INTERVIEW WITH THE GROUP CHIEF EXECUTIVE OFFICER COMPANY S SUCCESS?

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1 10 INTERVIEW WITH THE GROUP CHIEF EXECUTIVE OFFICER CHIEF EXECUTIVE OFFICER Shah Hakim bin Zain SCOMI MARINE BHD HAS BEEN MAKING WAVES IN THE REGION. WHAT FACTORS HAVE CONTRIBUTED TO THE COMPANY S SUCCESS? Our assets, our expertise and our strength have all stood us in good stead. Under our two core businesses, namely Marine Logistics services ( ML ) and Offshore Support services ( OSS ), we own and operate one of the largest fleet of vessels in Southeast Asia. Our fleet comprises 150 vessels, serving our ML and OSS businesses. These include 17 utility vessels, 20 anchor handling tugs, 52 barges, 58 tugs, 2 accommodation barges and 1 landing craft. Scomi Marine s presence is in Malaysia, Singapore, Indonesia, Thailand, Australia, UAE, Qatar and Saudi Arabia.

2 11 CAN YOU ELABORATE ON CH OFFSHORE LTD S EXPERTISE? CH Offshore Ltd ( CHO ), a 29.1%-owned associate company, was incorporated on 31 March 1976 and is listed on the Main Board of the Singapore Stock Exchange. Among the many Scomi Marine-related companies, CHO is the one that has had the earliest involvement in the oil and gas industry. Beginning with operations first in Indonesia which at that time was the largest oil producer in Southeast Asia, CHO today has an experienced management team with over 26 years of offshore oil and gas industry involvement. The experience today enables it to assess, understand and respond quickly to client needs and anticipate industry trends. CHO also has the capability to harness its skills and expertise in the offshore industry in many parts of the world including countries such as Indonesia, Thailand, Vietnam, the Philippines, Brunei, Malaysia, the People s Republic of China, the Middle East, West Africa and Australia. With an extensive range of offshore support vessels and planned new deliveries between 2008 and 2010, CHO is well positioned to take on various services for the exploration, development and production activities for the offshore oil and gas sector. WHAT DOES PT RIG TENDERS INDONESIA TBK BRING TO THE TABLE? PT Rig Tenders Indonesia Tbk ( PTRT ) is Scomi Marine s 80.5%-owned subsidiary company. Established on 22 January 1974 and listed on the Jakarta Stock Exchange and Surabaya Stock Exchange on 5 March 1990, PTRT is involved in both the ML business for coal transportation and the OSS business for oil and gas exploration, development and production. Headquartered in Jakarta, PTRT s two branch offices in Banjarmasin and Balikpapan are strategically located to carry out its two core businesses. Its list of clientele for the offshore activities cover major oil companies in Indonesia such as BP, China National Offshore Oil Corp ( CNOOC ), Chevron, Conoco-Philips and Santos. It also serves two major coal producers in Indonesia.

3 12 INTERVIEW WITH THE GROUP CHIEF EXECUTIVE OFFICER (CONT D.) WHAT DOES THE MARINE LOGISTIC BUSINESS ENTAIL? Our ML services for major coal producers is a very critical function within the coal supply chain. We provide inbound and outbound logistics services and port and terminal management services. Today, our involvement in coal transportation is mainly in Indonesia, where we service two of the largest coal producers in the country. We currently operate some 138 vessels, out of which 110 are owned by us, while the rest are chartered. Our vessels are relatively young, averaging 12 years each. In 2006, we enjoyed an average vessel utilisation rate of 90%. Our relatively young vessel profile is the result of the recent deliveries of 16 vessels between January 2005 and August The addition of eight of these new barges of 12,200 dead weight tonne ( dwt ) each has boosted the dwt capacity of our marine logistics operation by 25%. On 6 July 2006, the Company was awarded a coal transportation contract from TNB Fuel Services Sdn Bhd. It entails the transportation of 500,000 metric tonnes of coal per annum, for use in the Malaysian market, for three years with an option for an additional two years involving routes to and from Indonesia, China, South Africa and Australia. We commenced our first load in October 2006 from Australia and will continue deliveries throughout the year. WHAT ACTIVITIES DOES YOUR OFFSHORE SUPPORT SERVICES BUSINESS COVER? Within the oil and gas sector, we provide vessels for offshore support services activities such as seismic surveys, rig towing, anchor handling, positioning and mooring of drilling rigs, fire fighting and general transportation services. We also provide offshore accommodation facilities, offshore construction and maintenance support and standby safety services. Operationally, our fleet today is deployed throughout the region with 3 vessels in Malaysia, 4 vessels each in Thailand and the Middle East, 21 vessels in Indonesia and 1 vessel in Australia. Of the 33 vessels in the offshore support services division, 12 are owned by our subsidiary company PTRT, 19 by associate company CHO, and the remaining 2 by our subsidiary company Marine Co Ltd. All of our vessels are fully deployed and we enjoy an 85% utilisation rate. Additional contribution will also come from the newly delivered Tourmaline vessel that commenced its chartering business in the first quarter of 2007.

4 13 HOW DID SCOMI MARINE PERFORM FINANCIALLY FOR THE PERIOD UNDER REVIEW? The year under review is the first full year in which Scomi Marine s performance reflects its core business in energy logistics for the energy sector. For financial year ( FY ) 2006, our marine logistics business generated 88% of turnover, while the offshore support services business contributed the remaining 12% of the turnover. In FY 2006, our turnover grew by 118% to RM511 million over FY 2005 (that included the jewellery business, which was disposed off during the year). Profit After Taxation ( PAT ) was RM82.7 million, which was 231% higher over that recorded in the previous corresponding period. The PAT included a gain on disposal by CHO of RM12.2 million when the Aquamarine vessel was sold in September During the FY 2006, we were confronted with numerous operational challenges, the major ones being: i. Rising bunker prices that saw an 18% increase at its peak in Q ii. Additional port charge for foreign flagged vessels in Indonesia. This raised our port related expenses by approximately 48% (from Q4 in 2005) WHAT WERE THE HIGHLIGHTS OF 2006? There were several key highlights in 2006: Corporate The Company consolidated its business by completing the disposal of the jewellery business to M S Habib Holdings Sdn Bhd in July With the disposal, our core business activities are now mainly in energy logistics. Marine Logistics We completed our fleet expansion with the delivery of the last six vessels in 2006 which formed a portion of the 16 vessels that were ordered and delivered to Scomi Marine since Scomi Marine obtained a trans-ocean coal transportation contract for a Malaysian customer and successfully completed its first lift in October We also successfully deployed six vessels to the Middle East to commence our barging project in Qatar in August The contract is for 2.5 years with an option for a 6 to 12 months extension. Currently, this is not a substantial earnings contributor but represents an opportunity to leverage our presence in that part of the world. Offshore Support Services Our Malaysian subsidiary completed the purchase of two AHTS from CHO, an associate of the Company. This enabled the vessels to continue working in Malaysian waters and be on a long term charter for an oil major. CHO took delivery of the first of its eight AHTS, the Aquamarine in September The vessel was subsequently sold for a significant gain to a Latin American party to work in the Gulf of Mexico. In December 2006, CHO took delivery of its second deep water vessel, the Tourmaline. CHO also placed orders for four additional deep water vessels in This brings the total order for the 12,240bhp/150 MT bollard pull vessels to six to be delivered over the next three years. As exploration activities move into deeper water, the Company is ready to capitalise on the expected demand for these vessels from key markets like Malaysia, Australia, India and Indonesia.

5 14 INTERVIEW WITH THE GROUP CHIEF EXECUTIVE OFFICER (CONT D.) WHAT WERE THE CHALLENGES FACED BY THE COMPANY IN 2006? We had several challenges to contend with in The Company faced the challenge of managing rising operating expenses. These came about as a result of increases in fuel costs, higher port dues in Indonesia for foreign-flagged vessels and operational inefficiencies due to scheduling. With longer turnaround times, it resulted in increased fuel expenditure. Increased interest costs were also incurred due to the higher USD London Interbank Offered Rate ( Libor ) of 5.3% compared to 4.0% at the time of drawdown. To address the scheduling issue that affected both bunker costs and increased cycle time, discussions were initiated in Q3 of 2006 to introduce key performance indicators ( KPIs ) that would minimise operational concerns. WHAT WAS YOUR PLAN TO FURTHER INCREASE YOUR FLEET AND OPERATIONS? New Vessel Delivery On 18 January this year, our associate company CHO took delivery of its latest AHTS vessel, namely the Tourmaline. Powered by 12,240 bhp with speed of 14.3 knots, the Tourmaline is equipped to participate in deepwater exploration. Going forward, CHO expects to take delivery of six more new AHTS builds, each with a 12,240 bhp capability. Four of these will be delivered in year 2008 and one each in 2009 and 2010 respectively. With the completion of these deliveries, CHO s fleet shall increase to 25 vessels. Re-flagging of 27 Vessels to Indonesian subsidiary In November 2006, we completed reflagging 27 vessels from our Marine Logistics division to our Indonesian subsidiary PTRT. The exercise involved 7 utility vessels, 10 tugs and 10 barges and was undertaken to comply with the Indonesian cabotage laws as well as reduce our port charges. WHAT WERE SOME OF THE INITIATIVES YOU UNDERTOOK TO BOLSTER YOUR OPERATIONS? In aligning our internal process, practice and structure with our major shareholder, Scomi Group Bhd ( Scomi ), we have embarked on several internal organisational initiatives to further streamline our operations. One of the initiatives is to follow through on Scomi s transformation journey which it is implementing under its Business Excellence for Scomi s Transformation ( BEST ) Project. Through this project, the Group will enhance its operational processes through the adaptation of industry best practices. We are confident that the BEST Project will help equip us with the tools we need as we embark on rapid regional growth. We will focus on equipping the key operations and support services groups with the necessary platforms and infrastructure in order to achieve better efficiency and professionalism. This initiative, under Scomi, will elevate our capabilities to the next level, through improved operational, functional and process efficiencies. It will provide us with: An improved cross-selling and marketing capability A shared finance function across the Group s business units Enhanced inventory or stock and asset management. Scomi has also launched its new brand platform which we will be adopting. Under the new brand, all companies within the Scomi group will be united under one group and one brand. We will also be incorporating Scomi as part of our companies names where relevant. As we embrace this new brand of Scomi, we are confident that it will be a platform to bring together all employees as one and to motivate them to reach for greater heights.

6 15 WHAT IS THE OUTLOOK FOR THE GROUP GOING FORWARD? Marine Logistics With the demand for coal increasing, coal production is expected to increase to meet this demand. We are positioned to leverage on our presence in Indonesia, which is the largest coal exporter and second largest producer in the world. Our focus this year is to improve our fleet utilisation and efficiency. The Key Performance Index ( KPI ) structure with our customer was made effective 1st April 2007 and would ensure that the operations are measured optimally and benefit both parties. Offshore Support For the OSS business, we will continue with fleet reprofiling to address age issues and higher specification requirements as well as focus on the AHTS market for oil and gas (deep water vessels). We will explore the use of purpose-built vessels for long term charters and look at new opportunities such as the demand potential for a mobile/early production unit ( MOPU/EPU ) and a floating barge in Malaysia. Financial Efficiency Going forward, our emphasis shall be on improving our financial strength with better balance sheet management as a key driver. We will also continue to ensure that margins are improved by working on yield management for our charters. SO WILL IT BE PLAINSAILING FOR THE GROUP IN 2007? Marine Logistics Division With positive outlook of increasing coal demand, we are well positioned to leverage on our presence in the Southeast Asia region. Going forward, the ML division is expected to focus on improving its fleet efficiency via strict monitoring of the KPI s. In Malaysia, we are working to raise our market share for coal transportation as we see much potential in the increased demand. Offshore Support Division The price of oil is the most important determinant for exploration and production ( E&P ) activities. Crude oil continues to hover above USD60 per barrel, driven by demand from China and India. With the continued demand, production is expected to increase to meet these new requirements. The forthcoming year should see our focus continuing to be in the existing markets of Malaysia, Indonesia, Thailand, the Middle East and until recently, Australia. This allows the Company to leverage on its presence in these markets where vessels are required for redeployment. We are turning our attention to deep water activities as we equip our fleet for this phase of E&P. WHAT IS SCOMI MARINE S GOALS FOR 2007 AND BEYOND? Our goals over the next five years is: To consolidate our position as the Number One coal barging transportation provider in the world To be the leading offshore service provider for the oil and gas industry in Asia To be a key player in the regional Petroleum/Chemical Tanker market. Scomi Marine is all geared up to tap the potential offered by the increase in global oil and gas E&P activities, especially in deepwater. The expansion of our fleet in deepwater capabilities certainly puts us in a position to explore these opportunities. Shah Hakim bin Zain Group Chief Executive Officer