1. TANKERS ADAPTING TO NEW RULES AND REGULATIONS Peter M. Swift Managing Director, INTERTANKO

2. International Association of Independent Tanker Owners 260 + members: > 80% of the independent oil tanker fleet and > 85% of the chemical carrier fleet 300 + associate members: in oil and chemical tanker related businesses 15 Committees - 4 Regional Panels Representative Offices in Europe, US and Asia One of the Association’s primary goals: Lead the continuous improvement of the Tanker Industry’s performance in striving to achieve the goals of: Zero fatalities, Zero pollution, Zero detentions

3. Tankers Adapting to New Rules and Regulations AGENDA: Fleet developments: - Oil and Chemical fleets Adapting to ………………….. - MARPOL revisions (principally Annexes I & II) - ISGOTT - Common Structural Rules - Related developments/issues In the pipeline: - Annex II revisions - Annex VI revisions Commitment to continuous improvement

4. Tanker fleet development m dwt No Assumptions for period until 2009: Scheduled phase out for the period: 15.5 m dwt including 4.2 m dwt that should already have been phased out earlier than 2007 Assumed removals 2007 – 2009: 29 m dwt (including conversion + other demolition)

5. Record ordering - despite high prices (mdwt)

6. Demolition: slowed in recent years (mdwt) 0 5 10 15 20 25 30 8485868788899091929394959697989900010203040506 Others/NK Bangladesh Pakistan India Taiwan Korea China

7. Average age steadily reducing (tankers above 10,000 dwt) Years 6 8 10 12 14 16 1970197319761979198219851988199119941997200020032006

8. Double-hull percentage rising steadily %

9. (Single Hull) Tanker Phase Out - an “uncertainty” post 2010 m dwt Assumptions : MARPOL phase out allows for trading until the age of 25 years old, max 2015 The EU alternative does not allow SH trading after 2010. DB/DS can trade until the age of 25 years old, but here cut off 2015 0 10 20 30 40 50 60 70 200320042005 2006 200720082009 2010 2011201220132014 2015 MARPOL (min phase out - trading of SH until 25 years) EU + no SH after 2010 OPA90

10. Chemical Carrier Fleet 70% of fleet double hull, almost all of remainder double bottom or double side – average age 11.5 years, Large order book (37% of existing fleet by dwt), Significant changes to MARPOL Annex II from Jan 2007, principally in carriage of veg oils – several uncertainties.

11. Chemical tanker fleet by hullnumber

12. Chemical tanker fleet and age distribution m dwt

13. Reclassification of Annex II products Type of changeReclassified from/toProducts and volumes Re-categorisation of vegoils, soft oils and fats D to IMO type 2, or IMO type 3 with DH meeting operational requirements Palm oil 27 m ts Soybean oil 10 m ts Sunflowerseed 3 m ts+ Other veg oils 3 m ts+ Tallow + fatty acids+ 2 m ts+ Total approximately 50 m ts Other products with no previous requirements on ship type IBC ch. 18 to IMO type 3Methanol 17 m ts MTBE 5.5 m ts UAN 5 m ts MEG/TEG/DEG 5 m ts Methyl ethyl ketone, ethyl acetate 1 m ts Change of ship type requirements IMO type 3 to type 2Xylenes >5 m ts Acrylonitrile <1 m ts No requirementsNo changeMolasses 5 m ts Ethanol 3 m ts

14. Major exporters of vegetable oils m ts

15. Further information available at www.intertanko.com November 2006 The Revisions to MARPOL Annex II (entry into force 1/1/2007) A Practical Guide

16. ISGOTT The International Safety Guide for Oil Tankers and Terminals Fifth Edition (2006) Principal changes are the recommendations covering: Operating procedures with the introduction of the ISM Code Operating procedures for Tank Cleaning – moving to “Inerted” or “Not Inerted”

17. Common Structural Rules Championed from outset by owners Already implemented Experiences to be accumulated / revisions will follow in time Some shipyards struggling with coating performance requirements

18. OTHER - (Industry views) MARPOL Annex I: Woeful inadequacy in the provision of oily waste reception facilities Welcome for new requirements for the protective location of Bunker Tanks Need: Reception facilities for Annex II cargoes Timely ratification of HNS & Bunker Conventions & To speak out against unjust Criminalisation

19. Changes in the pipeline Chemical Carriers: Proposals from the Inter-industry Group to amend SOLAS to provide for the application of inert gas to new oil tankers of less than 20,000 DWT and to new chemical tankers. Review of Dangerous Cargo Endorsements through STW.

20. Changes in the pipeline Air Emissions: Revision of MARPOL Annex VI Other local, national and regional regulations Of particular concern to tramp sectors, trading internationally

21. Existing SECAs NOV. 2007 MAY 2006

22. Air emissions - shipowners’ concerns over multiplicity of new requirements: Expanded number of SECAs, some with different requirements Proliferation of port, state and regional requirements – often conflicting Installation/retrofitting of: - multi-fuel tanks, - scrubber technologies, exhaust filters, etc. (still to be proven) Onboard handling and disposal ashore of toxic wastes from exhaust gas scrubbing – in addition to existing sludge handling problems Further fuel treatment processing Operational and safety concerns during fuel switchovers Additional fuel log record keeping and reporting Onus of responsibility falling solely on the owner/operator

23. Our industry is committed to keeping Tanker Shipping Safe, Reliable & Cost Effective

24. Accidental oil spill from tankers and tanker trade m ts m bn tonne miles

25. Reported tanker incidents reducing – until 2005/6 !! Number

26. Tanker incidents 2006 by type

27. Muchas Gracias For more information, please visit: www.intertanko.com www.shippingfacts.com www.maritimefoundation.com