INTERTANKO – who we are and some of the challenges for the 21st century Bill Box Senior Manager Communications & External Relations INTERTANKO Ghent & Antwerp University Monday 11 November, 2013

INTERTANKO What we do: What we work towards: Provide leadership to the tanker industry in serving the world with safe, environmentally sound and efficient seaborne transportation of oil, gas and chemical products What we work towards: A responsible, sustainable and respected tanker industry, committed to continuous improvement and constructively influencing its future ... ... zero fatalities, zero pollution, zero psc detentions

INTERTANKO – the figures 220 members 3,250 tankers 284m dwt 40 countries 75% of independent fleet > 10,000 dwt + 300 Associate Members

INTERTANKO – strength in its committees Associate Members Bunkers Chemical Tankers Documentary Environmental Human Element Insurance & Legal Offshore Tankers Safety & Technical Vetting

INTERTANKO – c h a l l e n g e s Sustainability Tanker Supply & Demand Green Transportation Piracy

Sustainability

Strategies for s u r v i v a l Sustainability Commercial sustainability = viability Strategies for s u r v i v a l Is the old way of doing business the right way for the second decade of the 21st century?

INTERTANKO – viability and sustainability Today’s tanker market is unviable and poses a serious threat to the sustainability of the energy supply chain

INTERTANKO – viability and sustainability

INTERTANKO – viability and sustainability Un-viability manifested + in charter/freight rates not covering basic vessel operating costs + in the late payment of freight and demurrage hits owner’s cashflow increases owner’s working capital req’t + in inconsistent, unbalanced charter terms

INTERTANKO – viability and sustainability

Estimated accumulated losses VLCCs + Suezmaxes + Aframaxes $ billion

INTERTANKO – Sustainability Project Aim: To realign tanker industry key stakeholders, and to work towards more balanced tanker trading conditions and fair risk sharing, that will allow sustainable quality shipping regardless of market cycles. To change bad habits/practices (late payments) A m b i t i o u s aim? Start with some specifics ...

INTERTANKO – Sustainability Project Specifics: Erosion of, and failure to adhere to c/p terms Lack of understanding about Worldscale Inconsistent, subjective, costly vetting practices Delays in freight and demurrage settlements

Sustainability Project

Accumulated losses since 2009 for large/medium tankers $26bn Sustainability Project Headline figures: Accumulated losses since 2009 for large/medium tankers $26bn The same again (or more) accumulated by the smaller sizes

Tanker supply and demand

Tanker supply and demand - the key Weak market, uncertain fundamentals Oil demand increasing 1-2% pa But oversupply of tankers - physical and operational Increasing North American oil supplies (shale oil) replacing Middle East oil Reduced tanker tonne-miles

Tanker tonne-mile effect 100,000 tonnes North Sea/NW Europe (530 miles) 53m tonne-miles Middle East/NW Europe (11,150 miles) 1,115m tonne-miles

Tanker indices %

Tanker fleet development (Assumed max phase-out) m dwt number Assumed orderbook August 2011, include chemical tankers Tanker fleet increase 2003-2013 some 72%

Tankers – green transportation

Average age tanker fleet above 10,000 dwt Years Based on LRFairplay

Shipping is energy efficient Toyota Prius - 1 tonne, 1 kg CO2, 12 km Source: Danish Shipowners Association

Int’l shipping - environmental performance Industry programmes in conjunction with the IMO: Oil pollution - reduced by > 95% since 1970s Engine efficiency - improved by > 20% in last 15 years Volatile Organic Compounds (VOCs) - voluntary measures - VOC emissions down by > 80% and over the next ten years will also deliver: Toxic air emissions (SOx and NOx) - sulphur oxide (SOx) emissions being further reduced by c. 90% and nitrogen oxide (NOx) by c.60%

Design Index (EEDI) Ship Size (DWT) Reference Line Today 10% Industry pushing mandatory efficiency improvements Reducing GHG emissions on new ships by 30% by 2025 Design Index (EEDI) Reference Line Today 10% Attained EEDI < Required EEDI Phase 1 2015 - 2019 20% Phase 2 2020 - 2024 30% Phase 3 on and after 2025 Ship Size (DWT) [Tankers>20,000 DWT]

Shipping is energy efficient …… and still has a massive incentive to continuously reduce its GHG emissions US $ 240,000,000,000 - the annual fuel bill for international shipping - and one that is set to rise as oil prices rise and cleaner fuels are introduced - fuel bill is often 60- 80% of total operating costs

Piracy

Naval arrest and prosecution of pirates

Piracy - Somalia 2009 Statistics 2011 Statistics 2013 Statistics - 47 hijackings (21% of incidents) 2011 Statistics - 24 hijackings (12% of incidents) 2013 Statistics - 6 attacks, 1 hijacking (brief), - numerous ‘suspicious incidents’

Thank you for your attention