Manager Research and Projects INTERTANKO AGM – Open Market Session, Erik Ranheim Manager Research and Projects INTERTANKO AGM – Open Market Session, Washington, 08 April 2003

Supply of tonnage in the aftermath of PRESTIGE PRESTIGE accident Current phase out schemes for SH tankers Proposed EU regulation Consequences of possible implementation: Fleet Other market consequences

PRESTIGE (Bahamas) Built 1976, DWT 81,564 Cargo: 77,000 ts HFO Damaged 13 November and oil leakage increased as ships was forced out to sea and the damage deteriorated Sunk 19 November 133 miles outside Spain, major pollution Strong political reactions for stricter regulations – last proposal Brussels, 27‑28 March 2003 TRANSPORT, TELECOMMUNICATIONS AND ENERGY COUNCIL

PRESTIGE proposal Market Issues Unilateral EU requirements from 1st July? Accelerated phase out of SH tankers Heavy oils in DH tankers Stricter controls Possible followers to EU initiative Notes 1. Naturally understands the concerns associated with and threats posed by oil transportation, with the reminder that the accidental pollution and incident records have shown very considerable and sustained improvements for more than 10 years. 2. Stresses the imperative that all involved maintain strict adherence to international (maritime) law and review processes. 3. Advocates the conducting and completion of an impartial, comprehensive accident investigation. Stresses the necessity, before any new measures are proposed or introduced, for rigorous analysis and understanding of the risks and consequences involved based on sound technical grounds, and where appropriate encourages a full impact analysis of each such measure. 4. As a matter of principle, rejects unilateral and/or regional, ill-considered, (and frequently expeditious/opportunistic and reactionary) measures. 5. Reminds that shipowners receive only a very small proportion of the economic benefit from oil supply and distribution, and that the principal beneficiaries in this value chain are oil companies and traders.

Phase of single hull tankers above 5,000 dwt mil dwt

Phase of single hull tankers above 5,000 dwt Number

Phase of single hull tankers 5,000 - 29,999 dwt Number

Phase of single hull tankers 30,000 - 59,999 Number

Phase of single hull tankers 60,000-119,999 dwt Number

Phase of single hull tankers Suezmaxes Number

Phase of single hull VLCCs Number

Phase of single hull tankers above 5,000 dwt Number Built year EU DH EU SH EU cand DH EU cand SH Non-EU DH Non-EU SH Total 1970s 1 44 77 4 552 673 1980s 24 61 18 82 57 542 685 1990s 213 20 67 14 689 277 311 2000s 238 125 86 173 750 1,371 1,669 476 250 172 346 1,500 2,742 3,338

EU phase out SH tankers > 5,000 Proposal from EU Transport Council, - implementation 1st July CAT 1, non-SBT tankers, 40 mil dwt out 2003 CAT 2, SBT tankers, 61 mil dwt out 2010 (-DH/DS) CAT 3, tankers below 20/30,000 dwt 322 tankers out 2010

Modernisation tankers Notes

Conclusion Supply side benefit from two/three tier market Return to commodity type of market when most SH tankers removed Vulnerable market with only modern tankers - no pool of old tankers to send to scrapping Notes 1. Naturally understands the concerns associated with and threats posed by oil transportation, with the reminder that the accidental pollution and incident records have shown very considerable and sustained improvements for more than 10 years. 2. Stresses the imperative that all involved maintain strict adherence to international (maritime) law and review processes. 3. Advocates the conducting and completion of an impartial, comprehensive accident investigation. Stresses the necessity, before any new measures are proposed or introduced, for rigorous analysis and understanding of the risks and consequences involved based on sound technical grounds, and where appropriate encourages a full impact analysis of each such measure. 4. As a matter of principle, rejects unilateral and/or regional, ill-considered, (and frequently expeditious/opportunistic and reactionary) measures. 5. Reminds that shipowners receive only a very small proportion of the economic benefit from oil supply and distribution, and that the principal beneficiaries in this value chain are oil companies and traders.