Aegean Marine Petroleum Network Inc.

42 Hatzikyriakou Avenue
Piraeus, 18538
Greece
Telephone: (+30-210) 458-6200
Fax: (+30-210) 458-6245
Web site:http://www.ampni.com

Public Company
Incorporated: 2005
Employees: 4,048
Sales: $803.8 million (2006)
Stock Exchanges: New York
Ticker Symbol: ANW
NAIC: 483111 Deep Sea Freight Transportation; 488320 Marine Cargo Handling

BARGING INTO SHIPPING

ENTERING THE OIL MARKET IN 1999

PUBLIC OFFERING IN 2005

INDEPENDENT MARINE FUEL LOGISTICS LEADER FOR THE NEW CENTURY

PRINCIPAL SUBSIDIARIES

PRINCIPAL COMPETITORS

FURTHER READING

Aegean Marine Petroleum Network Inc. is a leading specialized marine fuel logistics group and one of only a few capable of providing marine fuel logistics services on an international scale. The company supplies fuel and lubricants to oceangoing vessels both in port and at sea, providing a fully integrated suite of services from procurement to physical delivery. Aegean Marine supplied more than two billion metric tons of fuel in 2006. In support of this, Aegean has been developing a network of subsidiaries in key ports around the world, with sites in Greece, Singapore, Jamaica, Gibraltar, and the United Arab Emirates. The company also develops its own logistics software and systems. Aegean Marine has also ensured its supply of marine petroleum products, and pricing stability, through a number of long-term fuel supply contracts. The company expects to add at least four more facilities elsewhere in the world by 2010.

Aegean Marine operates its own fleet of 12 bunkering tankers, ten of which are double-hulled tankers. The company has also placed orders for an additional 22 double-hulled tankers to be delivered by 2009, and plans to exercise its options to build an additional nine vessels more before the end of the decade. This will expand the company’s fleet to more than 40 double-hulled tankers, making it the largest independent company in the sector. Aegean Marine’s aggressive fleet expansion will also provide it with a clear advantage: With shipbuilding yards at full capacity, the total number of fuel oil bunkering vessels is expected to decrease dramatically as the use of single-hulled vessels is phased out by 2008. Aegean Marine is part of the Aegean Oil group of companies, an independent oil company that operates more than 500 service stations in Greece. While Aegean Marine went public with a listing on the New York Stock Exchange in 2006, both it and Aegean Oil remained majority controlled by founder Dimitris Melissanidis. The company posted revenues of nearly $804 million in 2006.

BARGING INTO SHIPPING

The Melissanidis family originated from Pontos, a mountainous coastal region along the Black Sea that was claimed by Turkey in the 1920s. Like most of the Greek population living in the area, which had originally been colonized by Greece during the Ionian period, the Melissanidis family was forced to immigrate to Greece during the massive exchange of Greek and Turkish populations in the early 1920s. The Melissanidis moved to Nikaia, a small village located on the mountains surrounding Athens, where son Dimitris Melissanidis was born.

Melissanidis showed his entrepreneurial spirit from an early age, when he bought a used car and founded his own driving school. Into the early 1980s, Melissanidis began building his own business empire, turning to the transport sector. One of his first business ventures was the transport of timber to Tehran.

Through the decade, Melissanidis became one of Greece’s most successful young entrepreneurs. This success allowed Melissanidis to pursue his passion for soccer, as he gained control of the Ionikos FC Club, helping the team move into the ranks of Greece’s First Division. Yet Ionikos FC represented only a step toward Melissanidis’s true goal, that of owning popular Athens-based team AEK FC. That club had been founded earlier in the century by a group of Greeks forced to flee Constantinople. By the end of the 1980s, Melissanidis had succeeded in his goal, becoming part of a team, including shipbuilding magnate Giannis Karras, taking control of the club. In a later interview published in Aegean Marine’s newsletter, Melissanidis described the achievement: “I studied at Ionikos FC Club and I took my postgraduate degree from AEK FC Club.”

Melissanidis, who helped lead AEK to a string of victories through the 1990s, had acquired more than just a football club. His association with Karras at AEK led the two to form a business partnership into the early 1990s. This partnership provided Melissanidis with an entry into the shipping and petroleum industries. In 1990, Melissanidis set up his first shipping business, later known as Aegean. That company started out with just a single barge.

ENTERING THE OIL MARKET IN 1999

Melissanidis’s shipping operations developed strongly through the 1990s, as Aegean began building up its fleet. Into the mid-1990s, the company targeted especially the market for transporting fuel, and by 1996 had acquired its first dedicated vessel, the Theopisti. After establishing itself within the Greek market, the company began its first moves to branch out into international waters. This expansion also led the company into the development of its own bunkering and other marine fuel logistics operations. At first, the company centered this operation on the port of Piraeus, which had long been the center of the Greek shipping sector, and served as an important bunkering port for ships in the Black Sea region. Into the new century, the emergence of a number of competing ports, including Gibraltar, Istanbul, and the Suez Canal, had begun to drain ships from the Piraeus port. In response, Aegean itself moved into international waters. In 1997, it established its first foreign bunkering and fuel supply center in Gibraltar.

The rise of Aegean’s shipping and marine fuel logistics operations had by then led the company to extend its operations into the fuel supply side as well. By the late 1990s, Aegean Oil had become an important independent player in the Greek fuel supply sector. Supporting this side of the operation, the company added fuel depots in Alexandroupolis and in Aspropyrgos.

Melissanidis continued building Aegean into a highly integrated group. The next extension to the company came in 1999, when Aegean acquired the small Evroil company. Based in Evros, at the very north of Greece, Evroil provided Aegean with its first foothold into the retail sector, with a network of service stations. Melissanidis set out an ambitious plan to build Aegean, through Evroil, into a leading independent fuel retailer. The company began expanding its service station network, targeting at first the Thrace region. Aegean also announced its goal to build its network to more than 500 service stations by the middle of the first decade of the 2000s. Once again, Melissanidis displayed a knack for achieving his goals, as the company topped 280 service stations by the beginning of the decade, then topped 500 stations in 2006.

COMPANY PERSPECTIVES

Strategy: We believe that future growth will be achieved not only by increasing market share in our current locations but also by expanding operations to other locations.

PUBLIC OFFERING IN 2005

Aegean continued to expand its bunkering operations into the early 1990s. The company added a fuel center at Fujeirah in the United Arab Emirates, quickly establishing a major presence in the Persian Gulf market, from 2000. The company next turned toward the North and South American markets, initially setting up shop in Venezuela. By 2004, however, the company had transferred its American operations to Jamaica. The company also continued building up its fleet of ships, acquiring a number of existing ships while placing orders for newbuilds. By the early 2000s, Aegean transported more than one million metric tons of fuel per year.

By the middle of the first decade of the 2000s, the company controlled a total fleet of 26 vessels, including 12 bunkering tankers. Fully ten of these were of the double-hull type, a fact that provided Aegean with a strong competitive position in the coming market. Single-hull tankers had been chiefly responsible for a number of dramatic oil spills in the 1980s and 1990s, and were required to be phased out by 2008. Hence, the global marine fuel shipping industry was expected to undergo a major upheaval. At the same time, shipyards around the world were working to capacity, meaning that, as the shipping industry retired its single-hull tankers, only a limited number of new double-hull tankers could be expected to fill the gap.

Aegean had anticipated the transformation of the sector by setting into place an extensive series of shipbuilding contracts; as of the beginning of 2007, the company had more than 20 new vessels on order, with delivery of all to be completed by 2009. Some ten of these vessels were to be built at China’s Fujian Shipyard. Six others were to be built at the Severanav shipyard in Romania. At the same time, the company had taken options for another ten vessels, all of which were expected to be exercised. The company also began seeking to purchase a number of existing tankers. As a result, the company’s fleet was expected to grow to nearly 45 vessels by 2010.

INDEPENDENT MARINE FUEL LOGISTICS LEADER FOR THE NEW CENTURY

In order to fuel this expansion, Aegean restructured its marine fuel logistics operations. The company transferred its bunkering tanker and logistics holdings, formerly held by Melissanidis holding company Leveret International, into a new dedicated company, Aegean Marine Petroleum Network Inc. in 2005. The company then prepared for its public offering, turning to the New York Stock Exchange for its listing at the end of 2006. The listing allowed the company to raise more than $200 million toward its expansion drive.

Aegean Marine’s commitment to building its fleet provided the company with a competitive edge against its far larger competitors, which typically operated as subsidiaries of the major oil companies. The company was able to claim the leading spot as an independent marine fuel logistics group; indeed, it was the only independent group in the sector. The need for the major oil companies to revitalize their fleets, coupled with the limited number of new double-hull tankers available, was expected to place pressure on the profitability of their logistics operations. While this fact was expected to lead to increasing consolidation within the oil industry, it also favored the emergence of independent specialists, such as Aegean Marine.

Aegean continued to position itself for this future market. The company added a new base of operations, when it inaugurated its fuel center in Singapore in 2006. At the same time, Aegean Marine announced its intention to add four new centers internationally before the end of the decade.

As it awaited delivery of its first newbuild contracts, Aegean Marine sought out acquisitions of existing vessels. In May 2007, the company bought the M/T Nautilus, owned by Sirius Shipping AB. The company then renamed the double-hull tanker as the Aegean Princess. Soon after, Aegean Marine took delivery of the first of a series of ships expected to be delivered by the Fujian shipyard in 2007. By then, Aegean Marine had more than doubled its fuel transport operations, topping two million metric tons of delivered fuel. Aegean Marine Petroleum Network had established itself as the pacesetter in the marine fuel logistics industry of the early 2000s.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Aegean Bunkering (Singapore) Pte.; Aegean Bunkering Gibraltar Ltd.; Aegean Bunkering Jamaica Ltd.; Aegean Bunkering Services Inc.; Aegean Holdings SA; Aegean Investments SA; Aegean Marine Petroleum LLC (United Arab Emirates; 49%); Aegean Marine Petroleum SA; Aegean Oil (USA) LLC; Aegean Shipping Management SA; Hellenic Environmental Center SA.

KEY DATES

1996:

Aegean begins first marine fuel shipments from Piraeus, Greece.

1997:

Company establishes fuel center in Gibraltar.

2000:

Company launches fuel center and logistics subsidiary in United Arab Emirates.

2004:

Aegean opens new fuel center in Jamaica.

2006:

Fuel center operations begin in Singapore.

PRINCIPAL COMPETITORS

Hutchison Whampoa Ltd.; Exel PLC; Kawasaki Kisen Kaisha Ltd.; Serco Group PLC; Wagenborg Shipping B.V.; Apex Oil Company Inc.; Gulf Marine Maintenance and Offshore Service Company Dubai L.L.C.; Seabulk International Inc.; International Marine Services; Tidewater Marine International Inc.

FURTHER READING

“Aegean Lifts Newbuilding Book to 40 Double-Hull Tankers,” newsfront.gr, October 27, 2006.

“Aegean Listed on New York Stock Exchange,” Business Partners, January–February 2007.

“Aegean Marine Increasing Fleet Capacity,” Bulk Transporter, June 19, 2007.

“Aegean Marine Petroleum Network Inc. Agrees to Acquire Double-Hull Bunkering Tanker,” PR Newswire, May 23, 2007.

“Aegean Marine Petroleum Network Inc. Expands Infrastructure,” M2 Presswire, July 10, 2007.

“Aegean Marine Petroleum Network Inc. Ready to Fly?” M2 Presswire, December 12, 2006.

“Analysis of Aegean Marine Petroleum Network Inc.,” M2 Presswire, July 10, 2007.

“Dimitris Melissanidis,” Elnavi Magazine, March 2007, p. 16.