The  strategic  goal is to increase "Latvijas kuģniecība" shareholders'

value   in   medium-term.   A  condition  for  attaining  the  goal  is

establishing  a  joint  venture,  at  the  same  time  reorganising the

existing company.

The task of the LASCO Group is to retain the leading position among the

world's  top six companies in medium-size tanker market, simultaneously

retaining the leading position in the Nordic market.

At the beginning of 2003 LASCO fleet consisted of 52 vessels, including

36  tankers  with  average age 18 years, 13 reefers with average age 16

years, 2 LP carriers - 5 years, and one dry cargo vessel.

The  old  age of LASCO vessels is the reason why currently the business

outlook  for  the fleet is not favourable. Besides, the EU requirements

regarding  the  prohibiton  to  operate single-hull tankers may have an

effect on the company business.

The main strategic direction is development and upgrading of the tanker

fleet:  this  fleet gives the largest contribution to LASCO profits. In

2002  the  tanker  fleet profit was 21.8 million USD (total Group fleet

profit was USD 20.2 million).

According  to  the  number  of  vessels, LASCO is a leading medium-size

tanker  owner  in  the world. This market segment generates the highest

sales,  and is believed to be more stable than the rest of the shipping

activities.  LASCO  strength  is the lower costs in comparison to other

shipping companies.

It  has  been  admitted  that attracting large-scale investment for the

restructuring  of fleet would be possibly only  by establishing a joint

venture.

In  the  next seven years to come the strategy will be focused in three

key directions:



Strategy  direction  1.  A  joint  venture  will  be  esatablished with

partners.  LASCO  would  hold  about  50%  of  shares, contributing the

investment  over a several year period. LASCO will have the majority of

positions   in  the  joint  venture  management.   Shareholders'  funds

invested  in  renewal  of  the  fleet will actually be about 30% of the

vessel value, the remaining 70% to be borrowed from banks.

The  fleet  upgrading  plan  is  to  purchase  10 new and 2 second-hand

medium-size  tankers.  All  the  newly purchased vessels would be under

LASCO   commercial   and  technical  management.  A  buyout  option  is

considered.

Between  2004  and  2008 two new tankers will be ordered each year. The

orders have to be to the same shipyard - this will enable to reduce the

building costs.

Strategy  direction  2.  Disposal  of  all reefers at maximum profit is

expected  to  be accomplished by the end of 2005. Simultaneously, it is

envisaged to sell to scrap all the obsolete tankers that would not meet

the  EU standards. Cost efficient disposal of the 2 LP carriers as well

as  the  dry  cargo  vessel will also be considered.  The proceeds from

vessel selling will be invested into upgrading of tanker fleet.

In  2003 two small tanker repairs will be done in dry dock to make them

marketable - the segment of this size tankers is not profitable.

In  compliance  with  MARPOL  and  the potential EU requirements, it is

planned to dispose of single-hull medium size tankers.

Subsequent to the forthcoming sale of tankers, the aggregate deadweight

of  the  fleet will notably decrease by the end of 2005. It is expected

that  the  number  of tankers in 2010 will be 22. For this reason it is

critical to approve the tanker fleet upgrading strategy.

Strategy direction 3. During the next two years any business operations

not   directly   in   line  with  core  business  will  be  terminated;

administrative costs will be optimised.

LASCO  is  planning  to move the adminstration building to 1 Elizabetes

Street  and  to  4a Andrejostas Street, Riga, to be accomplished by the

end of 2003.

It is planned to sell real estate not used in core business, as well as

to close all business not in line with LASCO core business.