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TANKER Seminar 2004
Istanbul
31 May 2004
Peter M. Swift
TANKER SEMINAR 2004
1. INTERTANKO Today2. Tanker industry
– performance and structure3. Issues and challenges4. Managing the issues5. Challenges ahead
INTERTANKO today:
Vision for the tanker shipping industry:
“ A responsible, sustainable and respected industry able
to influence its own destiny.”
- representing responsible oil and chemical representing responsible oil and chemical tanker owners worldwidetanker owners worldwide
- promoting Safer Ships, Cleaner Seas and Free promoting Safer Ships, Cleaner Seas and Free CompetitionCompetition
- strict membership criteria based on quality strict membership criteria based on quality and performanceand performance
The The International Association of Independent Tanker OwnersInternational Association of Independent Tanker Owners
INTERTANKOINTERTANKO
14 Committees - 4 Regional Panels• Safety & Environment• Technical – incldg. Bunkers, IT • Chemicals, Short Sea, Offshore• Legal, Insurance, Documentary• Vetting, WorldScale• Communications and Public Relations• Publications – Industry Guidelines• Services and advicewww.intertanko.com
The The International Association of Independent Tanker OwnersInternational Association of Independent Tanker Owners
INTERTANKOINTERTANKO
• 230 (+/-)230 (+/-) Members Members
2,200 (+/-) tankers2,200 (+/-) tankers165 million dwt165 million dwt Average age: 11.8 yearsAverage age: 11.8 years
• 280 (+/-) 280 (+/-) Associate MembersAssociate Members
• 25 Staff / 8 Consultants25 Staff / 8 Consultants
Oslo
London
Washington
Singapore
TANKER SEMINAR 2004
1. INTERTANKO Today2. Tanker industry
– performance and structure
3. Issues and challenges4. Managing the issues5. Challenges ahead
2003 in review
• Increased tanker demand – with extra emphasis on quality
• Accelerated introduction of new ships
• Proactive industry on standards and environmental measures
• Volatile but profitable markets
• Awakening investor interest
Tanker Performance
US CIF oil price* - USD
0
5
10
15
20
25
30
35
2000 2001 2002 2003 Max 03
Freight Costs
Fob SpotDubai
*Costs of oil transported from the Persian Gulf to LOOP
Accidental oil spills from tankers 1970-2003
0
100
200
300
400
500
600
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02
Tonne miles
0
2,000
4,000
6,000
8,000
10,000
12,000
Trade in Tonne-miles (Source: Fearnleys)
Pollution tonnes Source. ITOPF
Tonnes
Accidental pollution from tankers 1,000 ts
0
50
100
150
200
250
300
350
400
450
90 91 92 93 94 95 96 97 98 99 00 01 02 03 P'04
Largest spills since 1990
1991 ABT Summer 260,000 ts
1991 Kirki 17,700 "
1991 Haven 144000 "
1992 Agean Sea 74,000 ”
1992 Katina P 72,000 ”
1993 Braer 85,000 ”
1994 Seki 19,000 "
1996 Sea Empress 72,000 ”
1997 Nahodka 17,500 "
1999 Erika 20,000 ”
2002 Prestige 77,000 ”
2003 Tasman Spirit 30,000 ”
Oil into the Sea Annual Releases, best estimates
Average 1990-1999, '1000 ts
Natural seeps
Extraction of oil
Tanker accidents
Tanker operation
Other transportation
River and run-offs
Other shipping
Other consumption related
Source: National Academy of Science
47%
21%
11%
8%
3%
3%
Tanker incidents1978-03
0
200
400
600
800
1000
78 80 82 84 86 88 90 92 94 96 98 00 02
Grounded WarMisc Hull&MachineryFire/ExplCollision
Source: LMIS, Informa, press, INTERTANKO
Number
Tanker incidents 2003 - 130
12%
25%
24%25%
14%
Collision
Groundings
Hull&machinery: 2813 engine,6 steer/prop/rudder5 hull5 other
Fire&Expl.
Misc. .
dw t. Tankers involved36 below 10,00038 10-29,999 dw t35 30-99,999 dw t17 > 100,000 dw t
Age tankers involved :24 built 1970s or earlier48 built 1980s43 built 1990s12 built 2000s, 3 unknow n
7 involving pollution of which Tasman Spirit most serious
Fleet by hullpercentage
622
6074
83
9478
4940
2617
49
0
20
40
60
80
100
1991 1997 End 02 End 03 End 05 End 10
SH* share (%)
DH share (%)
End 05, all tankers built 1982 and earlier goneEnd 10, all tankers built 1987 and earlier gonetrading beyond 2010 subject to administrations
Tanker record
• Continuous improvement - both in safety and environmental performance
• But not complacent……………..
• In a world of “near zero tolerance” for any tanker accident
Tanker Industry & Market Fundamentals
Growth in leading operators – Preference of charterers ?
Frontline 15.1 m dwt 62 tankersTeekay 9.7 m dwt 88 ” (13 on order)Mitsui OSK 9.7 m dwt 62 ” (15 " )World-Wide 7.3 m dwt 28 ” ( 2 " )Kristen 5.5 m dwt 25 ” ( 3 " )Genmar 5.1 m dwt 42 ”Tsakos Group 4.9 m dwt 40 ” (15 " )Dynacom 4.8 m dwt 30 ” (11 " )AP Møller 3.8 m dwt 31 ” (18 " )Thenamaris 3.1 m dwt 31 ” ( 8 " )OMI 2.6 m dwt 33 DS-Schiffahrt 2.3 m dwt 24 ”Stelmar 2.1 m dwt 36 ” ( 5 " )BP 1.7 m dwt 24 ” (24 " )Brostrøm 1.4 m dwt 49 ” (18 " )
Major oil company fleets
0
10
20
30
40
50
60
1974 1978 1984 1990 1995 1997 1999 2002 2004 2005
Chevron/ Texaco
ExxonMobil
BPAmoco
Shell
Exxon
BP
Chevron
Texaco
Mobil
Amoco
dwt
Tanker supply
Accelerated phase-outFurther sales for demolitionIncreased contracting of new tonnageNew entrants (e.g. Chinese interests)Active shipbuilding programme may dampen tanker fleet expansionUSD 100 billion invested in oil tankers since 1995
Tanker phase out - m dwt
0
10
20
30
40
50
60
70
MARPOL*
EU
OPA90
Phase out year
Sales for decommissioning
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 03 04
Others/NN
Bangladesh
Pakistan
India
Taiwan
Korea
China
4.7 months
m dwt
Tanker deliveries - numbernumber
0
50
100
150
200
250
300
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
10-60,000 Panamax Aframax Suezmax VLCC
Tanker deliveries, demolition, phase out m dwt
-20
-15
-10
-5
0
5
10
15
20
25
30
35
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
MARPOL* 43.7
Demolition
Deliveries 79.2
Net change
EU phase-out 86.2 m dwt*subject to administrations
Tanker demand
OPEC increasing oil productionFSU increasing oil production USA increasing imports / rebuilding strategic stocksCHINA flat domestic oil production, increased imports
Crude oil price - Brent blend spot development 1999-2004
15.0017.5020.0022.5025.0027.5030.0032.5035.0037.50
02-J u
l
02-O
ct
02-J a
n02
-Apr02
-J ul
02-O
ct
02-J a
n02
-Apr02
-J ul
02-O
ct
02-J a
n02
-Apr02
-J ul
02-O
ct
02-J a
n02
-Apr02
-J ul
02-O
ct
02-J a
n02
-Apr
$/bb
l
Billion tonne-miles created by the transportation of one mbd
609
556
324
316
314
293
234
106
50
0 100 200 300 400 500 600
Ras Tanura-LOOP
Ras Tanura-Rotterdam
Ceyhan-LOOP
Ras Tanura-Rotterdam
Ras Tanura-China
Bonny-LOOP
Mongstad-LOOP
Puerto La Cruz-Houston
Mexico-Houston
bn tonne miles
via Cape
via Cape
via Suez
Seaborne oil trade
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002 P05
Mill
ion
tonn
es
Oil productsCrude oil
Source: Fearnleys
TANKER SEMINAR 2004
1. INTERTANKO Today2. Tanker industry
– performance and structure3. Issues and challenges4. Managing the issues5. Challenges ahead
Tanker Issues & Challenges
International versus Regional legislation
Maritime Regulatory Structures Liability and criminalisation Environmental concerns Security
Regional versus international developments
• Security – MTSA vs. ISPS• Liability – EU Penal Sanctions vs.
International Conventions• Safety & Environment – EU (Post Erika &
Prestige) vs. IMO/Marpol & SOLAS• Sulphur Levels – EU, USA vs. IMO
EU + US Agendas !
Maritime Regulatory Structures
Are they working ?• IMO• Flag administrations• Classification Societies• Port State Control
Others: P and I, commercial vetting
LIABILITY and CRIMINALISATION
Increasing liabilities of shipowners & others
Extended criminalisation
Penal Sanctions
led by politicians or by the public ?
Environmental Challenges
Anti-Foulings (Convention – consistent standards)
VOC Recovery (in port and at sea)
Sulphur Levels (in Fuel) / Air emissions
Ship Recycling (Voluntary vs. Regulatory)
Water Ballast Management (Practical solutions)
Security Challenges
• Visas (US and elsewhere)• Seafarer identity cards• ISPS deadline• Non-compliant ports• Security costs• Other………………………
• Links to Piracy and Armed Robbery ?
TANKER SEMINAR 2004
1. INTERTANKO Today2. Tanker industry
– performance and structure3. Issues and challenges4. Managing the issues5. Challenges ahead
Responsible parties working together......Responsible parties working together......
SHIPOWNER
SHIPYARDS
INSURERS
BANKS &INVESTORS
CARGO OWNER
CHARTERER
PORTS & TERMINALS
CLASSSOCIETIES
FLAG STATES
PARTNERSHIP:Working closely with regulators and legislators
Convention Ratification:• AFS Convention (2001)• Annex VI (Air Emissions) (1997)• HNS Convention (1996)• OPRC-HNS Protocol (2000)• Bunkers Convention (2001)
Places of Refuge
Reception Facilities
Port and infrastructure security
The same commitment from politicians and regulators ?
Annex VI – Success at last !
CONVENTION :MARPOL Annex VI: Prevention of Air Pollution from Ships (Sept. 1997)
RATIFIED BY :Bahamas, Bangladesh, Barbados, Denmark, Germany, Greece, Liberia, Marshall Islands, Norway, Panama, Singapore, Spain, Sweden, Vanuatuand now by Samoa
Places of RefugePlaces of RefugeA Solution Waiting to be ImplementedA Solution Waiting to be Implemented
Erika II Package – December 2000Erika II Package – December 2000
Requires Each Member State to Draw up Requires Each Member State to Draw up Emergency Plans for Hosting Ships in Emergency Plans for Hosting Ships in Distress in Places of RefugeDistress in Places of Refuge
PSC – an industry perspectiveSummary:
PSC is actively supported by industry More needs to be done to ensure harmonised standards Greater sharing of inspection records would be beneficial It is an imperative that the integrity of PSC is maintained Better targeting would result from additional analysis of PSC
records Important lessons can be learned by analysing PSC
performance Used as membership criteria by associations Used in assessments by charterers, insurers and others Support for EQUASIS
PSC Operational Issues – the shipowners’ perspective
Need to ensure:
Harmonised standards and training of inspectors
Better / more rational targeting
Consistency in grounds for detention, naming of charterer, appeals procedure, etc.
Development of rewards / incentives
Operational Issues in relation to PSC – the shipowners’ perspective
Ideas to ensure integrity of system:
Regular and open dialogue between responsible owners and PSC officials
Development of ”best practices” within PSC regimes, e.g. With leadership from Paris MoU
Appropriate mechansims for confidential feedback Reports back to IMO of PSC performance
PSC Operational Issues – the shipowners’ perspective
Need to ensure integrity of system:
”Overly enthusiastic” inspectors ”Selective” targeting ”Soft option or easy” targeting ”Malpractice”
- self interest or third party interest
BUT Not all owners are ”guilt free”
The
ROUND TABLE
of
international shipping associations
Examples of Round Table cooperation:
• Improved dialogue with IACS
• Tripartite meetings of owners, builders and class
• Flag State guidelines
• Industry guidelines on Recycling
• The “image” of shipping
Industry Leadership - Flag State Guidelines
Full Ahead with Partners ?Full Ahead with Partners ?
• Feedback mechanisms weak
• Openness and transparency doubted
SHIPOWNER
SHIPYARDS
INSURERS
TRAFFICMANAGEMENT
CARGO OWNER
CHARTERER
PORTS & TERMINALS
CLASSSOCIETIES
FLAG STATES
Examples of where we could do better:
• Tanker Structure Cooperative Forum• Industry guidelines and standards• IACS development of Requirements and
Procedures• Port and Terminal Reviews• Incident reporting and analysis, and casualty
investigations
Initiatives via Information Sharing
Impediments to information sharing:
• commercial competitiveness• legal liability• professional jealousy• lack of incentives
Information Sharing
TANKER SEMINAR 2004
1. INTERTANKO Today2. Tanker industry
– performance and structure3. Issues and challenges4. Managing the issues5. Challenges ahead
Challenges ahead
Zero tolerance – shipping “image”- managing environmental expectations
Establishing goal-based standards Implementing common rulesHuman element in design and operationMachinery reliabilityLiability – as means of punishmentFeedback mechanisms – accidents and
EWS
What are we responsible for ?
In addition to making money
Thank you
www.intertanko.com
2004 : DATES FOR THE DIARY
October 5-6 St Petersburg Mare Forum: “Russian Energy shipments”
October 27-28 AmsterdamExecutive Committee & Council
October 29 AmsterdamMare Forum: “ShipFinance 2004”(Free registration for Members)
Thank you
www.intertanko.com