Leading the way; Making a difference INTERTANKO International Association of Independent Tanker Owners Hellenic Mediterranean Panel Athens 29 th March 2012 Overview: Association Finance Priorities + Strategic Plan Air + GHG Emissions Katharina Stanzel Deputy Managing Director INTERTANKO

Leading the way; Making a difference MEMBERSHIP 230+ Members 3,200+ Tankers 280+ Million DWT Members in 40+ countries > 75% of Global Independent Tanker Fleet 320 Associate Members

Leading the way; Making a difference MEMBERSHIP Million dwt / number of members Number of ships

Fleet Composition and Fee Structure -10%-5% USD/ship 1,415 1,486 1,635 1,800 2,000 1,800 1,710 USD/dwt Min US 5,000 5,250 6,350 7,000 6,300 6,500 6,175 Max US 52,000 54,600 65,000 80,000 85,000 76,500 72,675 Typedwt# crude 205,248,439 1,317 product 36,607, chem/oil 24,147, chemical 10,013, gas 4,947, special 4,916, ,880,212 3,348

Leading the way; Making a difference Average Age Membership Fleet

Leading the way; Making a difference BUDGET 2010 membership fees reduced by 10% No change in 2011 membership fees 2012 membership fees reduced by 5%

Leading the way; Making a difference BUDGET (US$) (Actual) (Budget)(Budget) Operating Income7,753,228 7,572,6507,401,925 Operating Expenses-6,886,593-7,217,450-7,373,997 Operating Result 866, ,200 27,928 Non-operating Income/expenses 87, , ,000 Result for Year 953, ,200 2,928

Leading the way; Making a difference Key Focus Areas Safety/TechnicalSeafarersEnvironment Marine Operations Regulatory / Legal Information Top priorities for 2012 Damage stability Inert gas Shipyard standards Class standards Fuel quality Mercury in crude Criminalization Crew competence Shore access Fair treatment of Seafarers GHG emissions Ballast water Reception facilities Air emissions Piracy Vetting Port State Control Chemical operations Sanctions Limits of liability insurance Oil spill compensation Tanker market Panel meetings IO web page Other work plan issues Tanker design Structural Integrity Machinery/equipm ent Fuel switching Safe tank entry Gas detection Biofuels Cargo properties Crew visas Seafarer ID docs Accommodation sp. Cadet berthing Ship recycling Anti-Fouling Waste management Noise pollution Response mgmt. Hull biofouling Ship striking mammals Loadlines off SA Lifesaving app Pilotage Port & Terminals Navigation issues Offshore operations Ship/Ship transfer ISPS Code Security Officers Ship sec alert sys Accident investigations Conflict in law UNCLOS Legislation Charter parties FDIP Demurrage Intellectual property Worldscale Anti-corruption Weekly News Annual review/ report Publications Presentations Tanker statistics Incident analysis Workshops Seminars Bulletins Global political/ economic environment

Macro-environment Political Global Economic Shift of Powers -China/ India/ Brazil - Europe failing Free market distortions - Regional Protectionism Regulatory Environment politicised - Regional regulation - Sanctions etc. Security Issues (Piracy) Economic Market Dynamics (Fleets, Cargos, Finance) Tonne mile demand Fuel availability/ cost Growing national protectionism Growth of national fleets/ interests Environ mental Globalised Concerns, e.g. Ballast Water Nox, Sox, PM, GHG Techn ologica l Compliance options through technology Availability of abatement/ treatment tec. Availability of Fuels LNG Distillates Socio- cultural Human Resources: - Availability/ Recruitment - Competency - Training Expectations from Legislators Politicians Public Overregulation Political decision making Need for Cooperation with other associations/ orgs

ANNUAL TANKER EVENT Venue: Conrad Hotel Singapore May 9 – Council dinner May 10 – Council meeting May 11 – Tanker Seminar - Tanker market - Piracy - Technical session

Leading the way; Making a difference Emissions to Air Air Emissions SO x NO x Particulate Matter Greenhouse Gas Emissions Carbon Dioxide Methane etc. Marpol Annex VI Compliance through S content Equivalent Measures accepted Addresses Marine Fuel Oil Quality

Leading the way; Making a difference MARPOL Annex VI Reg Fuel Oil Availability and Quality Fuel oil.. shall meet the following requirements: blend of HC derived from petroleum refining free from inorganic acid should not include any substance or chemical waste which: jeopardize ship safety and adversely affects machinery is harmful to personnel contributes to overall addition to air emissions  Quality and Safety standards

Leading the way; Making a difference HFO Quality – Recent developments Blending to meet required sulphur limits can result in: Increased average density Increased average catfines levels (Al+Si) Increase in sludging problems Reduced ignition and combustion quality Increased problems with chemical contamination of fuel 13

Leading the way; Making a difference Fuel Quality Issues

Leading the way; Making a difference

Quality Control of Bunkers Need to clarify responsibility for ensuring bunkers delivered to ships meet relevant criteria set in ISO 8217:2010 and MARPOL Annex VI & ensure stricter enforcement of Reg. 18 and involve local authorities in quality control of fuels Require bunker suppliers to have quality control system for fuels they sell & take corrective actions when off spec bunkers are delivered BUT currently No official authority involved in control and monitoring prior to fuel delivery Control by commercial fuel tests/owners only Responsibility for quality compliance and control should not be left with ships Quality/type of fuel has become very relevant

Leading the way; Making a difference

Leading the way; making a difference Proliferation of Regulations complicated application requirements safety challenges (e.g. fuel switching) lack of predictability of available alternatives − global availability of different bunker types ? − abatement technologies still adapting to ship use Danger of increasingly regionalised not harmonized regimes causing:

Leading the way; Making a difference

Emission Control Areas - ECAs NORTH SEA & BALTIC SEA NORTH AMERICA

Leading the way; Making a difference 2015 Compliance Options: Fuel Liquid Natural Gas (LNG) as main fuel High costs for retrofit & new building Supply network to be built Methane slip Low Sulphur fuel (0.10% MGO) Rel. easy but expensive Additional/converted storage capacity for MGO ? total segregation between MGO and HFO fuel systems High price premium (currently ~US$ 350/t) potential availability issues

Leading the way; Making a difference Compliance Options: Scrubbers Exhaust Gas Cleaning Systems Maturity Availability Performance reliability One scrubber for each main engine or up to 3 auxiliary engines Time needed for retrofit: 2-3 weeks planning installation 7-10 days off hire 2 weeks testing for certification

Leading the way; Making a difference

Cost Assessment VoyageMGO premium/year Price ScrubberPayback period vs MGO usage AG – LOOPUS$ 1.4 mUS$ 10 m13 yrs US$ 8 m10 yrs US$ 6 m8 yrs AG - RotterdamUS$ 1.3 mUS$ 10 m14 yrs US$ 8 m11 yrs US$ 6 m8 yrs Suezmax shuttle North Sea US$ 5.25 mUS$ 8 m2.7 yrs US$ 6 m2 yrs Aframax shuttle North Sea US$ 3.5 mUS$ 6 m3 yrs US$ 5 m2.5 yrs

Leading the way; Making a difference Scrubbers: Issues to Consider Test resultsIs technology proven for application at sea ? Does it work with SCRs Dimensions / physical footprint / weight CAPEX OPEX energy consumption sludge treatment / disposal Prove compliance usage + water wash discharge monitoring Performance monitoring & documentation Redundancy Manufacturer capacity Crew issues: training and qualification

Leading the way; Making a difference ECA 2015 Strategy Cost efficiency is related to time spent in ECAs ALTERNATIVECAPEXOPEX LNG> US$20 m/shipup to 20% fuel saving MGOlow premium US$ 350/t but up to 4% fuel saving SCRUBBERS US$5 m or more/ ship 2-3% fuel penalty in use increased CO 2 emissions

Leading the way; Making a difference Greenhouse Gas Emission Reductions Technical & Operational Measures Ship Energy Efficiency Management Plans (SEEMP) Energy Efficiency Design Index (EEDI) Market Based Measures (MBMs)

Leading the way; Making a difference GREENHOUSE GASES Policy on implementation of IMO Energy Efficiency Design Index (EEDI) requirements - 4 year waiver - method of compliance Policy on Market Based Measures (MBM) Better acceptance of “Virtual Arrival” project with charterers

Leading the way; Making a difference Ship Energy Efficiency Management Plans Best practice guidance – TEEMP In co-operation between members and other stakeholders Company & Shipmanagement Plans Voyage optimisation Propulsion resistance management Machinery optimisation Cargo handling optimisation Energy Conservation Awareness Plan

Leading the way; Making a difference INTERTANKO POSITION 1.Welcome adoption of amendments to MARPOL Annex IV, mandating energy efficiency measures (EEDI/SEEMP regs) 2.Advocate: a)“level playing field”: implementation of EEDI to all new build ships from the same date b)Compliance with EEDI focussed on improved hull design, propulsion efficiency & energy optimisation, not predominantly reduced speed designs c)Measures taken to comply with EEDI not to jeopardise or have adverse effect on safety of the ship 3.Emphasise that EEDI measure for new ships only

Leading the way; Making a difference MARKET BEASED MEASURES - MBMs Governments do not believe that ships can meet GHG reduction targets without MBMs EEDI & SEEMPs ‘unlikely to be sufficient’ but: no reduction targets have been set! Number of proposals discussed at IMO: Mandatory CO 2 reduction targets, Efficiency Incentive Schemes, Emissions Trading Schemes, GHG Funds Impact Study to assess suggested proposals

Leading the way; Making a difference INTERTANKO POSITION Market Based Measures not justified at this time (Industry is already incentivised by high fuel prices) Should MBMs be required, they should: be implemented through an international regime be simple to enforce and to monitor drive the right behaviour Provide transparency to maintain current level playing field not place disproportionate financial and operational burden on the industry

Leading the way; Making a difference

SUSTAINABILITY Deep concern that the current tanker market rates are consistently below ship owners’ operating costs. INTERTANKO’s Chairman, Capt Graham Westgarth “If these rate levels continue for a long period, this could lead to a situation where sustainability of the oil transportation industry is threatened.” “Our Members operate tankers to the highest standards and will continue to do so. Operating for a prolonged period in an environment where tanker owners are not even covering their operating costs is obviously not a situation that can be maintained.”

Leading the way; Making a difference Thank You