.

China Ports

• Chinas upcoming ports • There are many more, but these

are especially the ones to watch in the near future.

• Tangshan - Hebei Province • Yingkou - Liaoning Province • Yantai - Shandong Province • Qinhuangdao - Hebei Province • Huanghua - Hebei Province • Qinzhou - Guangxi Province • Dalian - Liaoning Province • Lianyungang - Jiangsu Province • Xiamen - Fujian Province

• Currently, Dalian Port operates one of the largest crude oil terminals in China, annual capacity of 80 million tons, it is the most important distribution centre for oil products and liquid chemicals in northeast China.

• A world-class petrochemical industrial park now under construction on Changxing Island, north of Dalian.

• Lianyungang is an important transportation hub in Jiangsu it is dubbed as the bridgehead of the New Asian-European Continent Corridor.

• It has an excellent location for transit point, which offers the shortest distance in connection with the east and west coasts of Pacific Ocean

• Xiamen Southeast International Shipping Center, is the 4th international shipping center approved by the state council after Shanghai, Tianjin, Ningbo and Dalian.

What to Look out for

• Commodity prices

• Coal vs. Oil & NGL

• Ability to take advantage of market changes / be flexible

• MEOH intro to new usage

• India GDP expansion

• Overcapacity

• Flexibility in ships tradability

• Iran Nuclear agreement

• Iran MEOH production

• Loss of Iran discounts

• Changes in Tax laws / dumping policies

• OPEC members comeback

• ISIS, Russia and other geo-political issues

Disclaimer

• This presentation has been prepared for the Air Liquide, MEOH Conference - June 2015 in Houston Texas by Gulf Stream Tanker Chartering LLC – GSTC.

• The presentation is intended for the benefit of attendees and its contents and conclusions are not confidential and may be disclosed to any other persons or companies with or without our permission.

• We will be honored if you share this with your industry peers. • Please contact Gulf Stream Tanker Chartering for any questions.

• The information upon which this presentation comes from our sources and available internet

information, own experience, knowledge and databases. The opinions and comments expressed in this report are those of GSTC’s. They have been arrived at following careful consideration and enquiry but we do not guarantee their fairness, completeness or accuracy. The opinions, as of this date, are subject to change. We do not accept any liability for your reliance upon them.

• Thank you for your time

Gulf Stream Tanker Chartering LLC., - Knut A. Scharning

828 Heights Blvd., Houston, Texas 77007 • Phone 713 869 4657 • Cell 713 291 0044