Simon Young

Deputy Director of COSCO R&D

March 30,2006 Singapore

Contents

China Energy Structure & Oil

China Oil Trade Now & Future

Oil Tanker Market Outlook 2006

1
 China Energy Structure
& Oil Consumption

China Energy
Production & Consumption
Million tonnes Production Consumption
coal equivalent
2500
Since 1992, China energy consumption has surpassed energy
production. 2225
2000 In 2004, China became the second largest country in both
2060
energy production and energy consumption.
1500

1000

500
1980
1985
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005

SourceNational Bureau of Statistics of ChinaCOSCO R&D 4

2
China Energy
Structure,2004
%
China Energy Prodution's Structure China Energy Consumption's Structure

Hydroelec
tricity Hydroelec
8% tricity
7%
Natural
Gas Natural
3% Gas
3%
Crude Oil
15%
Crude Oil
23%

Crude
Coal
Crude
67%
Coal
74%

Chinas oil consumption is more than oil production

SourceNational Bureau of Statistics of ChinaCOSCO R&D 5

China Energy
Structure,2004
%
China Energy Consumption's Structure World Energy Consumption's Structure

Hydroelec
Nuclear &
tricity
Hydroelec
7%
tricy Crude
Natural 10% Coal
Gas
25%
3%

Crude Oil Natural

23% Gas
24%

Crude
Coal
67%
Crude Oil
41%

Compared with the world average, oil accounts for smaller

percentage in Chinas energy consumption.
SourceNational Bureau of Statistics of ChinaCOSCO R&D 6

3
China Crude Oil
Production & Consumption
Crude Oil Production Crude Oil Consumption
Million tonnes
330 299.9
290
250
210 180.8
170
130
90 Since 1995, China crude oil consumption has surpassed crude oil production.
50
80

85

90

95

96

97

98

99

00

01

02

03

04

05
19

19

19

19

19

19

19

19

20

20

20

20

20

20
SourceBP Statistical Review of World Energy 2005 ,COSCO R&D 7

China Oil
Reserves
Thousand Oil Proved Reserves
million barrels
20
Since 2000, China oil proved reserves has fallen slowly.
18 17.1
16

14

12

10
80

85

90

95

96

97

98

99

00

01

02

03

04
19

19

19

19

19

19

19

19

20

20

20

20

20

SourceBP Statistical Review of World Energy 2005 ,COSCO R&D 8

4
China Oil
Reserves, 2004

Offshore
East 24%
39%

More than 60% of

China oil reserves are
West
located in the west 37%
and offshore area of
the country, where
are difficult to exploit.

SourceNational Bureau of Statistics of ChinaCOSCO R&D 9

China Oil
R/P Ratio, 2004
90.0 81.6
80.0 73.9
70.0
60.0
50.0
40.9 40.5
40.0 33.1
30.0 21.6
20.0 11.8 14.2 13.5 13.4
10.0
-
North S. & Europe & Middle Africa Asia OPEC Non-OPEC China World
America Cent. Eurasia East Pacific
America
Chinas oil R/P ratio is only a third of the world average figure.
SourceBP Statistical Review of World Energy 2005 ,COSCO R&D

5
China Oil Status
-Reserves, Consumption
Production & Trade
Percentage of China oil proved reserves,
consumption,prodution & trade in the world(2004)

9.0%
8.2%
8.0%
7.1%
7.0%
6.0%

5.0% 4.5%
4.0%

3.0%
2.0% 1.4%
1.0% 0.8%
0.0%
Proved Reserves Consumption Production Import Export

Since 2003,China has left behind Japan, becoming the second

largest country in oil consumption.
SourceBP Statistical Review of World Energy 2005 ,COSCO R&D 11

China Oil Trade

Now & Future

6
China Oil
Export & Import
140 -----Crude Oil 126.8
120
Since 1996, China has turned to be a net
importer of crude oil, and the imports of crude
Million Tonnes

100
oil keeps increasing steadily while exports
80
decrease.
60

40

20 8.07
0
90

93

94

95

96

97

98

99

00

01

02

03

04

05
19

19

19

19

19

19

19

19

20

20

20

20

20

20
Import Export

SourceChina Customs Statistics ,COSCO R&D 13

China Oil
Export & Import
40 -----Product Oil
35 Since 1993, China has turned to be a net 31.5
importer of oil, and the imports of product oil
30
doubles the exports though both the imports and
Million Tonnes

25 exports are increasing steadily.

20
14
15

10
5
0
1990 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Import Export

SourceChina Customs Statistics ,COSCO R&D 14

7
China Oil Status
-Crude Oil Import

Top 5 Countries in Crude Oil Import( 2005)

Million Barrels per Day
8
8
7
6
5
4.2
4
3 2.6 2.4
2
2
1
0
USA Japan China S.Korea India
China is the third largest country in crude oil import.
SourceClarksonCOSCO R&D 15

China Crude Oil Import

-Diversified Sources

70%

60%

50%
Venezuela
40%
Brazil
30%

20%

10%

0%
Middle East Asia Pacific Africa Europe Others
1998 61% 20% 8% 4% 7%
2000 54% 15% 24% 5% 2%
2004 45% 12% 29% 11% 3%
2005 47% 8% 30% 12% 3%

SourceChina Customs Statistics ,COSCO R&D 16

8
China Crude Oil Import
-Transportation 2005

By Train Others
11.1% 0.1%

By Sea
89% of China crude oil imports are 88.8%
shipped by oil tankers.

SourceChina Customs Statistics ,COSCO R&D 17

China Energy
& Oil Trade Future
%
China will use more natural gas, hydroelectricity and
other reproducible energies, reduce the dependence on
coal and maintain the oil percentage.

Forecast: 450 million tons of oil consumption in 2020, 250

million tons of oil be imported.

More crude oil will be imported from Former Soviet Union

by pipeline.

18

9
China-Kazakhstan oil
pipeline project
%
Construction was completed on Nov.14, 2005, and put into
production on Dec. 15, 2005.

Links Atasu in Kazakhstan to Dushanzi, China's first major

land oil import route.

Capacity: 10 million tons of crude oil/year to China after

phrase I; 20 million tons of crude oil/year to China after
phrase II.

In May, 2006, Kazakhstans crude oil will get to the China

oil refinery after traveling by the 3,000-kilometer pipeline.

19

China-Russia oil
pipeline project
%
In April, 2005, Russia finally decided the far-east oil
pipeline project to Daqing not Japan.

Construction began late last year, phase I capacity 30

million tons/year,Siberian city of Taishet to Skovorodino.

Of which, two-thirds to Daqing by pipeline, while the

remaining 10 million tons would be shipped by rail to a
new port to be built on the Pacific coast near Nakhodka.

20

10
China-Russia oil
pipeline project
%
The project is expected to be completed around 2008.

The pipeline's capacity will be expanded to 50 million

metric tons a year, or roughly 1.2 million barrels per day in
the future.

China will gain abt 30 million metric tons of crude oil

through the pipeline from Kazakhstan and Russia in 2010,
and 50 million metric tons in 2020.

21

China Crude Oil Import

-Transportation 2020

By Pipeline
16.2%
By Train
3.2%

By Sea
80.6%
Pipeline will take more share out of the sea
shipments of China crude oil imports.

SourceCOSCO R&D 22

11
 Oil Tanker Market
Outlook 2006

Market Review
VLCC Gulf- S. Korea & Japan
2003 2004 2005 2006
350
300 Market has kept the consistent trend these years.
250
200
150
100
50
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
week
SourceClarksonCOSCO R&D 24

12
Market Forecast
VLCC Gulf-East(WS,actually) VLCC Gulf-East(WS,fit by regression)
OPEC Crude Supply(mbpd) VLCC DWT Increase yoy(%)
WS M bpd , %
160 35

140 30
29

120 25

100 102 20

80 15

60 10

40 5
2.6
20 0

0 -5
1999 2000 2001 2002 2003 2004 2005 2006F

SourceIEA, Clarkson, COSCO R&D 25

Market Outlook

WS- a very close correlation with OPEC crude supply and

VLCC fleet tonnage growth rate.

OPEC crude supply rised from 28.6 mbpd in 2004 to 29.2

mbpd in 2005, and 29.6 mbpd in January, 2006; 29.8 mbpd
in February. OPEC crude supply will maintain above 29
mbpd in 2006 to stabilize oil price.

The tonnage of VLCC fleet is expected to increase 2.6%

this year, 3.3% in 2005.

2006, good year for tanker, WS on Gulf-East VLCC will be

above 100.

26

13
Conclusion

Chinas efforts: to explore such new energies as

hydroelectricity and wind power, solar energy; control the
growth of such fossil energies consumption as coal, oil.

To secure the oil supply from abroad, China will diversify

the oil import sources, and the shipment of pipeline will
take more share of China oil import.

The outlook of VLCC rate in 2006 is optimistic.

27

We have made a great successful conference

together with you and other shipping communities in 2005.

World Shipping (China) Summit 2005

2005.11.1-11.2
Shanghai
Jointly-organized by Honorary Organizers

28

14
 Expect to see you at
World Shipping (China) Summit 2006

2006.11.2 Thursday -11.3 Friday

Shenzhen

For the latest information about Summit 2006 29

Please visit www.shippingsummit.com

Thank you for your attention!

Simon Young
Tel: 0086 10 66492977
Fax: 0086 10 66083782
Email: yangsc@cosco.com
www.cosco.com

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