Manager Research and Projects Lloyd’s 7th International Product Tanker Conference London 14 September 2005

Phase out R egulations 13F 13G 13H MARPOL Annex II OPA90 schedule/size limit different S tatistics C onversion to PL/SBT - DH 2010 – final year for SH tankers?

Phase out history  In the aftermath of Exxon Valdez, 0n 18 August 1990, the US President signed into law the US Oil Pollution Act of 1990 (OPA 90). This was the first regulation which has mandated double hull design for tankers with a building contract after 30 June 1990 and with a delivery after 31 Dec  First IMO phase out initiated by the US OPA 90 - ratified by IMO March enforced as from July 1993  Accelerated IMO phase out initiated by Europe as a result of the ERIKA accident outside France - ratified by IMO April enforced as from September 2001  Further acceleration of IMO phase out initiated by Europe as a result of the PRESTIGE accident outside Spain - ratified by IMO December 2003, enforced as from April enforced by Europe as from October 2003  The European Union’s Regulation (1726/2003) on single hull tankers took effect on 21st October 2003  Both ERIKA and PRESTIGE carried Heavy Fuel Oils that can pollute up to ten times more than crude oil. IMO therefore adopted a new regulation – Regulation 13H of Annex I of MARPOL 73/78 – banning the carriage of heavy grade oil as cargo in single hull oil tankers as from 5 April 2005.

Phase out by segment

Phase out SH tankers (5-9,999 dwt) No Phase out year ships 02 SH 432

Phase out SH tankers (10-19,999 dwt) No Phase out year ships 542 SH 186 order 149 Phase out overhandg : 44

Phase out SH tankers (20-29,999 dwt) Number Phase out year ships 253 SH 142 Orders 18 Phase out overhang : 23

Phase out SH tankers (30-44,999 dwt) Number Phase out year Ships 637 SH 216 Orders 121 Phase out overhang : category 1 tankers built DB/DS phased out

Phase out SH tankers (45,000 – 59,999 dwt) Number Phase out year Ships 425 SH 75 Orders 229 Phase out overhang : 2 14 category 1 tankers built

Phase out SH tankers (60,000 – 79,999 dwt) Number Phase out year Ships 264 SH 98 Orders category 1 tankers built

Phase out SH tankers (10,000 – 79,999 dwt) m dwt Phase out year Ships 75 m dwt SH 28 m dwt Orders 28 m dwt 63% (976 tankers 17.6 m dwt) phase out below 30,000 dwt 32% (401 tankers 8.9 m dwt) orders below 30,000 dwt 4-10 m due for phase out 2010

Tanker fleet development m dwt

Implementation policies of special provisions

Phase out s pecial provisions 13 G (5) - double bottom/sides - CAS requirement 13 G (7) - SH trading beyond 2010/25 years 13 G (8) (b) – entry into ports or offshore terminals (provisions (5), (7) 13 H (5) - double bottom/sides - trading beyond 2010/25 years 13 H (6) (a) - crude oil having a density at 15ºC higher than 900 kg/m3 but lower than 945 kg/m3 13H (6) (b) tons dwt and above but less than 5,000 tons dwt - SH until 25 years 13 H (7) - exclusively within an area under its jurisdiction, 13 H (8) (b) – entry into ports or offshore terminals (provisions (5), (6)

Implementation policies Flag / Port States 13G (5) 13G (7) 13G (8)(b)13H (5) 13H (6)(a) 13H (6)(b) 13H (7) 13H (8)(b) AustraliaY1Y1 NYNNNNY BahamasYYN/AYYYY BarbadosYYNYYY7N EU MembersY1Y1 NYNNNNY GreeceNNNYYYYN Hong KongY1Y1 Y2Y2 NNNNNY IndiaYYNYYYYN JapanY1Y1 YNY1Y1 NY3Y3 -N4N4 LiberiaYYN/AYYYY Marshall Isl.YYN/AYYYY MexicoYNYNNNNY Panama Canal-- case by case---- Panama FlagYYNYYYNN ChinaYNYY2Y2 NNNY Republic of Korea- --N5N5 N5N5 N5N5 N5N5 Y RomaniaYNYNNNNY SingaporeYYNYYYYN United StatesN/A Source:

Annex II revision

MARPOL Annex II Revisions After 1 January 2007 products defined as "floaters" and "persistent floaters", which include the vegetable oils, will be assigned to Category Y. Vegoils will have to be carried in IMO Type 2 or 3 space. Oil-like substances will not exist (xylene will require chemical code certificate). All ships loading IBC Cargoes will need to hold a Certificate of Fitness (CoF) issued under the revised requirements.

MARPOL Annex II Revisions The vegetable oils listed in Chapter 17 of the IBC Code will be regulated as Pollution Category Y and ship Type 2, and contain a limit on free fatty acid content. The IMO agreed that the individually identified vegetable oils should in principle be carried in Ship Type 2. However, via regulation of the revised MARPOL Annex II, an administration might allow the carriage of these substances in a ship Type 3 “ONLY” if the ship complies with all requirements for a ship Type 3, as identified in the IBC Code, except for cargo tank location. The cargo tank location shall be in accordance with regulation of the revised MARPOL Annex II but these ships must be constructed with double sides meeting the requirements for IMO ship Type 2 vessels and double bottom requirements of B/15 or 2 metres (whichever is the lesser) and the CoF shall indicate the exemption granted.

Tanker fleet by hull by m dwt

Conclusion

P hase on schedule with no major problems 2010 situation unclear OPA re-schedule different Annex II revision will affect single hull product tankers