Marine Transportation of Energy Marine Transportation System Capacity Mare Forum Houston Nov Bulk Liquid Ocean Shipping Issues Peter M. Swift

The world needs tankers As long as the world uses oil As long as the world uses oil World oil consumption 3,590 mpta World oil consumption 3,590 mpta 60 % transported by sea = 2,015 mtpa 60 % transported by sea = 2,015 mtpa mtpa chemicals mtpa chemicals

Nominal Arabian Light Deflated Arabian Light Nominal freight rates Deflated freight rates Source: INTERTANKO, IEA 10

Tonnes spilt per billion tonne-mile transported

US crude oil production and net crude oil imports (est.) Source: EIA

Oil consumption in selected Asian countries

OPEC and non-OPEC oil production Source: IEA

Major world crude oil exporters - Mbd Source: OPEC, PIW, IEA, Norwegian Oil Directorate

Crude oil – seaborne trade indicies 1973=100 Source: Fearnleys

Oil products – seaborne trade indicies 1973=100 Source: Fearnleys

Tanker & combined carrier fleet by year of build < Number of tankers U/VLCCs Suezmax Aframax Panamax 10'-60' dwt For delivery

Tanker & combined carrier fleet by year of build < Dwt millions U/VLCCs Suezmax Aframax Panamax 10'-60' dwt For delivery

Tanker fleet double-hull development Source: INTERTANKO

Double hull ships are great …but like the life rafts of a Boeing 747, it is a device we should do all in our power to avoid testing.

World fleet and orderbook - million dwt

World Shipbuilding Capacity (mCGT)

Bulk Liquid Ocean Shipping Issues  Demand for marine transportation  Supply of marine transportation  Shipping standards  Environmental concerns  Security issues

Bulk Liquid Ocean Shipping Issues Demand for Marine Transportation  Oil dependence & Global economic health  Oil sources – long haul vs. short haul  Alternative energy sources  Pipelines

Bulk Liquid Ocean Shipping Issues Supply of Marine Transportation  Fair return on investment  AGEISM Arbitrary but flawed age limitations - legislation or charterers - challenge to principle of grandfathering

Bulk Liquid Ocean Shipping Issues Shipping Standards – The Threats  Poor freight rates  Weak links in the chain of responsibility  Competition between builders and between classification societies  Ineffective self-regulation  Inadequate feedback mechanisms

QUALITY STANDARDS - T HE V ICIOUS C IRCLE STANDARDS LOWERED ACCIDENTS INCREASE IMPOSITION OF NEW REGULATIONS INVESTMENT DISCOURAGED ??

Bulk Liquid Ocean Shipping Issues Environmental Concerns  Society’s ever increasing expectations – effectively zero tolerance  Bunker fuel requirements  Oil movements in extra sensitive areas

Some of the more sensitive areas

Bulk Liquid Ocean Shipping Issues Security Issues  Limburg incident  Security at loading and discharge ports  Critical passages

Critical Oil Movements Security Concerns Straits of Hormuz15.5 mbd (14 mbd crude) Malacca Straits mbd Red Sea3.3 mbd Sumed pipeline2.2 mbd Bosporous/Turkish Straits1.6 up to 2.3 mbd Druzba / ”Friendship” pipeline 1.2 mbd Ceyhan pipeline1.1 mbd Suez canal0.9 mbd Panama canal and pipeline0.5 mbd

The world needs tankers - the world expects tankers to be safe !

Thank you