Welcome to INTERTANKO Members’ Seminar Seoul 6th April 2011

INTERTANKO Korean Members Seminar Schedule Wednesday 6th April 2011 0930 Welcome and introduction Dr. Whang, SK Shipping INTERTANKO Overview Vetting and Benchmarking Piracy Environmental Issues Regional Issues INTERTANKO Work Plan Open discussion on all issues 1200-1300 Lunch

Anti-Trust/Competition Law Compliance Statement INTERTANKO’s policy is to be firmly committed to maintaining a fair and competitive environment in the world tanker trade, and to adhering to all applicable laws which regulate INTERTANKO’s and its members’ activities in these markets. These laws include the anti-trust/competition laws which the United States, the European Union and many nations of the world have adopted to preserve the free enterprise system, promote competition and protect the public from monopolistic and other restrictive trade practices. INTERTANKO’s activities will be conducted in compliance with its Anti-trust/Competition Law Guidelines.

Asian Panel and Member Seminars 2011 April Seoul Members Seminar Dalian Member In-house Seminar Shanghai Member In-house Seminar Singapore Asian Panel Meeting Hong Kong Members Seminar May Athens Annual General Meeting

Vetting Issues Update

Smart Vetting 1 Vetting Committee objectives & updates: The One Stop Shop Concept / Terminal Acceptance: We have raised the concept of formation of a common marine assurance “system” (not methodology), which would be accessible and useable by each party concerned in the screening process. Advising of Non Acceptance: We have raised the issue regarding provision of information to owners to enable them to address what may be identified as outstanding in a prompt manner. Conditions of Class: - Transparency to report or not to report? Major survey of members 53% response validating concerns (submitted to OCIMF GPC discussions)

Smart Vetting 2 Vetting Committee objectives & updates: Reward Systems to Reduce Inspections: Exploration of establishing further reward systems to benefit good owners. Linking TMSA and the VIQ: Gap analysis undertaken by the vetting committee: Potential benefits from linking TMSA with the VIQ could result in a further shift to more self assessment. SIRE/CDI HVIQ: We have requested SIRE to re-assess the possibilities of harmonising the SIRE & CDI VIQ into a harmonised VIQ.

Smart Vetting 3 Vetting Committee objectives & updates: Officer Matrix Requirements: SIRE and CDI have advised that they are planning to seek information from owners regarding officer training systems in their respective forthcoming revised VIQ’s Port State Use of SIRE & CDI reports: We are reviewing the development of systems to increase the current low usage of SIRE and CDI reports by the Port State Control Authorities (Reduce the number of inspections and better target sub-standard ship)

Smart Vetting 4 Vetting Committee objectives & updates: INTERTANKO Guide for Engaging Independent Ship Inspectors: Raised with SIRE: Potential for greater usage of our standard set of guidelines when engaging independent ship inspectors, Reporting to Oil/Chemical Companies: We have investigated and provided information to members regarding advice pertaining to “discoverability” in association with reporting incidents to oil and chemical companies and we are in discussion with OCIMF on this subject.

INTERTANKO Benchmarking and Databases

Terminal Vetting Database (TVD) Quick recap... What Terminal Vetting Tankers are vetted but are sometimes asked to make fast to poor quality berths The vetting process works for ships, so why not for terminals? Why enhance safety at the terminals improve member efficiency by influencing terminals to ‘fix’ problems maintain industry safety record Who Access to the system is controlled by INTERTANKO and was strictly limited to INTERTANKO Members and Associate Members As of 2010, access granted to all interested parties The Terminal Vetting Database is hosted by www.Q88.com in partnership with INTERTANKO Access is usually set up within one business day

Terminal Vetting Database (TVD) – latest statistics Stats for past 12 months: # reports submitted: 3843 # berths covered: 1792 # reports with low rating: 350   Question containing low ratings: Condition Apron/Fenders/Dock 82 Accessibility/Communication 76 English Skills 67 Safety Awareness 60 Bollard condition 59 Tug Performance/Condition 44 Condition Chicksans/Hose 42 Dock Lighting 42 Pre-transfer Conference 40 Emergency Preparedness 37 Courtesy 31 Surveyor Safety Awareness 29

TMSA related TMSA 2 Gap Analysis Document http://www.intertanko.com/templates/intertanko/issue.aspx?id=44647 TMSA 2 Benchmarking database http://www.intertanko.com/templates/Page.aspx?id=46718 Guidance on Change management http://www.intertanko.com/templates/intertanko/issue.aspx?id=41452

Marine Injury Reporting Guidelines: TMSA Lost Time Indicating Frequency (LTIF) Total Recordable Case Frequency (TRCF) Benchmarking Based on OCIMF’s Marine Injury Reporting Guidelines: LTI = Σ (Fatalities, Permanent Total Disabilities, Permanent Partial Disabilities, Lost Workday Cases) TRCF = LTI + lost workday cases + restricted work cases LTIF (frequency) = LTI’s x (1,000,000 / Exposure Hours) TRCF (frequency) = TRC x (1,000,000/Exposure Hours) Data: Covers 12-month rolling period Input data Confidential

TMSA LTIF AND TRCF Lost Time Frequency T. Rec. Case Frequency NOTE: a company average below pool average is a better than average performance! LTIF 31 Dec 2008 LTIF pool average: 1.44 # entries below pool average: 50 (61%) out of 82 LTIF 31 Dec 2009 LTIF pool average: 1.39 # entries below pool average: 68 (65%) out of 104 TRCF 31 Dec 2008 TRCF pool average: 3.40 # entries below pool average: 53 (65%) out of 82 TRCF 31 Dec 2009 TRCF pool average: 3.23 # entries below pool average: 70 (68%) out of 104 LTIF Pool Average: 1.39 Entries below pool average: (65%) TRCF Pool Average: 3.23 Entries below pool average: (68%)

TMSA CREW & OFFICER RETENTION Crew and Officer Retention Rates formula is modeled upon the "Abelson adjusted turnover rate“, modified by INTERTANKO to ensure that the output is a measure of the company percentage retention rate as opposed to a turnover rate. % Retention Rate (RR) = 100 - [ ({S – (UT + BT)} / AE) x 100 ] S Total Number of terminations from what ever cause UT Unavoidable Terminations BT Beneficial Terminations AE The average number of employees working for the company (12 month rolling period).

TMSA CREW & OFFICER RETENTION Crew Retention Rate (Average 93.6%) Officer Retention Rate (Average 91.3%) Entries Entries

VIQ Benchmarking Traffic Light System, incorporating either Red or Green, to indicate if the number of SIRE VIQ observations for your fleet are either above or below the number of SIRE VIQ observations for the collective of the INTERTANKO fleet. Red = above INTERTANKO fleet average Green = below INTERTANKO fleet average Fleet Average Deficiency: "Total number of deficiencies per SIRE VIQ chapter, divided by Total number of inspections“ 12 month rolling period Confidential http://www.intertanko.com/templates/intertanko/issue.aspx?id=47207

VIQ Benchmarking (example output data) SIRE Chapters Certification & Documentation 0.5   0.62 0.27 Crew management 0.33 0.3 0.43 Navigation 0.8 0.56 0.84 Safety Management 1.49 1.23 0.91 Pollution Prevention 0.68 0.67 0.44 Structural Condition 0.06 0.17 0.25 Cargo & Ballast System Petroleum 1.03 Cargo & Ballast System Chemical 0.71 Cargo & Ballast System Gas Mooring 0.78 0.41 Communications 0.14 0.24 0.29 Engine & Steering Compartments 1.05 0.88 General Appearance & Condition 0.51 0.36 Intertanko Fleet Petroleum Average Intertanko Fleet Chemical Average Intertanko Fleet Gas Average Petroleum Chemical Gas

Confidential Accident Reporting Platform CARP database provides a simple functionality allowing the quick & easy updating of accident data. Enable members to input their own incident data in a fully confidential basis whilst allowing INTERTANKO to use the information entered so that: Lessons can be learned and shared. Similar accidents prevented. Standardise accident data and categorisation. Standardise simple accident analysis, root cause, direct cause and corrective actions. Platform Now Available http://www.intertanko.com/templates/Page.aspx?id=47899

VIFF and PSCIFF “Vetting Inspection Feedback Forms” (VIFF) meets SIRE Inspector Compliance Requirements Launched May 2010 “PSC Inspection Feedback Form” (PSCIFF) meets IMO PSCO code of conduct guidelines Launched October 2010 Both provide a means of confidential feedback to INTERTANKO which can then be shared, confidentially, with SIRE or relevant Port State MoU

Environmental Issues

GHGs - Ship Energy Efficiency Management Plan Environmental Issues GHGs - Ship Energy Efficiency Management Plan Mandatory application after MEPC 62 (July 2011) Charterers already referencing SEEMP (IMT MESQAC) Biofouling Voluntary Guidelines to be adopted MEPC 62 Ballast Water Management ...!!

Environmental Issues Ballast water management IMO Legislative Status The BWM Convention will enter into force 12 months after ratification by 30 States, representing 35 per cent of world merchant shipping tonnage. Currently 27 countries representing 25.32% of world merchant shipping tonnage Implementation dates still important...

Environmental Issues Ballast water management Entry into force Summary of implementation dates: Ship constructed before 2009 BW capacity 1500-5000m3 – have treatment system from first intermediate or renewal survey after anniversary date in 2014 BW capacity less than 1500m3 and greater than 5000m3 – have to have treatment system from first intermediate or renewal survey after anniversary date in 2016 Ship constructed in or after 2009 BW capacity less than 5000m3 shall have a treatment system installed at its second annual survey and no later than 31/12/2011 Ship constructed after 2009 but before 2012 and with a BW capacity greater than 5000m3 shall have a treatment system from first intermediate or renewal survey after anniversary date in 2016 Ship constructed in or after 2012 with a BW capacity of greater than 5000m3 shall be constructed with a BW treatment system ‘Constructed’ in respect of a ship means a stage of construction where: .1 the keel is laid; or .2 construction identifiable with the specific ship begins; or .3 assembly of the ship has commenced comprising at least 50 tonnes or 1 percent of the estimated mass of all structural material, whichever is less; or .4 the ship undergoes a major conversion. All implementation dates above reflect requirements in Regulation B-3. In terms of a ballast water treatment system as referenced, then this refers specifically to a system that meets the standard specified in Regulation D-2 of the Convention. Note that the Convention does not specify that a ship must install a system but that a ship must meet the D-2 standard – which de facto means the installation of a treatment system. Dragos – in reference to the IACS clarification notes and MEPC 61, we are supportive of their interpretation on the anniversary dates.

Environmental Issues Ballast water management The Challenges: Compliant systems for the Convention and regional legislation (i.e. USA - NY, CA x100 to x1000 beyond IMO) Owner compliance with US or IMO standards Installation of treatment systems on a large scale IMO Review: Installation realities – capability of industry to install systems in time frame (2012-2016, ~50,000 ships) Contract realities – how many owners planning to install systems (INTERTANKO member survey) Sampling and testing – what will happen after installation? Dragos: Bullet 1 – regardless of the scientific fact that we do not have the capability to meet the standards of even IMO, NY and Cal States moving ahead with requirements. This puts owners in difficult position – do they hold of installing IMO compliant systems now on the basis that better systems will come onto the market and meet regional requirements as well? Bullet 2 – The larger vessel issue is now coming to the attention at IMO – i.e. for vessels with a ballast water capacity greater than 5000m3. Bullet 3 – Will the type approved systems actually meet the standards even when installed and running on board? Do the IMO guidelines on type approval G8 and G9 need reviewing and does the testing procedure, specifically relating to the laboratories, need reviewing?

Environmental Issues Ballast Water Treatment Concern expressed over treatment systems to meet 2012 deadline INTERTANKO Environmental Committee & ISTEC Questionnaire: 1. Policy – who and how many systems? 2. Practicality – installing and using BWT systems INTERTANKO Ballast Water Treatment Systems Guide

Regional Issues

Regional Issues China Oil Pollution Regulations Regulations on the Prevention and Control of Ship-Induced Pollution of the Marine Environment Latest requirements effective 1st February 2011 Relating to discharge of ship and cargo generated wastes as well as the use of port reception facilities Compulsory Discharge (as per European Directive – no exemption?) Pollutant receiving certificate required before ship is allowed to clear port Administration:

Regional Issues China Oil Pollution Regulations Regulations on the Prevention and Control of Ship-Induced Pollution of the Marine Environment Administration: For International vessels, all waste to be discharged prior to port clearance and PRC from MSA shown to port authority Prior to Waste Discharge PRF / Ship Agreement PRF Obtain Permit of Operation from MSA After Waste Discharge PRF provides Ship with PRD – signed by Master Ship applies MSA PRC using PRD

Regional Issues China Oil Pollution Regulations Regulations on the Prevention and Control of Ship-Induced Pollution of the Marine Environment INTERTANKO Observations and Queries Does the ship operator have to gain a Pollution Receiving Certificate each time the ship leaves port or on a periodic basis (annually)? Does the contract have to be with one reception facility (contractor) or can it be more than one? What are the limits of fees? Is there a threshold at which compulsory discharge does not apply? e.g. if waste quantities minimal as per EU Directive?

Regional Issues Japan Earthquake and Tsunami Precautions for vessels trading into Japan ports? Information gathering on radiation levels Crew protection and precautions? Equipment required? Ship/port interface? Inspections and analysis by ports after vessel has traded to a Japanese port? Which ports? What level of radiation is being deemed abnormal?

For more information please visit www.intertanko.com thank you For more information please visit www.intertanko.com tim.wilkins@intertanko.com 38

Tanker Market Overview

The state of the Tanker Industry Uncertainty, fundamentals still strong but high oil price a threat Slack in supply of tankers slow steaming (ballast) Lowering of C/P speed Suez Canal less used Piracy effect – longer routes/inefficiency Reduced Libyan export, increased Middle East export

Tanker Demand Increase in world oil demand bn tonne-miles Based on Fearnleys

Tanker Demand Tanker trade bn tonne-miles Based on Fearnleys

Tanker Demand Seaborne Oil Trade and Middle East Oil production mbd 000 bn tonne-miles Asia 80% dependent on Middle East, Europe 18% and US 17% - some 15 mbd crude oil through Hormuz 2010 Based on Fearnleys/IEA

Tanker Supply Tanker fleet development m dwt number Assumed max phase out, orderbook March 2009, include chemical tankers Tanker fleet increase 2003-2013 some 75%

Tanker Supply Tanker phase out, deliveries, scrapping tankers 10,000 dwt + balance assuming various demand increases m dwt

Conclusions Despite disruptions, fundamentals still strong, but …. The dust has not settled neither from the financial crises nor the Japanese earthquake/tsunami, and the Arab insurgency continuous Tanker deliveries high next two years and the fleet is young

For more information please visit www.intertanko.com thank you For more information please visit www.intertanko.com tim.wilkins@intertanko.com 47