Bahri Annual Report- 2018

Annual Report 2018

Bahri Oil is one of the world’s largest oil transporters due to the size of its fleet which comprises 45 Very Large Crude-oil Carriers (VLCCs) with a total capacity of 14 million tons as of 2018 – accounting for 6 percent of global capacity.

Bahri Oil’s fleet of VLCCs has grown by 45 percent over the last four years, reflecting our long-term commitment to preserving our leading position in this sector. The Company successfully expanded over 2018 by adding five new carriers to its fleet, further

cementing Bahri’s position as the world’s largest owner and operator of modern and efficient VLCCs that are fitted with the latest maritime technology and best-in-class safety features.

Leadership in Fleet Quality and Operations year before.

As part of Bahri’s efforts to maintain a modern and competitive fleet, the Company took its very first VLCC, Ramlah, out of commission after almost 23 years. It had undergone 172 voyages transporting crude oil across all main trade routes around the globe and had been used by Saudi Aramco as a floating storage unit since 2016. The carrier was sold at a price higher than value, delivering an additional non- operating profit for Bahri. The Company also added five new VLCCs to its fleet in 2018, bringing the number of carriers added to the fleet over the last two years to 10. It goes without saying that fuel is a major operational cost for shipping organizations. However, in 2018 Bahri Oil was able to achieve fuel consumption savings of 8 percent compared to the previous year, contributing to an improved financial performance. These savings were achieved with the addition of five new vessels with fuel saving technology, scheduling optimization and careful voyage management, and implementation of dynamic speed management for vessels. Another contributory factor was the introduction of periodic inspections for 11 tankers. The Company docked these tankers to ensure they were performing optimally as part of Bahri Oil’s wider periodic inspection program. Implementation of the most effective fuel-saving solutions were prioritized as fuel prices kept increasing in 2018. Our VLCC fleet embarked on a total of 410 voyages over the year, shipping

832 million barrels of oil worldwide. This represented a shipping increase of 6 percent compared to 2017. As part of our target to diversify our routes, we increased shipments to destinations outside the GCC by 20 percent – ensuring such shipments accounted for 45 percent of our total cargo over the year. Within the GCC, the Company added the Al-Basra Oil Terminal as one of its loading terminals, following the Ras Tanura Terminal. Bahri transported three shipments from Al-Basra to the United States, a new route for the Company. We have also maintained our presence in the GCC-to-East shipping market by transporting 38 consignments over the year, including one via a new route from Ras Tanura to Malaysia. We also concluded a voyage from the Arabian Gulf to India as part of our continued efforts to enhance business operations and increase efficiency. Having added new vessels to the fleet, voyages returning from the West witnessed an increase of 23 percent compared to the previous year. Our share of high-revenue shipments from the US to the East also improved in 2018 – we transported 32 shipments, a 300-percent increase compared to 2017. These consignments included 13 shipments via a new route from the US to India. We also served five new clients over nine voyages. The number of returning clients has also grown – seven of our existing clients launched four voyages or more with Bahri Oil in 2018 compared to only four clients the

As part of our agreement with the Arab Petroleum Investments Corporation (APICORP) to create a mutual maritime investment fund, we plan to buy an initial five new VLCCs in 2019. These carriers will be under the umbrella of the mutual fund while under the technical and commercial management of Bahri, expanding the fleet and providing further scope for revenue optimization. Bahri’s US-Gulf Shipments Ratio to Total Shipments Returning from the West

VLCC Fleet Growth

45 5

2015

2016

2017

2018

The new vessels feature an advanced marine technology that can minimize fuel consumption, further improving our operations. Our expanding fleet has enabled us to achieve our goal of developing our customer network and broadening market reach in 2018 in line with Bahri’s long-term strategy of maintaining its leading position in this sector. We also managed to increase our market share by transporting eastbound oil shipments from the United States and acquiring new clients. We achieved an increase of more than double in our

shipping movement compared to the previous year. This was due the high quality of our services and competitive prices that made Bahri the go-to partner for oil-producing clients and refineries around the world. We were undeterred by challenges encountered over 2018 including the slow growth in global demand for crude oil due to volatile prices, the continued increase in the number of carriers entering the market and pressures on the global shipping market that were exacerbated by high fuel prices. Bahri, however, preserved its leading position

in the oil transportation market. The Company shipped 2.25 million barrels of crude oil a day across the world throughout the year. This is due to our operational efficiency, optimal fleet scheduling and careful leveraging of long-term contracts in line with our strategic vision. This allowed Bahri to achieve competitive results throughout the year. With our increased fleet, we were able to depend less on charters and achieved higher profit margins.

44% 15%

2018 2017

VLCC Ramlah

45 VLCCs Fleet Comprises

Total Capacity

6% of global capacity Accounts for

SAR9 Million Profits

23 Years of Service

172 Voyages

14m tons