Erik RanheimManager Research and Projects

Seatrade Middle East Maritime, Dubai, 4 February 2003

INTERTANKOINTERTANKOInternational Association of Independent Tanker OwnersInternational Association of Independent Tanker Owners

Safe TransportSafe TransportCleaner SeasCleaner Seas

Free CompetitionFree Competition

advocatingadvocating

Issues facing tankers

Middle East essential for tankersSafety performancePRESITIGE accidentPossible consequences

Source: Fearnleys, IEA, INTERTANKO

Seaborne Oil Trade andMiddle East Oil production

8

12.5

17

21.5

4

6

8

10

12

Middle East Oil Prod mbd

Tonne miles

mbd'000bil tm

Control of the tanker fleet

209 29 5458 71

389102 226

93186

1422186 459 235

248

0%

20%

40%

60%

80%

100%

Handy

Panam

ax

Afram

ax

Suezm

ax

VLCCs

Spot

Period

Oil Company

Source: EA Gibson

Oil companies reducing fleets

0

10

20

30

40

50

60

1974 1978 1984 1990 1995 1997 1999 2002

ExxonMobil

Chevron/ Texaco

BPAmoco

Shell

Texaco

Mobil

Exxon

Chevron

BP

Amoco

dwt

Cost elements - Gasoline price at the pump

0.0

1.0

2.0

3.0

4.0

5.0

USA Japan Germany UK

Long haul freight, $3/bbl

Marketing etc

Oil price $30/bbl

Tax

Cost elements making the: gasoline price:

$ per gallon

Tankers performing well

Accidental oil spill from tankers tonnes spilt per billion tonne mile

transported

0

10

20

30

40

50

60

70

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02

Source: ITOPF/Fearnleys

Accidental oil pollution from tankers and seaborne oil trade

Bn tonne-miles’000 tonnes

99.995 %safe arrival in 2002

Accidental oil pollution from tankers

0

300

600

900

1990-95 1996-02

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

000 ts spilt

bn tonne-miles

Reduced number of incidents

0

100

200

300

400

500

78 80 82 84 86 88 90 92 94 96 98 00 02

CollisionFire/ExplFounderedHull & MachineryMisc WarGrounded

Tanker Incidents 2001

9%

26% 28%

28%9%

Collision Groundings

Hull&machinery:19 engine8 hull

Fire&Expl.

Misc.

dwt tankers involved :51 below 10,000 29 10-29,999 dwt25 30-99,999 dwt19 Above 100,000 dwt

Age tankers involved :29 built 1970s or earlier40 built 1980s36 built 1990s13 built 2000s, rest unknown

Modernisation tankers

622

51

75 81

9478

49

25 19

0

20

40

60

80

100

1991 1997 End 02 End 07 End 10

SH share (%)

DH share (%)

PRESTIGE

PRESTIGE (Bahamas)

Built 1976, Hitachi Japan for MOC

DWT 81,564

Mare Shipping Liberia/Universe Maritime, Greece,

Member INTERTANKO (79)

Cargo: HFO/SG 0.99

Load port , Ventspils, Latvia

Discharge port, Singapore

Damaged 13 December - Sunk 19 December

Clean record

PRESTIGE – issues

Major spill of heavy fuel oil Initial cause of hull failure? Could the ship haved been

saved - Port of RefugeLiability Arrest of Capt. Mongouras

The credibility of the industry is at again stake

Capt. Mongouras 32 years experience

Source: ABS

ABS, 3 DecNo apparent structural cause has yet been determined

Tanker structure/corrosion

ESP spring 2001, quality of steel replacement?

Storage with HFO containing H2S Ballasting to rectify list,

strongly increased bending moment

Increased stresses due to restart of engine

Forced out to open rough seas

Ownercondition and operation of ship

Class Ensure that the ship in maintaiend to good standards no matter age

Charterers type of cargoselection of ship

Authoritiesport of refugeclean up

P&Iclaims handling

Who is to responsible and who failed?

Overreaction counter-

productive

A sound industry needs

predictable contitions

Identify places of refuge for ships in distress Control of maritime traffic along the coasts Establishment of a supplementary

compensation fund Response capability strenthened Modernisation of the tanker fleet takes place

at a rapid pace

Possible measuresDraft Council Conclusions:

number

Possible measuresDraft Council Conclusions:

Accelerated phasing out of single hull tankers , CAS from age of 15 years

Not accept SH tankers carrying the heaviest grades of oil…

25% target of Port State Control, EMSA, quality, uniformity inspections

0

2040

60

80

100120

140

160

MARPOL

EU proposAL

Phase-out VLCCs

Age phase out EU

No

15 1316 1717 2518 2619 1820 1321 1622 1023 1124 16

25+ 54Total 219

Total 436 ships, 217 DH, average age 10.1 years, orderbook 64

Phase-out Suezmaxes

Age No17 518 1219 1220 521 1322 523 624 225+ 33

Total 93

0

10

20

30

40

50

60

2003

2005

2007

2009

2011

2013

2015

2017

MARPOL

EU

OPA 90

Total 266 ships, 173 DH, average age 9.8 years, orderbook 55

No

0

30

60

90

120

150

180MARPOL

EU

OPA 90

Phase-out 60-119,999 dwt

Age phase out EU

Built

15 116 117 418 819 1820 2321 2022 1623 11924 4525 141

Total 396

Total 780 tankers, 384 DH, average age 13.2 years ,203

No

Proposed EU reg. single-hull tanker phase-out

0

100

200

300

400

500

600

700

<197

019

7219

7519

7819

8119

8419

8719

9019

9319

9619

9920

0220

0520

0820

1120

14

0

100

200

300

400

500

600

700

Existing double-hull

Existing single-hull

For delivery

Proposed EU reg.

No No

+5,000 dwt

Prestige Issues

Heavy grades of oil in DH tankers Changing trade patterns Position of IMO threatened Fragmentation regulations - inflexible markets Think before act

INTERTANKOlooking after the interest of the tanker industry

Tanker market stagnating

OPEC/non-OPEC crude oil production 1971-2002

15

20

25

30

35

40

45

50

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

Mbd

Non-OPEC

OPEC

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

1995 1996 1997 1998 1999 2000 2001 2002

America

Europe

Middle East

Africa

FSU

Others

European oil imports by source – 12.5 mbd in 2002

US crude oil production and net crude oil imports1983-2003 (est.), monthly

Source: EIA

2

3

4

5

6

7

8

9

10Ja

n-83

Jan-

85

Jan-

87

Jan-

89

Jan-

91

Jan-

93

Jan-

95

Jan-

97

Jan-

99

Jan-

01

Jan-

03

Mb

d

US crude oilproductionUS net crude oilimportsLinear (US netcrude oil imports)Linear (US crudeoil production)

0

5

10

15

20

25

30

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Others/NN

Bangladesh

Pakistan

India

Taiwan

Korea

China

Tankers sold for recycling by receiving country mil dwt