International Chemical and Oil Pollution Conference and Exhibition 2005 The Political Envionment Surrounding Safe Shipping By John C. Fawcett-Ellis General Counsel & Regional Manager Asia-Pacific Singapore, 28 September 2005

- representing responsible oil and chemical tanker owners worldwide - promoting Safer Ships, Cleaner Seas and Free Competition

-strict membership criteria based on quality and performance

The strength of INTERTANKO  230 members – operating some 2,200 tankers (170 million DWT)  280 associate members  26 staff  Oslo, London, S’pore and Washington DC  Chairman – Mr S Van Dyck  14 committees  4 regional panel

INTERTANKO’s vision for the tanker industry: “ A responsible, sustainable and respected industry able to influence its own destiny.”

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.

The world needs tankers

Regular supply critical

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

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

Fleet by hull percentage

AGENDA  Maintaining Supremacy of IMO & International Maritime Law  Common Structural Rules & Goal Based Standards  Criminalisation of Seafarers  Challenges to Industry Governance Structures  Other: People issues Piracy Ship Recycling Environmental Challenges Competition Rules Security Oil Pollution Liability (& Compensation)

Maintaining Supremacy of IMO & International Maritime Law Against the challenges of Local and Regional Legislation

Increasing politicization of regulation Increasing politicization of regulation Examples:  Phase out of single hull tankers  West European Particularly Sensitive Sea Area  Moves to open up CLC/Fund Convention and link with substandard shipping  Penal sanctions adopted by EU, criminalising accidental pollution Why?  Coastal state interests versus flag states, and reduced influence of maritime constituency  Power of EU Commission

Commission (The executive) THE EUROPEAN INSTITUTIONS & the power plays European Parliament (Direct election) Council (Member States) EMSA

HOW IT WAS: Examples of positive regulatory developments (the “IMO spirit”)  ISM Code and STCW (training) Outcomes broadly based on technical merits of arguments put forward. Industry viewpoint understood, if not always accepted.

HOW IT IS: The Challenges Today  More political drivers and less consideration of the technical, operational, and commercial interests  More unworkable, inconsistent and illogical regulation and less consideration of the practical aspects  More pressure for local / regional regulation and less willingness to adopt and apply international regulation

Maintaining Supremacy of IMO & International Maritime Law What are the threats?  15 Years Ago the United States (OPA90)  Today the European Union  Politics post Erika and Prestige  Conflict with International legislation (UNCLOS, MARPOL)  Criminalisation  EU Commission proposals for EU Common Position at IMO

Maintaining Supremacy of IMO & International Maritime Law International Regulation for an International Industry What the industry seeks from the Asian region:  Consistent support for IMO and the international approach  Rejection of regional initiatives  If possible, avoidance of “block” voting to combat EU moves in this direction

Criminalisation of Seafarers

CRIMINALISATION  Traditionally accidents have been regarded as quite distinct from deliberate acts  Attitudes have changed (scapegoat mentality)  e.g. Captain Mangouras, The Karachi Eight  EU Directive on Ship-Source Pollution (despite wide industry coalition)  Canadian Bill C-15  US approach (whistle blowing, enormous fines and rewards)

Criminalisation  INDUSTRY supports the investigation and prosecution of illegal discharges of oil from ships.  INDUSTRY strongly objects to criminalising accidental oil pollution and to treating seafarers as criminals  Any criminal offence of pollution from a ship must be clearly defined and in accordance with international law.  Any penalties imposed on someone found guilty of such an offence must be proportionate.  There should also be parity with any penalties imposed for pollution from land based sources.  Any suspects must be treated fairly, impartially and in accordance with international law on human rights.

CriminalisationAdditionally  INDUSTRY expects coastal states to comply with their existing treaty law obligations to provide adequate, affordable, oil waste reception facilities.  In order to safeguard the lives of seafarers and the marine environment, INDUSTRY urges coastal states to ensure proper contingency plans are put in place so that adequate assistance and if necessary a place of refuge can be made available to a ship in distress.

Challenges to Industry Governance Structures: Flag Classification Societies Port State Control P&I Clubs

The good, the bad and … all legitimate

Flag State Guidelines - industry advice

Challenges for Flag:  IMO Flag State Audit (currently voluntary but pressure to make mandatory)  Port State Control  - Currently: white, black and grey lists  - EU moving to target non-audited flags with preferential treatment measures  Political, public, union and media pressures – especially on open registers  Industry currently providing guidance / recommendations, and moving to do more

Challenges for Classification Societies:  EU Challenge on Role of Class  – perceived conflict of interest between statutory and classification activities  Common Structural Rules  – ability to deliver while maintaining IACS harmony  Role relative to Goal Based Standards  – IMO/Flag states versus IACS control of Goal Based Standards  Who sets class agenda – owners, builders, flag states or class managers ?  Example coatings standards (IMO – DE discussion)

Challenges for Port State Control (PSC) What is needed :  Better harmonisation and consistency of standards, training, etc. across all PSC regimes  Consistency in inspection and targeting criteria – based in part on analysis of PSC records and not arbitrary mechansisms, such as quota systems  Global sharing and mutual recognition of records between MoUs, with data logged in central system such as EQUASIS  Uniformity in internal procedures, such as clear grounds for detention, independent appeal panels, close-out of deficiencies, etc. &  To ensure that the integrity of PSC is maintained

Challenges for P&I Clubs & Club Boards:  OECD Report – Role of P&I in respect of substandard shipping  IOPC Revision Procedures  Pending Compulsory Insurance requirements  Who manages the agenda  – Shipowners or Club Managers ?

PEOPLE ISSUES (HUMAN FACTORS):  Heavy recent concentration on “hardware” issues  (e.g. accelerated phase-out, CSRs, goal-based standards etc)  Yet people still “cause” most incidents

PEOPLE ISSUES (HUMAN FACTORS): Industry has to address :  Shortages of qualified officers (BIMCO/ISF 2005)  Renewed criticisms of training standards (time to review STCW 95 ?)  Implications/causes of fatigue (ISPS etc.)  Manning levels

Extent of the problem Focus of attention on Regions - Malacca Straits - Somalia - West Africa Developments Piracy/Armed Sea Robbery:

Security in the Straits: The need to tackle: A. The Reality B. The Perception

The Reality:  Attacks have become more violent  Attackers have become bolder – large ships attacked  Attacks are motivated by financial gain not for political reasons  The Straits are a crucial route for the world’s shipping therefor the area is uniquely sensitive

The Reality (cont):  MSSI  The Batam Statement  Tripartite Techical Experts Group on safety of navigation  Tripartite Technical Experts Group on security in the Straits  The Jakarta Statement  Increased Cooperation

Reality?  More patrols?  Better coordination of resources to tackle the root of the problem, i.e. ashore?  Cross boarder patrols – bilateral agreements? Indonesia-Malaysia – up to 5 miles?  ”Eyes in the sky” – is this 24/7?

The perception:  Is enough being done?  Lack of clarity on the recent initiatives? What is in place and what is proposed?  That the listing of the region as a ”war risk” area has brought a reaction from the littoral states

INTERTANKO’s view:  Recent initiatives must be built upon  Support the role of the IMO as a facilitator of open discussions  Welcomed the open dialogue in Jakarta  Better accessibility of information on the initiatives taken – transparency is crucial  Support the political advance in internationalising the issue

JWC – Listed Areas  JWC should consult more widely  Review their decision on the basis of the factual situation  Follow closely all initiatives by the littoral states

Safety of Navigation in the Straits The Marine Electronic Highway Project

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

INTERTANKO’s vision for the tanker industry: “ A responsible, sustainable and respected industry able to influence its own destiny.”

Designers Shipbuilders Equipment Suppliers Class Charterers Operator/Manager Financiers / Guarantors Owner Commitment to Continuous Improvement by all stakeholders in the maritime businesses Cargo Owners Brokers P&IHull insurers Ports & Terminals Coastal States Waterways authorities Flag states Bunker suppliers Pilots Tug operators Labour providers Salvers Repairers Paint Suppliers Agents Spill Response Ship Breakers

Tanker Event 2006 Singapore March 2005

Thank you