1. Erik.Ranheim@intertanko.com Manager Research and Projects Main issues facing the tanker industry China Logistics 19 October 2005

2. S pokesman/representative S ervice/advice M eeting place INTERTANKO The International Association of Independent Tanker Owners For Safe Transport, Cleaner Seas and Free Competition

3. Representation  IMO, International Chamber of Shipping  UNCTAD, Oil Companies International Marine Forum  IACS, International Assoc. of Classification Societies  OECD/IEA of P&I Clubs  B russels.  W ashington  ……..

4. 255 Members 2,380 tankers 192 million dwt 40 countries 70% of independent fleet 280 Associate Members INTERTANKO Membership

5. Main issues facing the global tanker industry S afety performance C urrent maritime regulatory environment P layers in the tanker industry C hallenges ahead

6. Environmental concerns Zero tolerance

7. Tanker incidents down

8. Reported tanker incidents 1978 - 2005

9. Reported tanker incidents 9 ms 2005 - total 104 Hull&Machinery (18 engine, 2 hull) dwt rangeTotal Below 10,00045 10-29,99920 30-99,99926 100,000+13 Total104 AgeTotal Built 1970s17 Built 1980s35 Built 1990s31 Built 2000s21 Total104

10. Tanker pollution down

11. Accidental pollution from tankers oil spilt per tonne mile 1990 - 2005

12. Accidental oil spills from tankers Major structural accidents - 000 tonnes Source: INTERTANKO/ITOPF

13. Tanker accidental oil spills down 80% Source: ITOPF ts spilt 99.9999% of the oil arrived safely ‘000 bn tonne-miles

14. Oil pollution into the sea Maritime sources Source: GESAMP

15. Total losses down

16. Tanker total losses by size Source: Clarkson Shipyard Monitor/INTERTANKO No 1988 – 1996: 29 CTLs 1996 – 2005: 14 CTLs 60% below 60,000dwt

17. Tanker and bulker total losses Source: Clarkson Shipyard Monitor/INTERTANKO %

18. Explosions

19. Large tankers explosion before IGS requirements 1983/1985 TankerSizedwtYear Seatiger, 123,6921979, 2 fatalities Atlantic Empress292,6661979, 29 “ Energy Determination321,1861979, 1 “ Albahaa B239,4101980, 6 “ Mycene238,8891980, 6 “

20. Recent tankers explosion TankerSizeGTYear Bow Mariner 22,5872004, 21 fatalities Vicuna 23,1972004, 2 “ NCC Mekka 6,4992004, 2 “ Panam Serana 6,4992004, 2 “ Sun Venus 4,3562004, 2 “ Sunnny Jewel 4,3862004, 3 “ Isola Azura 9,3832005, 2 “

21. Tanker Explosion 2001-2005 Source: Informa/INTERTANKO Type/cause F&E dwt range Total Below 10,00010-2999930-99,999 Above 100,000 During repairs3 3410 Tank related21216 Engine room fire4 15 Cleaning3 3 Load/Discharge3 3 Various/Unknown1307315 Total20210840 %50%5%25%20%100% 25/20% 15/7% 13/24% 8/3%

22. Average age down

23. Tanker incidents and age development Source:LMIS/Informa/INTERTANKO %

24. Tanker pollution and age development Source:LMIS/Informa/INTERTANKO 000 ts Years

25. Tanker fleet double-hull development Source: Fearnleys/INTERTANKO %

26. In shipping high standards reflect the quality of the owner not the regulatory regime Erik Murdoch Director of Risk Management, The Standard P&I Club

27. Regulatory Environment

28. Leading members of our community, politicians, regulators and charterers alike, appear to be digesting the fact that mere legislative or penalising measures are already reaching their limitations as a driver for further improvement. Many have even started to express their concerns that all such externally imposed controlling devises are becoming counterproductive or even harmful. Emmanuel Vordonis, Executive Director Thenamaris Ships Management, Member of INTERTANKO’s Executive Committee Poseidon challenge

29. Regulation vs self regulation

30. Regulating safety Source: INTERTANKO Formal regulations and controls Self regulation Unsafe - Chaos Alienation Lack of motivation and flexibility Procedures purely to meet reg. req. Compliance culture Bureaucracy Check list mentality stops initiative Confusion Lack of global standards Right balance provide the best safety culture

31. Chain of Responsibility G overnments L aw, C ourts, I nsurers SHIPOWNER SHIPYARDS INSURERS TRAFFIC MANAGEMENT CARGO OWNER CHARTERER PORTS & TERMINALS CLASS SOCIETIES FLAG STATES F or the system to work, liability has to be shared

32. Challenges

33. Challenges to the industry S upremacy of IMO & International Maritime Law versus regional and local legislation L iability - moves to open up CLC/Fund Convention A nnex VI implementation C riminalising accidental pollution - Penal sanctions adopted by EU C ommon Structural Rules & Goal Based Standards S hip Recycling B allast water management S ecurity - (ISPS costs to be reflected in Worldscale) P hase out

34. MARPOL Annex VI Air emissions - how to ensure compliance A ll ships of 400GT and above E ntered into force May 19th, 2005 E xisting ships no later than 1st scheduled drydocking or no later that May 2008 N ew ships 19 May 2005 A reas to be considered: SOx /fuel quality NOx – spare parts and repairs VOC – vapour return lines & new technologies I ncinerators (type approved ) B unkering procedures: B unker D elivery N ote S ample S hip’s Note to Flag States – reports on non-compliance F uel switch for use of LSF in SECAs

35. Ratification R atified by 22 Governments that have a combined tonnage over 50% of World tonnage: A zerbaijan, B ahamas, B angladesh, B arbados, B ulgaria, C yprus, D enmark, F inland, G ermany, G reece, J apan, L iberia, M arshall I slands, N orway, P anama, S t. K itts and N evis, S amoa, S ingapore, S pain, S weden, U nited K ingdom, V anuatu. N ot ratified by for example: C hina, S K orea, F rance, N etherlands, M iddle E ast C ountries, US B unkering in a “non party” port followed by a call in a “party” port Potential source of trouble out of ship’s control

36. Criminalisation  T raditionally accidents have been regarded as quite distinct from deliberate acts  A ttitudes have changed (scapegoat mentality) ref. Captain Mangouras, ERIKA, The Karachi Eight TASMAN SPIRIT  EU Directive on Ship-Source Pollution (despite wide industry coalition) Canadian Bill C-15 US approach (whistle blowing, enormous fines and rewards

37. IACS Common Rules for Tankers as from April 2006  I NTERTANKO initiative started more than five years ago  O bjectives were to: eliminate class competition on scantlings embrace the intentions of goal-based standards meet the requirements of industry and the shipyards  w ill apply for double hull tankers of 150 m and above.  S hips should be designed with a fatigue life of 25 years based on N Atlantic winter conditions, with corrosion additions also based on 25 years, at least equivalent to or even in excess of all current Class regulations.

38. Industry Code of Practice (1999) IMO Guidelines (2003) ILO & Basel Guidelines Consideration of Mandatory Elements Market Forces Shipping Industry Green Recycling International Ship Recycling Convention Shipping Industry Feedback Workable Practical Objectives Met Ship Recycling

39. Ballast Water Management: Meeting the Treatment Standard – Treatment Technology Meeting the Treatment Standard Ballast Water Exchange and/or Treatment Technology Ships Constructed before 2009 with BW capacity 1500-5000, treatment technology in use after 2014 Phase in for Treatment System Installation (B-3) Ships Constructed before 2009 with BW capacity less than 1500 and greater than 5000, treatment technology in use after 2016 Ships Constructed on or after 2009 with BW capacity less than 5000, treatment technology in use from 2009 Ships Constructed after 2009 but before 2012 with BW capacity greater than 5000, treatment technology in use after 2016 Ships Constructed at 2012 or after with BW capacity greater than 5000, treatment technology in use after 2012

40. Ballast Water Management: Meeting the Treatment Standard – Treatment Technology Case Studies A)40,000dwt Product Tanker to be delivered July 2007 Ballast water capacity greater than 5000m 3 so will be able to conduct ballast water exchange until 2016, when it will then have to have been retrofitted with a ballast water treatment system. B)8,000dwt Chemical Tanker to be delivered July 2007 Ballast capacity of less than 5000m 3 but greater than 1500m 3, will have to be retrofitted with a ballast water treatment system by 2014. C)Existing VLCC – delivered 2003 Ballast water exchange until 2016, retrofitted after 2016. BUT, if prototype system installed and test programme approved by IMO, 5 year exemption given, upgrade system in 2021.

41. 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. 1992  First IMO phase out initiated by the US OPA 90 - ratified by IMO March1992 - 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 2000 - 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 2005 - 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.

42. Phase out Regulations 13G C ategory 1 - non PL/SBT (pre-MARPOL) tankers out by 2005 C ategory 2/3 out by 2010 or 2015 subject to administrations D ouble bottom or side tankers until 25 years 13H H eavy grades of oil in double hull tankers P rovisions for some heavy crude oils, double bottom/side tankers and domestic trade OPA90 schedule/size limit different C onversion to PL/SBT - DH A nnex II revision not phase out, but will shut SH tankers out of vegoil+ trades as from 2007

43. 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) - 600 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)

44. 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: WWW.INTERTANKO.com Implementation policies

45. Conclusion  S trong industry performance, but no complacency  Z ero tolerance to oil pollution  F ormal R egulations must provide room for flexibility and new initiatives  M ost pending regulations are common industry regulations  I ndustry challenge to ensure global standards and regulations  C ooperation with all the members in the maritime responsibility chain will provide the best results

46. INTERTANKO’s aim Strong responsible, sustainable and respected industry able to influence its own destiny