INTERTANKO APRIL Intertanko “Preparing for the Unpredictable” Robert P. Curt ExxonMobil Marine Transportation

INTERTANKO APRIL Points to be Covered What makes the tanker market move? What causes oil spill legislation? ExxonMobil’s efforts to reduce these causes ExxonMobil’s oil spill record ExxonMobil’s demurrage claims initiative Positioning for the next event

INTERTANKO APRIL Tanker market responds to critical events – generally short-term rates go up

INTERTANKO APRIL Pre-Gulf War escalating peaks are a sign of improved balance between supply & demand

INTERTANKO APRIL Dealing of Wild Cards becoming more frequent

INTERTANKO APRIL The late 2002/early 2003 rate jump: Weather Prestige sinking Venezuelan strike War New/increased long haul VLCC cargoes – Carib crude to Far East – European/American fuel to Singapore – Black Sea crude to Far East & USWC

INTERTANKO APRIL Source: ITOPF Certain oil spills result in changes in legislation, even if they are not the largest

INTERTANKO APRIL ExxonMobil Focus on Flawless Operations Rigorous vetting reduces unpredictable events Focus on improvements that can benefit both charterer and owner Flexible chartering coverage strategy based on mix of term and spot that provides ability to cope with unpredictable events

INTERTANKO APRIL ExxonMobil Vetting Requests Have Significantly Increased Category Number of Vessel Screenings 2,00080,000 Passing %7590 Vessel Inspection Reports 356,000 Terminal Reports1,00010,000 ** More owners meet criteria today with far less failing vetting

INTERTANKO APRIL Our vetting affiliate works closely with owners to assist them in meeting improved standards Development of Marine Environmental & Safety Criteria Term Business with High Quality Owners Oil to Water incidence rate has dropped from 1 per 100 port calls in 1984 to.02 per 100 port calls in 2002 ExxonMobil Has Significantly Improved Oil Spill Performance of Owned and Chartered Vessels

INTERTANKO APRIL Recent ExxonMobil Oil Spill History Continuous improvement in operated fleet performance In 2002, operated and time chartered fleets spilled a total of ~2 barrels - Or 2.3 teaspoons spilled / 1 million gallons transported

INTERTANKO APRIL Problem: No standard was in place for submitting demurrage claims No administrative guidance Extensive recycling of documents Required great personnel effort Excessive delay before settlement ExxonMobil Claims Processing Improvement

INTERTANKO APRIL ExxonMobil Claims Processing Improvement Shipowners and charterers working together to improve efficiency New clause implemented to improve claims processing Initial reluctance from industry: Why change? “This can’t be good for owners!”

INTERTANKO APRIL ExxonMobil Initiative For Efficient Demurrage Claim Processing Supporting Documentation Needed: Completed ExxonMobil Port Log Notice of Readiness Messages at all ports/berths Bills of lading for co-loads and parcels tankers Notes of protest given or received by vessel Pumping logs Crude Oil Washing logs (if applicable) Statement of facts/Port logs/ Terminal time sheets Agents’ time sheets

INTERTANKO APRIL Claims Processing Improvement Initiative Following the administrative procedure will speed up claims processing Average claims processing time has been reduced in half after implementation of the clause Although initial industry reluctance to accept change, results have been favorable to owners * Charterer’s administrative efforts reduced * Owner gets paid sooner * Broker gets commission sooner Win - Win - Win

INTERTANKO APRIL Continuous Improvement Electronic submissions of ExxonMobil Port Log Electronic submission of all time logs to further reduce complications These initiatives will allow the analysts to spend their time reviewing claims instead of reentering data Goal: Get demurrage to be as standard as freight

INTERTANKO APRIL Where do we go from here? Maintain rigorous vetting programs that reward quality vessels, owners and operators Operate flawlessly Generate contingency plans for possible economic, market, and operational risks Maintain operational/chartering flexibility to meet unforeseeable contingencies The next unpredictable event – will the industry be ready?