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Tsakos Energy Navigation Announces Orders For A Series Of Ice-Class Product Carriers

23 23 2004

ATHENS, Greece: Jan. 22 - Tsakos Energy Navigation Limited (TEN) (NYSE: TNP) today announced that it 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."

Out of 28 vessels, TEN currently has 21 operating with medium or long-term employment contracts, some at variable rates, accounting for 65% of the operating days for 2004. These contracts will generate a minimum of approximately $135 million in revenues, which should provide a sustainable flow of earnings and enhanced shareholder value. The company currently employs its remaining 7 vessels in the spot market, including the new VLCC. Currently, 90% of TEN's fleet is of the double hull design.

ABOUT TSAKOS ENERGY NAVIGATION

Including the addition of the M/T La Madrina, TEN currently operates a fleet of 28 vessels (including one chartered-in aframax, the Olympia, and the two suezmaxes, the renamed Cape Baker and Cape Balboa, recently the subject of the sale and charter-back deal). The fleet comprises 2,981,252 DWT and has an average age of 6.8 years, compared to the average for the world's tanker tonnage which has an average age of 12.8 years. TEN is scheduled to take delivery of a further nine newbuildings in 2004, 2005 and 2006. The Company has also options for 3 tankers for delivery in 2004 (one handysize tanker) and 2007 (two 1A ice class handysize tankers). The resulting fleet of 37 vessels (excluding the options but including the chartered-in aframax and suezmaxes) with 3,822,252 DWT will include 25 newbuildings (1997-2006) with 2,823,313 DWT.