Tanker performance Instituto Iberoamericano de Derecho Maritimo XII Congress/XX Anniversary Seville 14 November 2007 Manager Research and Projects, INTERTANKO

International Association of Independent Tanker Owners A non-governmental organization established in Oslo in 1970 to represent tanker owners Membership: 280 members 40+ countries 2,800+ tankers 226 million dwt 75% of independent tanker fleet 300 Associate Members Oslo – London - Singapore – Washington Spokesman – information service – meeting place INTERTANKO

MISSION “Provide leadership to the Tanker Industry in serving the world with safe, environmentally sound and efficient seaborne transportation of oil, gas and chemical products.” VISION for the TANKER INDUSTRY “A responsible, sustainable and respected Tanker Industry, committed to continuous improvement and constructively influencing its future.” 2. INTERTANKO

Tanker challenges Carrying the world’s most strategic raw material from some of the most politically tense areas in the world Carrying liquids and gases that pollute and are potentially hazardous Operating in a very volatile and uncertain market.

Introduction to the tanker industry

Seaborne Crude Oil Trade Flows 2006

Seaborne oil trade and Middle East oil production mbd Source: Fearnleys/IEA '000 bil tm

VLCC spot and break-even rates $ per day freight rate

Tanker shipping cost efficient Oil prices and tanker rates – real and nominal $/barrel

Tanker shipping cost efficient US CIF oil price/freight costs - $/barrel 43% 5% 6% 7% 6% 5% 4%

Tanker shipping cost efficient Gasoline price at the pump Euro per litre

Tanker ownership m dwt Current value fleet :~ $200 bn Freight income 2006:~ $45 bn

Tanker contracting by segment Source: Clarkson Shipyard Monitor m USD m dwt

Tanker fleet, orderbook and phase out tankers above 25,000 dwt m dwt 84 m dwt 138 m dwt 339 m dwt

Tanker phase out, deliveries, scrapping tankers >25,000 dwt, assume 2.5% trade growth m dwt

Tanker fleet by hull% * Assumes phase out according to regulations and trading until the age of 25 years after 2010 except that 10 SH aframaxes/VLCCs/suezmaxes are assumed to be removed in addition to phase out (conversions).

Source: IEA World oil demand increase - mbd mbd Increase 2008 Rest of world: Other Asia: 0.19 mbd Latin America: 0.16 mbd Africa: 0.11 mbd Europe: 0.21 mbd Others 0.4 0mbd Total 1.94 mbd

Tanker safety and the environment

Tanker trade and accidental oil spills % of the cargo arrives safely1000 ts spilt bntonne-m Amoco Cadiz 78 – Independenta Atlantic Empress 79 – Exxon Valdez 89 – 37 Haven ABT Summer 91 – 260 2

Tanker incidents – all sizes all types No incidents‘000 ts oil spills

Tanker incidents by cause Q07 Number incidents Source: Based on incident reports from Lloyd’s Maritime Information Service Oil pollution – 1000 ts 31% 10% 20% 27% 12% Erika Baltic Carrier Prestige Tasman Spirit Al Samidoon DBL 152 Bright Artemis

Tanker incidents by cause 2006 Source: Based on incident reports from Informa

Total losses, tankers and bulkers Source: Clarkson Number

Trends – Co2 emission, energy use, global trade Source: Fearnleys/INTERTANKO Index

World CO 2 emission

Shipping and the environment Fuelled by the dirtiest part of the barrel resulting in emissions of : SOx NOx un-combusted hydrocarbon Heavy metals Soot

Reducing harmful emissions from ships Onboard abatement technology –Scrubbers, filters, separators, catalysts SECAs/NECAs –Sulphur/Nitrogen Emission Control Areas Type and quality of fuel –Heavy fuel oil = a blending of refinery residues and distillate (up to 30% dist.) –Distillates = gasoil and diesel

Parties in the current regulatory and governance structures Paris MoU 1x2x3

Regulatory changes Accidents Political interference -driven Bureaucracy-drivenSelf-regulation UnlikelyMistrust of shipping

Ideal regulatory/governance system Global, simple, clear regulations created by competent people based on knowledge and analysis Strong, effective, regular controls by responsible bodies Port State - Control of last resort? Centralised comprehensive accident registration, investigation and analysis Transparency – obligation to report incidents

Tankers perform Tankers serve the major oil companies, which today are some of the most difficult clients in the world to satisfy, and tanker owners are under a great deal of pressure from the authorities. Zero tolerance for oil spills