Oil Shipping Today Peter M Swift January 2005 Propeller Club, London

Global primary energy consumption by fuel million tonnes oil equivalents Source: BP

World oil supply mbd

Crude oil seaborne trade

Oil consumption per capita (Litres/day )

The world needs tankers

Tanker Fleet Ownership Source: SSY Consultancy & Research Ltd

AS AN INDUSTRY WE MAY NOT BE LOVED BUT WE ARE NEEDED World Oil Consumption 3.6 billion ts World Oil Consumption 3.6 billion ts Transported by sea 2.2 billion ts Transported by sea 2.2 billion ts 60% transported by sea. 60% transported by sea.

Regular supply critical

Daily VLCC spot rates

Source: INTERTANKO

Oil price and tanker freight rate

War in Palestine Korean War Suez Canal Zone Conflict Suez Canal Closure 1973 Oil Crisis Suez canal reopens Market Doldrums Kuwait Asian Financial Crisis

Source: E.A. Gibson Shipbrokers Years $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 Freight cost ($/bbl) $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $55 $60 Crude oil price ($/bbl) FreightOil Price Freight and Oil Price Movement Suez Crisis '67 M E war '73 M E war OPEC price power Kuwait occupation After Erika

Gasoline price at the pump

Oil pollution into the sea Maritime sources

Torrey Canyon - Resulting in IOPFC Torrey Canyon Built 1959 in the USA. 60,000 dwt,, Li. Flagged Later jumboised to 120,000 dwt Owned by Union Oil Left Kuwait 19 February 1967 Cargo 120,000 ts of BP oil for Milford Haven Passed Scilly Isles 18 March am Discovered plotting error at am Re-plotted position 2.8 nm from the Seven Stones reef Course was changed too late Hits Pollard's Rock in the Seven Stones reef at 17 knots Rips open 6 tanks. 31,000,000 gallons of oil leaked Oil spread along the sea between England and France

Amoco Cadiz Resulting in Marpol PL/SBT, etc. The 1974 built Amoco Cadiz carrying 227,000 tonnes of crude oil ran aground off the small port of Portsall off the coast of Brittany, France at 10:00 p.m. on March 16, The whole cargo spilled out as the breakers spilt the vessel in two, progressively polluting 360 km of shoreline from Brest to Saint Brieuc. At the time this was the largest oil spill by tanker ever registered. The French Government along with damaged villages prosecuted the Amoco company in the United States. After 14 years of difficult proceedings they obtained 1,257 m Francs (190 m Euros), half the claimed amount.

Exxon Valdez Resulting in OPA 90 Left the Alyeska Pipeline Terminal at 9:12 p.m. on March 23,1989. Loaded with m barrels of North Slope crude oil bound for Long Beach North Slope crude oil had safely transited Prince William Sound 8,700 times in the 12 years At 12:04 a.m on March 24, 1989 Exxon Valdez grounded on Bligh Reef Prince William Sound and 11 cargo tanks were punctured.. Some11 million gallons or 257,000 barrels or 38,800 metric tones was spilt. 200 miles of shore line were heavily or moderately oiled 1,100 miles were lightly/very lightly oiled. Exxon spent about $2.1 billion on the cleanup effort.

Nakhodka Resulting in proposals to IMO, class and IOPFC * Built 1970, Ru. Flagged * Cargo of 19,000 ts of heavy oil * En-route from Shanghai, China to Petropavlovsk, Russia. * Stranded on the coast of Antou, Mikuni town, Fukui prefecture, Japan A total of billion yen in compensation was paid to about 6,000 claimants

Erika – Resulting in Marpol revisions and accelerated phase-out and first of the EU measures

Prestige – Resulting in action by EU and later IMO on phase-out and more

New Carissa Grounded Coos Bay, Oregon in 1999 After several salvage attempts the ship’s bow broke away from the stern and was eventually sunk by naval gunfire and a torpedo.. A COURT SETTLEMENT was reached June 2004 in the New Carissa grounding case. The 44,527dwt wood chip carrier ran aground north of Coos Bay, Oregon state on 4 February 1999, spilling more than 200 ts of fuel oil. US District Judge Garr King ruled on Wednesday that the US government must pay the ship’s owner Green Atlas Shipping of Panama and its Japanese subsidiary Taiheiyo Kaiun, $4M because it was negligent in not making available the latest navigation guides for the area. In return, Green Atlas must pay $4M to cover environmental clean-up costs and $6.5M in respect of costs incurred during the US Coast Guard’s attempts to remove the vessel.

Selendang Ayu Grounded and broke in two outside the Island Unalaska Dec 2004 The container On December 7, the crew of the M/V Selendang Ayu reported that they had lost power and were adrift off Unalaska Island. Efforts to tow the vessel failed and it went aground and broke apart between Skan Bay and Spray Cape at approximately 6pm, December 8. The Selendang Ayu carried approximately 424,000 gallons of Intermediate Fuel Oil (IFO 380) and 18,000 gallons of Marine Diesel (PDF).

Principal Challenges for Oil Shipping Industry Today 1.Meeting society’s expectations - our licence to trade - regulation versus self-regulation

The world expects us to have 0 accidents. Even though % of oil is delivered safely It takes only one accident to change the industry

The image ?

OWNER CHARTERERCLASS IMAGE PROBLEM ! The Rogues of the Tanker Industry

Principal Challenges for Oil Shipping Industry Today 2.Governance structure for the industry -International versus national/regional legislation

CHALLENGES TO INDUSTRY GOVERNANCE International vs. local, national and regional Liability – EU Penal Sanctions vs. International Conventions Safety & Environment – EU (Post Erika & Prestige) vs. IMO/Marpol & SOLAS Sulphur Levels / Air Emissions – EU, USA vs. IMO Security – MTSA vs. ISPS Ballast Water Management – US et al vs. IMO

Principal Challenges for Oil Shipping Industry Today 2.Governance structure for the industry -International versus national/regional legislation - Role of Flag States

Tanker Fleet by Flag Source: SSY Consultancy & Research Ltd

The good, the bad and … all legitimate

Flag State Guidelines - industry advice

Principal Challenges for Oil Shipping Industry Today 2.Governance structure for the industry -International versus national/regional legislation - Role of Flag States - Role of Classification Societies

Tripartite Dialogue on Newbuilding Standards IACS Joint Tanker Project Common Structural Rules 2005

Principal Challenges for Oil Shipping Industry Today 2.Governance structure for the industry -International versus national/regional legislation - Role of Flag States - Role of Classification Societies - Role of Coastal States

Principal Challenges for Oil Shipping Industry Today 3.Challenges to international Liability regimes, and the Increasing Criminalisation of Seafarers

Principal Challenges for Oil Shipping Industry Today 4.Environmental challenges: - inadequate reception facilities - ballast water management - air emissions (engine and cargo) - environmentally-sound recycling - and many more

Oil Shipping Today

Tanker incidents: Source: LMIS, Informa, press, INTERTANKO Number

Development of tanker oil spills Source: ITOPF. Number of spills above 700 tonnes.

Accidental oil pollution from tankers and tanker trade Source: ITOPF, Fearnleys 1000 bn tm m ts spilt

Port State Control Percentage of inspected ships detained

Fleet by hull percentage

“Oil should travel first class” - that is the aim of the oil shipping industry

Thank you