TEN Orders A Series of Ice-Class Product Carriers

Tsakos Energy Navigation Limited (TEN) has ordered two handysize, double hull, 1A ice-class tankers, with carrying capacity of 37,000 dwt each. The vessels have a contract price of just under $30 million per ship and are scheduled for delivery in September and December of 2006. TEN also holds options for two additional sister ships of the same specifications, which would be delivered in March and June of 2007. All vessels are to be constructed by Hyundai Heavy Industries at their Mipo shipyard, and represent the 24th and 25th vessels in TEN's newbuilding program since 1997. These vessels are specifically designed to meet the stringent requirements of classification societies and other regulatory bodies, the rules and guidelines of oil majors and various port authorities and terminals relating to environmental protection. They can also carry all petroleum products including all types and categories of aviation fuels and light chemicals including alcohol and MTBE, the "green", environmentally friendly additive in gasoline. Additionally, the vessels adhere to the Finnish Maritime Authority (FMA) standards, which ensure high structure strength for operation in areas with heavy ice presence. "Commercially, these environmentally friendly, high-specification vessels have the opportunity to earn a significant premium for their trading versatility," said Nikolas P. Tsakos, President and CEO of TEN. "At present, there is not an established period market for this type of vessel. However, with 1A ice-class vessels currently earning a substantial premium in the spot market for voyages loading from the Baltic, we believe that high-spec vessels of this type will be in even higher demand in the future. By building these vessels now, TEN joins an exclusive fraternity of shipowners who currently are or planning to participate in this specialized segment of our industry." Early market indicators have shown that exports from the Former Soviet Union (FSU) are expected to grow 8% in 2004. With ongoing export expansion projects in the Baltic Sea, the Black Sea and the Sakhalin Islands in the Far East, Russian exports are expected to account for more than 60% or 0.8 million barrels per day of the incremental global oil production growth in 2004. During winter, in order to transport crude or products from various loading ports in Lithuania, Estonia, Latvia and Russia, tankers with enhanced ice class specification become a necessity. TEN's entry into this rapidly expanding market significantly enhances its global reach and fleet diversity. Mr. Tsakos continued, "The decision to add this type of vessel to our fleet is driven in large part by the return of the FSU to the global oil markets, the continuous expansion of their production and export program, and the desire of our clients to reach this source, regardless of weather or port conditions. The demand for ice-class tankers to transport Russian crude from various northern ports of the Former Soviet Union to the rest of the world make this the perfect time to begin construction of these class 1A tankers, the highest specification currently available." He concluded, "We believe that these newbuildings will provide another opportunity for TEN to increase its earnings potential, and increase shareholder value."