1. Asian Regional Panel 6 March 2008 Singapore Peter M. Swift

2. MD report INTERTANKO International Association of Independent Tanker Owners

3. 2008 Dates AprilISTANBUL 20 Golf tournament Associate Members’ meeting 21ExCom, Council Focus sessions 22-23Tanker Event 22 Poseidon Challenge AGM 23 Oil & Market session 22Tanker Chartering seminar NovLONDON 17-18ExCom/Council, London

4. Future for Single Hulls Options today Conversion to - DH Tanker - FSU/FPSO - Bulk Carrier Recycling Continued Trading Subject to (i) Flag state and (ii) Coastal state acceptability after 2010 But now uncertainty over -Korea -Japan -China -India -Others

5. Load lines South Africa 16 Apr – 15 Oct = WINTER 16 Oct – 15 Apr = SUMMER 20 NM

6. Load Line Chart Zone

7. Blue Sky Thinking Business Environment Industry Developments Regulatory and Governance Environment Environmental and Social Pressures Human Element (Personnel) & Operational Challenges Other

8. Blue Sky Thinking Business Environment Cyclical business Rising costs Tanker accident ……………………….

9. Blue Sky Thinking Industry Developments Consolidation New business opportunities ……………

10. Blue Sky Thinking Regulatory and Governance Environment Weaker/stronger IMO More/less regional pressures/legislation Role of flag states Role of class Higher standards set by… ? Challenges to Limitation of Liability …………….

11. INTERNATIONAL CONVENTIONS WHO GOVERNS SHIPPING ? COMMUNITY INTERESTS - LOCAL LAWS / REGULATIONS REGIONAL REGULATIONS INTERNATIONAL SHIPPING

12. INTERNATIONAL CONVENTIONS MARPOL Annex VI Who governs Shipping ? - Environmental pressures COMMUNITY INTERESTS - -LOCAL LAWS / REGULATIONS California, West Coast/Canadian Ports, Rotterdam, Antwerp, Helsinborg, Other REGIONAL REGULATIONS EU / USA (EPA) INTERNATIONAL SHIPPING

13. Blue Sky Thinking Environmental and Social Pressures Climate change / global warming and air pollution pressures on shipping industries Development of (zero emission) eco-ships Tankers singled out – not cold ironing, large ballast water transporters, difficult recycling “Green legislation” grows – higher entry barriers, knowledge and experience more valued Corporate Social Responsibility practices and programmes are the “norm” ……………..

14. Blue Sky Thinking Human Element (Personnel) & Operational Challenges Availability and quality of officer pool will get worse before it gets better Solutions will be - through regulatory changes and/or market mechanisms - at both macro and micro level ? Sourcing will be even more from “new” Asian countries Greater participation of women Tanker industry could lose out to other sectors Standards in some sectors will slide More activity by management companies ……………

15. Blue Sky Thinking Other ?

16. Blue Sky Thinking BLUE SKIES or STORM CLOUDS ?

17. Update on the revision of MARPOL ANNEX VI & GHG reduction Asian Regional Panel 6 March 2008 Singapore

18. IMO Annex VI Revision Process End 2007 Group of Experts Report published February - BLG finalised its contributions April - MEPC 57 to develop and approve the revision October - MEPC 58 to adopt the revision Enforcement (tacit agreement) – earliest February 2010

19. Outcome from IMO BLG 12

20. Hybrid Solutions starting to emerge

21. Green House Gas Reductions IMO/Internationally Not part of Annex VI IMO 2000 study – continuing correspondence group Shipping not covered within Kyoto Now all changing – IMO 2009 deadline? EU - ? 20% reduction by 2020 (Baseline 1990) ? Shipping included ? US ?

22. Green House Gas Reductions Many issues Fleet growth as economies and trade grows Post Kyoto IMO or other External pressures – charterers, shippers, society, politicians Focus is already on Aviation Existing ships / new ships Indexing of units, fleets, industry CO2 trade-offs ? Emission trading scheme – Europe/international ??

23. Outcome from BLG 12 SOx and PM emissions Three options Option 1 – Global Sulphur cap –4.50% –1.00% as from 1 January 201[2] –0.50% as from 1 January 201[5] –Prior to 1 January 201[2] only: SECAs provision will apply with a S cap of 1.50% Procedures for fuel change over should be available and the timing recorded Scrubbers/abatement technologies could be used as a means of compliance

24. Outcome from BLG 12 SOx and PM emissions Option 2 – Global/Regional –Global S cap 4.50% –SECA S cap 1.50% 0.10% as from 1 January 201[2] –Scrubbers/abatement technologies allowed with the limits: 6.0 g SOx/kWh 0.4 g SOx/kWh as from 1 January 201[2] waste streams cannot be discharged in ports unless documented it would not have an adverse impact on the local eco-systems (IMO issues guidelines with criteria for such an assessment)

25. Outcome from BLG 12 SOx and PM emissions Option 3 – Global/Regional with Micro-Emissions Control Areas –Global S cap 4.50% 3.0% from 1 January 201[2] –SECA S cap 1.50% 1.00% from 1 January 201[0] 0.50% from 1 January 201[5] –Scrubbers/abatement technologies allowed with the limits: 6.0 g SOx/kWh 4.0 g SOx/kWh as from 1 January 201[0] 2.0 g SOx/kWh as from 1 January 201[5] waste streams cannot be discharged in ports unless documented it would not have an adverse impact on the local eco-systems (IMO issues guidelines with criteria for such an assessment)

26. Outcome from BLG 12 SOx and PM emissions Option 3 – Global/Regional with Micro- Emissions Control Areas Micro-Emission Control Areas –up to [24] nm off the coast; better definition yet to be developed –conditions for declaring a Micro - ECA yet to be developed –S cap 0.10% (no date given so far) –scrubbers/abatement technologies allowed with the limit at 0.4 g SOx/kWh –waste streams cannot be discharged in ports unless documented it would not have an adverse impact on the local eco-systems (IMO issues guidelines with criteria for such an assessment)

27. Opinions submitted to MEPC 57 SOx and PM emissions INTERTANKO supports Option 1 INTERTANKO also suggests that as from 1 January 201[5], Annex VI should also add limitiations to lower the PM emissions such as –carbon residue content in the fuel used by ships –ash content in the fuel used by ships OCIMF, ICS and BIMCO support Option 3 IPIECA supports Option 2 but with a S cap in SECA set at 1.00% Governments we believe support Option 1: Norway, Germany, Sweden, Finland, Italy, Ireland, Greece, European Commission.

28. Possible outcome from MEPC 57? SOx and PM emissions Possible agreement on a hybrid solution It starts with Option 2 It then translates into Option 1 Other comments: –Greece indicated at BLG 12 they disagree that scrubbers are identified as a specific alternative compliance –Marshall Islands seem to share that opinion –Australia and Canada seem also to support Option 1

29. Outcome from BLG 12 NOx emissions – Pre-2000 engines Measures on engines installed onboard ships constructed between 1 January 1990 and 31 December 1999 The NOx emissions at Tier I level Applicaton date –at the first intermediate or renewal survey; or – [1 January 2010], which one occurs later Compliance through: –in engine modification (MEPC 57 has to choose between two options); or –abatement technologies

30. Outcome from BLG 12 NOx emissions – Pre-2000 engines Option 1 –applies to all (i.e. 1990 – 1999) engines –if compliance through in-engine modifications not possible, a Port State could: require the ship to use distillate fuel; or deny port entry Option 2 – applies to larger (1990 – 1999) engines only ([displacement of and over [30/60/90] liters] or [power output of > 5000 kW]) – use of a certified ”upgrade kit”

31. Outcome from BLG 12 NOx emissions – Tier II (new engines) Tier II standards (emission reductions related to Tier I limits): –15.5% reduction (engines with n<130 rpm) (i.e. 14.36 g/kWh) – reductions between 15.5% and 21.8% depending on the engine’s rpm (engines with 130 rpm < n < 2000 rpm) –21.8% reduction (engines n > 2000 rpm) (i.e. 7.66 g/kWh) Applies to engines installed on ships constructed on and after 1 January 2011

32. Outcome from BLG 12 NOx emissions-Tier III (new engines) Tier III standards – 80% emission reductions from Tier I limits Tier III limits apply ONLY to engines installed on ships constructed on & after 1 January 2016 (a Party to Annex VI can apply the above limits to new engines of 130 kW and above) Tier III limits in ECAs only Outside ECAs - Tier II limits Emission levels for Tier III are as follows: –3.40 g/kWh (engines with n<130 rpm) –9*n(-0.2) g/kWh (engines with 130 rpm < n < 2000 rpm) –1.96 g/kWh (engines n > 2000 rpm

33. Outcome from BLG 12 Fuel Oil Quality Small but important changes and pending discusions The fuels required to be ”fit for purpose” MEPC 57 to clarify the meaning of ”fit for purpose” from a quality point of view IMO to invite ISO to revise marine fuels specifications in ISO 8217 Define fuel specification for a Global solution Possible inclusion of limitations of other parameters to reduce PM emissions BLG developed a standard procedure to interpret the actual test results of the sulphur content of the MARPOL sample

34. CONCLUSIONS Possible hybrid solution for SOx and PM emissions –starting with Option 2 (with a higher S cap in SECAs, say 1.00% from say 201[2]) –followed by Option 1

35. CONCLUSIONS NOx limits for existing engines - not an easy task Use of MDO would give an easy NOx reduction by 10% to 15%. BUT without a global use of MDO, the penalty on old ships would be too high NOx Tier II - possible and rests with manufacturers NOx Tier III implies use of SCRs/abatement technologies Prudent that new ships consider compliance with Tier III and install SCRs/abatement technology prior to 2016 Still to be assessed –SCRs - the only technology to give an 80% reduction;... BUT –existing SCR technology not efficient at low engine loads –can compliance be achieved in ECAs irrespective the engine load (close to port, through estuaries and straits ships slow down)?

36. Move to Double Hulls More than USD 500 billion invested since 2000 with the result that ~95% of tanker fleet double hulled in 2010 Assumed all SH tankers phased out by 2010

37. Average age tankers above 10,000 dwt (1970-2007) Years 6 8 10 12 14 16 1970197319761979198219851988199119941997200020032006

38. Tanker incidents 2007 by type and accidental pollution 1000 ts oil pollutionNo. incidents Source: INTERTANKO/LMIU/ITOPF/various

39. Accidental oil pollution into the sea Source: ITOPF/Fearnleys 1000 ts spilt bntonne-m -45% -33% -82% Reduction per tonne miles

40. Reported tanker incidents Number Source: INTERTANKO/LMIU/various

41. Tanker incidents 2007 by type Source: INTERTANKO/LMIU/various

42. Tanker incidents 2007 by size 325 incidents

43. Tanker incidents 2007 by age Incidents/no tankers: 325 incidents 13% 21% 33%

44. Incidents 2007 by type tanker Number Source: INTERTANKO/LMIU/various

45. Tanker engine related incidents No Source: INTERTANKO/LMIU/various 0102030405060 2002 2003 2004 2005 2006 2007 Below 10,000 10-29,999 dwt 30-99,999 dwt Above 100,000 dwt 2007 incidents by % of fleet per 000 dwt category:

46. Tanker incidents: engine related No Source: INTERTANKO/LMIU/various 0102030405060 2002 2003 2004 2005 2006 2007 1970s 1980s 1990s 2000s NK Built: 2007 incidents by % of fleet per decade of build:

47. THANK YOU For more information, please visit: www.intertanko.com www.shippingfacts.com www.maritimefoundation.com