Oils and fats changes and opportunities Capt Ken

Oils and fats changes and opportunities Capt Ken Tree Associate Consultant to Drewry Shipping September 2005

Oils and fats changes and opportunities Overview & slide references Oils & fats as organic chemicals (3 -4) Volumes past, present and beyond (5) Growth drivers - (6 -9) Uses- changes ahead (10 -14) Effect of crude petroleum prices (15) Previous cargoes – changes/opportunities (16 -18) Comparative earnings (19) The IMO double hulled future (20) 2

Oils and fats changes and opportunities Oils and fats Lets call them what they are – Triacylglycerols They belong to the chemical family of esters their most important ingredient being triglycerides Triglycerides are esters of glycerol and oils and fats are mixtures of triglycerides from various fatty acids Their chemical and physical properties and the esters derived from them vary with the individual oils or fats fatty acid profile Naturally occurring triacylglycerols are all further processed for further use 3

Oils and fats changes and opportunities Triacylglycerol raw materials 4

Oils and fats changes and opportunities Forecast seaborne trade of liquid chemicals (1982 -2007, mill tons) 5

Oils and fats changes and opportunities Main growth drivers - population 6

Oils and fats changes and opportunities Main growth drivers - caput consumption 7

Oils and fats changes and opportunities China - phenomenal imports 8

Oils and fats changes and opportunities India - domestic supply gap widens 9

Oils and fats changes and opportunities Uses - changes ahead Human nutrition – 80% Animal Feed – 6 % Oleo-chemicals – 14% Bio Fuels (bio-diesel) – to be determined 10

Oils and fats changes and opportunities Oleo - chemical & bio diesel (methyl esters) conventional production technologies 11

Oils and fats changes and opportunities Oleo - chemical exports 12

Oils and fats changes and opportunities EU bio diesel output targets 13

Oils and fats changes and opportunities EU consumption of rapeseed oil 14

Oils and fats changes and opportunities The effect of crude petroleum prices 15

Oils and fats changes and opportunities Previous cargo requirements-oils for edible and/or oleo-chemical use Oils for Edible and or Oleo-chemical use are presently shipped using one of the following previous cargo criteria 1. Not on the FOSFA Banned List – (Standard FOSFA Contract) 2. Immediate Previous cargo on the FOSFA Acceptable List – (A choice with an AS 9 sticker) 3. Immediate Previous cargo on EU 1 or 2 Acceptable List (Europe) 4. Immediate previous cargo on NIOP 1 or 2 List (USA) 16

Oils and fats changes and opportunities 17 Oleo - chemicals & bio-diesel-previous cargoes Oleo chemicals fall outside FOSFA-NIOP-EU Hygiene Legislative & are carried by IMO Class ships Quality requirements based on other high quality chemical cargoes between the shippers and owners. Kosher could be a requirement for glycerine Methyl Esters used for fuel non edible use last 3 clean and unleaded same as CPP (Already moving into Europe)

Oils and fats changes and opportunities Previous cargo - new approaches? Stainless steel – passivation – recognition of non absorption & ease of cleaning by approved methods and testing, as with other sensitive chemicals (i. e. Alcohols) Oils and Fats for non edible use i. e Bio Diesel Provided strict traceability ensured from origin to end use, last cargo requirements could be last 3 clean and unleaded, or NOBL at most? Now moving under last 3 clean & unleaded into EU. Both the above will/could relieve pressure on freight 18

Oils and fats changes and opportunities Comparative earnings 1 Q 00 1 Q 01 1 Q 02 1 Q 03 1 Q 07 35, 000 DWT Voyage Patterns Length 7072 19202 7911 11161 19655 Straits-Europe-Argentina-India-Straits 110 days 8108 18651 10146 13221 21805 Straits-Med-Argentina-India-Straits 102 Days 13244 23375 13203 16957 20078 Karachi R/V 22 Days 8218 18853 8653 11360 21239 Palm to Karachi-Molasses to S. France-Argentina-India-Straits 118 Days 11179 18299 10877 13809 21805 Palm to Karachi-Caustic AG/Durban-Argentina India-Straits 98 Days 13367 23503 13642 16765 25413 Palm to Med-Uan to USAC-Arg-India-Straits 123 Days 10198 20314 10739 13879 21666 Average DVS Earnings 11350 15000 12500 ? Average 30/32000 IMO 3 coated General Trade (mainly CPP) 161 135 153 176 255 Heavy Oil Price HO 244 196 202 242 475 Diesel Oil Price MDO 19

Oils and fats changes and opportunities 20 Here is to a healthy, safe double hull IMO class future for the carriage of triacylglycerols