Concordia orders revolutionary large tankers

11/4/1998 3:58 AM EST

Preliminary agreements have been signed for the construction of two large
tankers of VLCC type for subsidiaries of Concordia Maritime including fixed
options (the right but not obligation to build at a pre-determined price) for
a further six identical vessels. The shipyard is Hyundai Heavy Industries in
South Korea, the world's largest shipyard. The estimated delivery date of the
first two ships is the first half of 2001.

Two vessels on time charters to Sun Company
The first two vessels have been signed to three-year charters, 2001-2004, to a
subsidiary of Sun Company in Philadelphia. Sun Company Inc, is one of the
largest independent U.S. petroleum refiner-marketers. Sun operates five
domestic U.S. refineries with approximately 700.000 barrels per day of crude
oil processing capacity, and markets gasoline under the Sunoco brand through
approximately 3.800 outlets in 17 north eastern states in the USA.

The two new VLCCs to be built, will service Sun´s two north east refineries
both located on the Delaware River near Philadelphia.

The other six vessels on options, will be offered to Sun and other potential
customers with similar requirements, i.e. shallow-draft vessels offering high
transport safety. Concordia may look for co-operation with another shipping
company in order to achieve economies of scale and generate the economic
resources to build a sufficient number of vessels to satisfy market demand.

Dimensions and performance of the vessels
Deadweight at design draft 269,000 tons at 55 feet (16.75 metres)
Deadweight at scantling draft 315,000 tons at 62 feet (19 metres)
Length 336 metres
Beam 70 metres
Service speed 16.9 knots at design draft
Engine-power 38,680 BHP at NCR (normal continuous rating)
42,980 BHP at MCR (max. continuous rating)


Concordia's newbuildings: the safest VLCCs on the seas
The two vessels on order differ from the large tankers so far built in the
world in that they have - in addition to double hulls - double, completely
separated engine-rooms, double rudders and steering gears and double
propellers. This configuration gives the vessels substantial advantages since
one main engine can be shut down for maintenance while the vessel continues
its voyage with the second main engine. But above all, all these double
functions represent an extra safety factor and provide the vessel with a
manoeuvrability far superior to that of other large tankers. Many serious
tanker accidents, could in all likelihood, have been avoided with Concordia's
new ship type.

Economically efficient vessels
Double propellers and a hull design with twin skegs have made it possible to
build wider VLCCs than has so far been the case. Concordia's newly ordered
vessels will have a beam of 70 metres compared with the normal 58-60 metres
for VLCCs. These wide vessels will have a hull design which provides good fuel
economy. In addition, these vessels will be equipped with powerful main
engines giving them a maximum speed of about 15% above that of most other
large tankers. This is a significant factor which will enable the speed of the
vessels to be adjusted in order to achieve optimum utilisation of both the
vessels and the expensive port facilities.

But the major economic gain for the shipping company and the charterer lies in
the extreme shallow draft of the vessels which will make it possible to
transport large cargoes into ports where draft is restricted. The majority of
the world's refineries are located close to ports with draught restrictions
which limit the cargo volume for conventional ships. The more cargo a ship can
carry, the lower the transport cost per ton and the higher its earnings
potential. The additional economic value created by the good performance of
the new vessels has been shared between Concordia and Sun Company in the
charter arrangements.


Own ship design
In the opinion of Concordia and Stena, standard yard ship types currently
available, do not always satisfy the new millennium's increasingly stringent
demands on safe and economical oil transportation. A technical team in Stena's
newbuilding department, spent three years developing this new type of large
tanker designed to satisfy the safety, environmental and commercial
requirements drawn up by Concordia and Stena Bulk in close consultation with
our customers. During several years of development work, not least Sun Company
in Philadelphia contributed with its great experience. Consequently, the new
vessels are designed with the customers' interests very much in mind.

More favourable time to order than previously
Concordia has always preferred to purchase second-hand vessels since they have
a better profit potential than newbuildings. During the '80s and '90s, the
tankers built often had lower quality standards and among these, Concordia is
unable to find second-hand vessels which are suitable on a long-term basis for
our customers. This project, with newly built vessels chartered out over an
initial three-year period, gives us vessels designed by us to the highest
quality specification, a long life span and a depreciated value in 2004. Our
own second hand ships!

Since 1990, about 260 VLCCs have been ordered by our competitors at an average
price of about USD 90 million per ship. Today, an equivalent standard vessel
could be ordered at a price which is around 25% below this level. Concordia's
newly ordered vessels have better corrosion protection systems than a standard
vessel as well as many other high quality features. This represents an
additional expense, but the investment in higher quality will generate
efficiency gains and low operating costs.

Further information
If you are interested in discussing additional aspects of Concordia's project,
you can reach us at the following phone numbers:

Lars Carlsson, President of Concordia +46-31855003 or +46-705-855101
Maritime AB
Stig Bystedt, Technical Director +46-31855353 or +46 707-175998
Kim Ullman, vice President, Stena Bulk AB +46 31855005 or +46 705-855105

You are welcome to our homepage on Internet www.concordia-maritime.se

Messrs Sun Company Inc. are distributing their own press release. Comments
from Sun will be given by Mr Bud Davis, director of media relations. Phone +1
215 9773485.

Gothenburg and Zug, 4 November, 1998

Concordia Maritime AB Concordia Maritime AG


Oil should always travel first class at economy cost