1. Oil Shipping Today Peter M Swift 26 April 2005 Center for Maritime Economics & Logistics Erasmus University Rotterdam

2. Global primary energy consumption by fuel million tonnes oil equivalents Source: BP

3. World oil supply 1900-2005 mbd

4. Crude oil seaborne trade

5. Oil consumption per capita (Litres/day - 2003)

6. The world needs tankers

7. Tanker Fleet Ownership Source: SSY Consultancy & Research Ltd

8. 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.

9. Regular supply critical

10. Daily VLCC spot rates

11. Source: INTERTANKO

12. Oil price and tanker freight rate 1970-2004

13. War in Palestine Korean War Suez Canal Zone Conflict Suez Canal Closure 1973 Oil Crisis Suez canal reopens Market Doldrums Kuwait 1990-1 Asian Financial Crisis

14. Source: E.A. Gibson Shipbrokers 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 95 96 97 99 2001 2002 2004 Years $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 Freight cost ($/bbl) $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $55 $60 Crude oil price ($/bbl) FreightOil Price Freight and Oil Price Movement - 1950-2004 Suez Crisis '67 M E war '73 M E war OPEC price power Kuwait occupation After Erika

15. Gasoline price at the pump

16. Oil into the Sea Annual Releases, best estimates

17. Meeting Society’s expectations ( “ our licence to trade”) - including the environmental challenges Key issues for Tanker Owners

18. The world expects us to have 0 accidents. Even though 99.9997% of oil is delivered safely It takes only one accident to change the industry

19. Ballast Water Management - invasive species

20. Air Emissions - Engine and Cargo (VOCs)

21. Ship Recycling Ship Recycling – ship breaking, scrapping, demolition

22. Meeting Society’s expectations ( “ our licence to trade”) - including the environmental challenges & addressing the “image” issue Key issues for Tanker Owners

23. The image ?

24. OWNER CHARTERERCLASS IMAGE PROBLEM ! The Rogues of the Tanker Industry

25. Meeting Society’s expectations ( “ our licence to trade”) - including the environmental challenges - managing our “image” Maintaining International versus Regional and Local legislation Key issues for Tanker Owners

26. Threats to international maritime law Escorting of single hull tankers out of EEZ by Spain, France et al, in contravention of MARPOL and UNCLOS obligations Detention of seafarers, e.g. in Spain and Pakistan in contravention of UNCLOS Adoption of Criminal Penalties Directive for ship-source pollution European Commission suggestion that UNCLOS might be revised to alter the balance between flag states and coastal states. Willingness of EU to implement measures in conflict with MARPOL Canadian Bill C-15 in conflict with MARPOL and UNCLOS But ALL Politics are local

27. Threats to US federal law pre-eminence INTERTANKO vs. State of Washington (2000) - overturning state laws on manning, design, construction and operation USCG vs. State of Massachusetts (pending) State of California – vetoed on Escort Tugs, etc. (2004) New Jersey (possibly Delaware) threatening to ban single hulls (2005) EPA challenged on Ballast Water discharge exemptions (2005) Local and state air emission legislation (ongoing) State ballast water regulations (ongoing) But ALL politics are local

28. CHALLENGES TO INDUSTRY GOVERNANCE International vs. local, national and regional Liability – EU Penal Sanctions vs. International Conventions Safety & Environment – EU (Post Erika & Prestige) vs. IMO/Marpol & SOLAS Sulphur Levels / Air Emissions – EU, USA vs. IMO Security – MTSA vs. ISPS Ballast Water Management – US et al vs. IMO

29. EU Maritime Safety Package III Amendment to Directive on Vessel Traffic Monitoring and Information Liability and Compensation (principally Passengers) Recasting of Legislation on Port State Control Role of Classification Societies Marine Casualty Investigations in the EU Maritime Labour Standards Flag State Initiative But how about earlier programmes – Places of Refuge, Ratification of Conventions, Reception facilities

30. Meeting Society’s expectations ( “ our licence to trade”) - including the environmental challenges Maintaining International versus Regional and Local legislation Overhauling the governance structure of the industry: - Class, Flag, Port State Control Key issues for Tanker Owners

31. EU Challenge on Role of Class – perceived conflict of interest between statutory and classification activities Joint Tanker Rules – good rules, common rules, as quickly as possible, freely available, with process for further development/harmonisation 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 Classification Societies

32. Tripartite Dialogue on Newbuilding Standards IACS Joint Tanker Project Common Structural Rules 2005

33. Tanker Fleet by Flag Source: SSY Consultancy & Research Ltd

34. The good, the bad and … all legitimate

35. Flag State Guidelines - industry advice

36. Meeting Society’s expectations ( “ our licence to trade”) - including the environmental challenges Maintaining International versus Regional and Local legislation Overhauling the governance structure of the industry: - Class, Flag, Port State Control Reversing the trend to increased criminalisation Key issues for Tanker Owners

37. Increasing Criminalization Imprisonment of seafarers (Captain Mangouras et al) Detention of Tasman Spirit crew and salvors EU Directive on Criminal Penalties (including accidental damage)

38. Should this man have been detained for more than two years without trial ?

39. Meeting Society’s expectations ( “ our licence to trade”) - including the environmental challenges Maintaining International versus Regional and Local legislation Overhauling the governance structure of the industry: - Class, Flag, Port State Control Reversing the trend to increased criminalisation Ensuring the commitment of all stakeholders to continuous improvement Key issues for Tanker Owners

40. 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

41. Oil Shipping Today

42. Tanker incidents: 1978-03 Source: LMIS, Informa, press, INTERTANKO Number

43. Development of tanker oil spills Source: ITOPF. Number of spills above 700 tonnes.

44. Accidental oil pollution from tankers and tanker trade Source: ITOPF, Fearnleys 1000 bn tm m ts spilt

45. Port State Control Percentage of inspected ships detained

46. Fleet by hull percentage

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

48. Vision for the tanker industry: “ A responsible, sustainable and respected industry able to influence its own destiny.”

49. Key industry goals - effective regulation Regulatory environment which supports safe shipping operations, environmental protection and adherence to internationally adopted standards and procedures Properly considered international regulation of shipping Global regulation for a global industry, adopted and implemented uniformly

50. www.shippingfacts.com

51. INTERTANKO Publications Guide to bunkering of ships for the purposes of Annex VI to MARPOL A Guide for correct entries in the Oil Record Book A Guide to Crude Oil Washing and Cargo Heating Criteria Tanker Bills of Lading - A Practical Guide Guiding Principles to Emergency Management and Crisis Communications

52. INTERTANKO Publications Tanker Specification Awareness Guide A Guide to the Vetting Process, 5 th. Edition A Guide to Tanker Charters (2001)

53. Thank you www.intertanko.com www.shippingfacts.com