DEPUTY MANAGING DIRECTOR NORTH AMERICAN PANEL October 29, 2014 INTERTANKO OVERVIEW JOSEPH ANGELO DEPUTY MANAGING DIRECTOR

MEMBERSHIP BUDGET SECRETARIAT CURRENT MAJOR ISSUES FDIP ANNUAL TANKER EVENT

MEMBERSHIP 210+ Members 3,000+ Tankers 270+ Million DWT Members in 40+ countries 300+ Associate Members

INTERTANKO membership end year Number members/m dwt Number ships

INTERTANKO membership by type tanker

Members by size of fleet No tankers Number members Number of tankers 3,018, number of members 214

Members by size of fee Max fee is $72,675, Min fee is $5,985 Total fee Number members $ fee range Max fee is $72,675, Min fee is $5,985

INTERTANKO membership fleet by country of registration m dwt Number

INTERTANKO membership by Flag

INTERTANKO membership by Class

Average age membership INTERTANKO membership fleet Years

BUDGET (Actual) (Actual) (Budget) Total Operating 2012 2013 2014 (Actual) (Actual) (Budget) Total Operating Income (US$) 6,886,363 6,768,203 6,800,477 Expenses (US$) 6,021,965 6,206,943 6,780,740 Operating Result 864,398 561,260 19,738 Non-operating Income/expenses 321,319 136,161 -18,000 Result for Year 1,185,717 697,421 1,738

INTERTANKO income and staff Staff no. Income $ m

SECRETARIAT 20 STAFF MEMBERS IN 4 OFFICES STAFF INCLUDES Oslo (8), London (10), Singapore (1), USA (1) STAFF INCLUDES Managing Director (London) Deputy Managing Director & Director of Regulatory Affair (USA) Technical Director (Oslo) Marine Director (London) General Counsel (London) Senior Environmental Manager (Singapore) Currently seeking applicant for Marine staff

Ballast water management CURRENT MAJOR ISSUES Sustainability Value Proposition Vetting Ballast water management Air emissions

SUSTAINABILITY Why a Sustainability Project?? Charter/freight rates not covering basic vessel operating costs Earnings not supporting forward investment Charter party terms which are not balanced and at times ignored

SUSTAINABILITY Desired Outcome: Achieve balanced and fair trading conditions for the tanker industry regardless of the prevailing freight market Focus Code of Conduct for tanker chartering Use of SIRE as intended to reduce cost of Vetting inspections Improve late payment of freight and demurrage

SUSTAINABILITY CODE OF CONDUCT for Tanker Chartering Conduct at all times in accordance with the concept of ‘good faith’ Uphold the principles of fair and legal dealing with all stakeholders Comply with high standards of integrity and respect for others Conduct business as responsible corporate members of society Understand the needs of all stakeholders Listen and respond to all business partners in a prompt, professional and respectful manner Behave in ways that earn the trust of others Uphold these principles regardless of how they are treated by others

SUSTAINABILITY Next steps Direct action with senior oil company executives responsible for chartering strategy Invitation to consider and engage with CoC Continue R&D to identify/quantify facts and figures illustrating the big issues and to help redress market imbalances

SUSTAINABILITY Payment Performance Database Focus: late payment of freight and demurrage Need for database of specific payment information from members Why? To be able to prove trends which back up our arguments on late payments Pilot Study Proof of Concept > 5,900 data points from 2010-2014 Database satisfies anti-trust criteria

SUSTAINABILITY Payment Performance Database Contractual obligations? Freight Charter party – payable on completion of discharge Pilot study – Typical 5-10 days Demurrage Charter party – payable on receipt of owner’s invoice Pilot study – Typical > 90 days

SUSTAINABILITY

SUSTAINABILITY What you get … Top 20 best payment performers Average delays in freight payments Average delays in submitting demurrage claims Average delays in negotiating demurrage claims Average delays in payment of agreed demurrage claims

SUSTAINABILITY Plus – Comparison between owner’s own fixtures/charterers Comparison between owner’s own data and other Members’ Comparison between charterers (subject compliance with anti-trust/competition rules) Comparison between different tanker types USD amount overdue for how long (i.e. to calculate cost of extra working cap) Comparison of payment performance over time

SUSTAINABILITY What you give … Charterer name Vessel name Vessel dwt Voyage start date Voyage end date

SUSTAINABILITY Plus – Invoice amount for freight Invoice amount for demurrage Invoice dispatch date for demurrage Dispute notified date (if applicable) Claim agreed date (if applicable) Invoice payment date for freight Invoice payment date for demurrage Amount actually paid for demurrage

Payment Performance Database SUSTAINABILITY Payment Performance Database Data Security System designed by data encryption experts Your data is private to you and encrypted Secure login and data storage Secure connection through https protocol System servers located in purpose built hosting centre with best-of-breed security Your private data is only available to you, and to INTERTANKO administrators

Payment Performance Database SUSTAINABILITY Payment Performance Database Value as resource to back up our findings on charterer payment performance Value as resource for members to use benchmark overall and specific situation Value increases as contributions of data increase Database success depends on Members contributing their payments data and trusting us to handle this sensitive information

VALUE PROPOSITION Clearly and succinctly articulate INTERTANKO’s value to our members Develop marketing materials targeted at different levels to cater to: 1. Existing Members; 2. New/potential Members; 3. External stakeholders For external stakeholders consideration will be given to whether they might view being an INTERTANKO Member as a positive sign that attracts advantageous treatment.

VALUE PROPOSITION MEMBER ENGAGEMENT – Spring 2014 What are the 3 most important things INTERTANKO offers ? to You as an individual // to your company How would you describe INTERTANKO in one sentence ? How would you describe the unique value of INTERTANKO - what is the Association’s strength? What do you think INTERTANKO can improve on ? What do ‘competitors’ do better than INTERTANKO ? What does INTERTANKO do better than them?

VALUE PROPOSITION SUMMER 2014 FALL 2014 NOVEMBER 2014 Qualitative exploration amongst a small sample of Council members FALL 2014 Online quantitative survey of members opinion providing statistical rigour and benchmark measure for ongoing evaluation NOVEMBER 2014 Value Proposition presented to Council meeting

TANKER VETTING SHIP INSPECTION REPORT PROGRAM (SIRE) Established by OCIMF in 1994 to: 1. Provide standardized tanker inspection report; and 2. Allow all OCIMF members to use any report in the database with confidence One of the primary objectives was to reduce the number of tanker inspections SIRE brochure stated “ideal interval between inspections is therefore around 4–6 months” Recent information from INTERTANKO members is that OCIMF members are requiring inspections much more frequently

TANKER VETTING KEY ELEMENTS of OCIMF Chairman letter “I emphasise to you the importance of continuing to utilise the existing inspection reports contained in the SIRE database to the greatest possible extent.” “I would ask all OCIMF members to ... take every opportunity to eliminate unnecessary inspections.” “I also ... remind you ... only to inspect the vessels needed to meet anticipated chartering requirements. “The SIRE system is a programme OCIMF members can be rightly proud of ... and I request your help in doing so by taking every opportunity to eliminate duplication in your inspection regimes.”

OCIMF Sire Working Group/ INTERTANKO Vetting Committee TANKER VETTING OCIMF Sire Working Group/ INTERTANKO Vetting Committee Initial focus was “the decline in the use of the SIRE system by OCIMF members” Issues discussed included: Increased sharing of ship inspection statistical data - Improved feedback systems on ship inspections and inspectors Development of best practice guidance on important areas of marine risk assurance - Development of matters related to crew competency Accident database

TANKER VETTING TWO RECENT ISSUES OF CONCERN SHELL Ship visits by company CEOs (quarterly) and senior management personnel (monthly) 2. OIL TERMINALS “CONDITION OF USE” Oil terminals require the Master to sign/accept a document as a pre-condition of being allowed to load/discharge at the relevant terminal which contain onerous terms that usually exonerate the terminal from any liability for any damage caused to the vessel even if the damage is caused by the Terminal.

FREIGHT & DEMURRAGE INFORMATION POOL FDIP FREIGHT & DEMURRAGE INFORMATION POOL Service offered to members by INTERTANKO who will act on members’ behalf and in their interest to recover undisputed debt and to encourage prompt and responsible dialogue for disputed claims. Members pass INTERTANKO the details of their claims and contact details for the charterers. We then contact the charterers or other debtors Fee for the FDIP is USD 1440 per year, the cost of just a few hours legal advice from a London lawyer. The fee covers a members’ entire fleet entered with INTERTANKO and is for an unlimited number of claims.

FDIP How our FDIP can help you:   1.    Maintains database of charterers that have been reported to FDIP – members able to request information on specific charterers to see experience encountered with them; 2.    Publishes FDIP Statement that lists charterers that have persistently failed to settle claims; publishes a FDIP Circular that contains articles on recent cases on laytime/demurrage, recent clauses and information on particular charterers; 3.    Members are able to report claims to the FDIP following which the FDIP will request charterers to initiate a dialogue with owners or pay an agreed claim as appropriate; 4.    Where parties dispute the effect of the provisions of a charter party, they may seek independent advice from the INTERTANKO’s legal section.

2015 ANNUAL TANKER EVENT Venue: Athens, Greece Dates: May 18 - 22, 2015 Events: Executive Committee Meeting Council Dinner and Meeting Annual General Meeting Gala Dinner Tanker Seminar [Workshop] Details to follow soon!!

THANK YOU