Welcome to

INTERTANKO Members’ Seminar

Seoul6th April 2011

INTERTANKO Korean Members Seminar Schedule

Wednesday 6th April 2011

0930 Welcome and introductionDr. Whang, SK Shipping

INTERTANKO Overview

Vetting and Benchmarking

Piracy

Environmental Issues

Regional Issues

INTERTANKO Work Plan

Open discussion on all issues

1200-1300 Lunch

Anti-Trust/Competition Law Compliance Statement

INTERTANKO’s policy is to be firmly committed to maintaining a fair and competitive environment in the world tanker trade, and to adhering to all

applicable laws which regulate INTERTANKO’s and its members’ activities in these markets. These laws include the anti-trust/competition laws which the

United States, the European Union and many nations of the world have adopted to preserve the free enterprise system, promote competition and protect the public from monopolistic and other restrictive trade practices.

INTERTANKO’s activities will be conducted in compliance with its Anti-trust/Competition Law Guidelines.

Asian Panel and Member Seminars

2011

April

Seoul Members Seminar

Dalian Member In-house Seminar

Shanghai Member In-house Seminar

Singapore Asian Panel Meeting

Hong Kong Members Seminar

May

Athens Annual General Meeting

Vetting Issues Update

Smart Vetting 1

• Vetting Committee objectives & updates:– The One Stop Shop Concept / Terminal Acceptance: We

have raised the concept of formation of a common marine assurance “system” (not methodology), which would be accessible and useable by each party concerned in the screening process.

– Advising of Non Acceptance: We have raised the issue regarding provision of information to owners to enable them to address what may be identified as outstanding in a prompt manner.

– Conditions of Class: - Transparency to report or not to report? Major survey of members 53% response validating concerns (submitted to OCIMF GPC discussions)

Smart Vetting 2

• Vetting Committee objectives & updates:

– Reward Systems to Reduce Inspections: Exploration of establishing further reward systems to benefit good owners.

– Linking TMSA and the VIQ: Gap analysis undertaken by the vetting committee: Potential benefits from linking TMSA with the VIQ could result in a further shift to more self assessment.

– SIRE/CDI HVIQ: We have requested SIRE to re-assess the possibilities of harmonising the SIRE & CDI VIQ into a harmonised VIQ.

Smart Vetting 3

• Vetting Committee objectives & updates:

– Officer Matrix Requirements: SIRE and CDI have advised that they are planning to seek information from owners regarding officer training systems in their respective forthcoming revised VIQ’s

– Port State Use of SIRE & CDI reports: We are reviewing the development of systems to increase the current low usage of SIRE and CDI reports by the Port State Control Authorities (Reduce the number of inspections and better target sub-standard ship)

Smart Vetting 4

• Vetting Committee objectives & updates:

– INTERTANKO Guide for Engaging Independent Ship Inspectors: Raised with SIRE: Potential for greater usage of our standard set of guidelines when engaging independent ship inspectors,

– Reporting to Oil/Chemical Companies: We have investigated and provided information to members regarding advice pertaining to “discoverability” in association with reporting incidents to oil and chemical companies and we are in discussion with OCIMF on this subject.

INTERTANKO Benchmarking and Databases

Quick recap...What• Terminal Vetting

– Tankers are vetted but are sometimes asked to make fast to poor quality berths

– The vetting process works for ships, so why not for terminals?Why• enhance safety at the terminals• improve member efficiency by influencing terminals to ‘fix’ problems• maintain industry safety recordWho• Access to the system is controlled by INTERTANKO and was strictly limited to

INTERTANKO Members and Associate Members • As of 2010, access granted to all interested parties• The Terminal Vetting Database is hosted by www.Q88.com in partnership with

INTERTANKO• Access is usually set up within one business day

Terminal Vetting Database (TVD)

Terminal Vetting Database (TVD) – latest statistics

Stats for past 12 months:

# reports submitted: 3843

# berths covered: 1792

# reports with low rating: 350

 

Question containing low ratings:• Condition Apron/Fenders/Dock 82• Accessibility/Communication 76• English Skills 67• Safety Awareness 60• Bollard condition 59• Tug Performance/Condition 44• Condition Chicksans/Hose 42• Dock Lighting 42• Pre-transfer Conference 40• Emergency Preparedness 37• Courtesy 31• Surveyor Safety Awareness 29

TMSA related

• TMSA 2 Gap Analysis Documenthttp://www.intertanko.com/templates/intertanko/issue.aspx?id=44647

• TMSA 2 Benchmarking database http://www.intertanko.com/templates/Page.aspx?id=46718

• Guidance on Change management http://www.intertanko.com/templates/intertanko/issue.aspx?id=41452

TMSALTIF AND TRCF

0

2

4

6

8

10

12

14

16

Entries

02468

101214161820

Entries

T. Rec. Case FrequencyLost Time Frequency

LTIF Pool Average: 1.39 Entries below pool average: (65%)

TRCF Pool Average: 3.23 Entries below pool average:

(68%)

TMSACREW & OFFICER RETENTION

0

10

20

30

40

50

60

70

80

90

100

Entries0

10

20

30

40

50

60

70

80

90

100

Crew Retention Rate (Average 93.6%)

Officer Retention Rate (Average 91.3%)

Entries

VIQ Benchmarking

• Traffic Light System, incorporating either Red or Green, to indicate if the number of SIRE VIQ observations for your fleet are either above or below the number of SIRE VIQ observations for the collective of the INTERTANKO fleet.

Red = above INTERTANKO fleet average

Green = below INTERTANKO fleet average

• Fleet Average Deficiency:

"Total number of deficiencies per SIRE VIQ chapter, divided by Total number of inspections“

• 12 month rolling period• Confidential

http://www.intertanko.com/templates/intertanko/issue.aspx?id=47207

VIQ Benchmarking(example output data)

SIRE Chapters

Certification & Documentation 0.5   0.5 0.62 0.5 0.27

Crew management 0.5   0.5 0.33 0.3 0.43

Navigation 0.5   0.5 0.8 0.56 0.84

Safety Management 0.5   0.5 1.49 1.23 0.91

Pollution Prevention 0.5   0.5 0.68 0.67 0.44

Structural Condition 0.5   0.5 0.06 0.17 0.25

Cargo & Ballast System Petroleum 0.5     1.03 0 0

Cargo & Ballast System Chemical       0 0.71 0

Cargo & Ballast System Gas     0.5 0 0 0.84

Mooring 0.5   0.5 0.78 0.56 0.41

Communications 0.5   0.5 0.14 0.24 0.29

Engine & Steering Compartments 0.5   0.5 1.05 1.05 0.88

General Appearance & Condition 0.5   0.5 0.44 0.51 0.36

Petroleum Chemical GasIntertanko Fleet

Petroleum Average Intertanko Fleet

Chemical Average Intertanko FleetGas Average

Confidential Accident Reporting Platform

CARP database provides a simple functionality allowing the quick & easy updating of accident data.

Enable members to input their own incident data in a fully confidential basis whilst allowing INTERTANKO to use the information entered so that:

• Lessons can be learned and shared.• Similar accidents prevented.• Standardise accident data and categorisation.• Standardise simple accident analysis, root cause, direct

cause and corrective actions.

Platform Now Available http://www.intertanko.com/templates/Page.aspx?id=47899

VIFF and PSCIFF

• “Vetting Inspection Feedback Forms” (VIFF) – meets SIRE Inspector Compliance Requirements– Launched May 2010

• “PSC Inspection Feedback Form” (PSCIFF)– meets IMO PSCO code of conduct guidelines– Launched October 2010

Both provide a means of confidential feedback to INTERTANKO which can then be shared, confidentially,

with SIRE or relevant Port State MoU

Environmental Issues

Environmental Issues

1. GHGs - Ship Energy Efficiency Management Plan• Mandatory application after MEPC 62 (July 2011)

• Charterers already referencing SEEMP (IMT MESQAC)

2. Biofouling• Voluntary Guidelines to be adopted MEPC 62

3. Ballast Water Management• ...!!

IMO Legislative Status• The BWM Convention will enter into force 12

months after ratification by 30 States, representing 35 per cent of world merchant shipping tonnage.

• Currently 27 countries representing 25.32% of world merchant shipping tonnage

• Implementation dates still important...

Environmental IssuesBallast water management

Entry into force Summary of implementation dates:

Ship constructed before 2009BW capacity 1500-5000m3 – have treatment system from first intermediate or renewal survey after anniversary date in 2014

BW capacity less than 1500m3 and greater than 5000m3 – have to have treatment system from first intermediate or renewal survey after anniversary date in 2016

Ship constructed in or after 2009BW capacity less than 5000m3 shall have a treatment system installed at its second annual survey and no later than 31/12/2011

Ship constructed after 2009 but before 2012 and with a BW capacity greater than 5000m3 shall have a treatment system from first intermediate or renewal survey after anniversary date in 2016

Ship constructed in or after 2012with a BW capacity of greater than 5000m3 shall be constructed with a BW treatment system

Environmental IssuesBallast water management

The Challenges:

• Compliant systems for the Convention and regional legislation (i.e. USA - NY, CA x100 to x1000 beyond IMO)

– Owner compliance with US or IMO standards

• Installation of treatment systems on a large scale– IMO Review:

• Installation realities – capability of industry to install systems in time frame (2012-2016, ~50,000 ships)

• Contract realities – how many owners planning to install systems (INTERTANKO member survey)

• Sampling and testing – what will happen after installation?

Environmental IssuesBallast water management

Environmental IssuesBallast Water Treatment

Concern expressed over treatment systems to meet 2012 deadline

INTERTANKO Environmental Committee & ISTEC

Questionnaire:

1. Policy – who and how many systems?

2. Practicality – installing and using BWT systems

INTERTANKO Ballast Water Treatment Systems Guide

Regional Issues

Regional IssuesChina Oil Pollution Regulations

Regulations on the Prevention and Control of Ship-Induced Pollution of the Marine Environment

• Latest requirements effective 1st February 2011• Relating to discharge of ship and cargo generated wastes

as well as the use of port reception facilities– Compulsory Discharge (as per European Directive – no

exemption?)– Pollutant receiving certificate required before ship is allowed to

clear port– Administration:

Regional IssuesChina Oil Pollution Regulations

Regulations on the Prevention and Control of Ship-Induced Pollution of the Marine Environment

• Administration:

• For International vessels, all waste to be discharged prior to port clearance and PRC from MSA shown to port authority

PRF / Ship Agreement

PRF Obtain Permit of Operation from MSA

PRF provides Ship with PRD – signed by Master

Prior to Waste Discharge

After Waste Discharge

Ship applies MSA PRC using PRD

Regulations on the Prevention and Control of Ship-Induced Pollution of the Marine Environment

INTERTANKO Observations and Queries• Does the ship operator have to gain a Pollution Receiving

Certificate each time the ship leaves port or on a periodic basis (annually)?

• Does the contract have to be with one reception facility (contractor) or can it be more than one?

• What are the limits of fees?

• Is there a threshold at which compulsory discharge does not apply? e.g. if waste quantities minimal as per EU Directive?

Regional IssuesChina Oil Pollution Regulations

• Precautions for vessels trading into Japan ports?

– Information gathering on radiation levels

– Crew protection and precautions?

– Equipment required?

– Ship/port interface?

• Inspections and analysis by ports after vessel has traded to a Japanese port?

– Which ports?

– What level of radiation is being deemed abnormal?

Regional IssuesJapan Earthquake and Tsunami

thank you

For more information please visit www.intertanko.com

tim.wilkins@intertanko.com

Tanker Market Overview

• Uncertainty, fundamentals still strong but high oil price a threat

• Slack in supply of tankers– slow steaming (ballast)– Lowering of C/P speed– Suez Canal less used– Piracy effect – longer routes/inefficiency

• Reduced Libyan export, increased Middle East export

The state of the Tanker Industry

Tanker DemandIncrease in world oil demand

Based on FearnleysBased on Fearnleys

bn tonne-miles

-2.6

-2.2

-1.8

-1.4

-1.0

-0.6

-0.2

0.2

0.6

1.0

1.4

1.8

2.2

2.6

3.0

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

* *Rest of world*Middle EastUSAChinaWorld

Tanker DemandTanker trade

Based on FearnleysBased on Fearnleys

bn tonne-miles

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

1970s 1980s 1990s EST00s

-38%

+36%

+20%

Tanker DemandSeaborne Oil Trade and Middle East Oil production

Based on Fearnleys/IEABased on Fearnleys/IEA

mbd 000 bn tonne-miles

9

12

15

18

21

24

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

4,000

5,800

7,600

9,400

11,200

13,000

Middle East Oil Prod mbd

Tonne miles

•Asia 80% dependent on Middle East, Europe 18% and US 17% - some 15 mbd crude oil through Hormuz 2010

Tanker SupplyTanker fleet development

Tanker fleet increase 2003-2013 some 75%

m dwt number

275

329

383

437

491

545

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

3,300

3,920

4,540

5,160

5,780

6,400

dwtNumber

Assumed max phase out, orderbook March 2009, include chemical tankers

Tanker SupplyTanker phase out, deliveries, scrapping tankers 10,000 dwt

+ balance assuming various demand increasesm dwtm dwt

-25

-5

15

35

55

75

95

-02 03 04 05 06 07 08 09 10 11 12 13 14 15

Max phase out

Deletions

Delveries

Surplus zerotrade grow thSurplus 2.5%trade grow thSurplus 4%trade grow thSurplus 6%trade grow th

year

Assumed market balance end 2008

Minus 2% growth in 2009 and the above scenarios later

Assumed removal of double hull tankers

Conclusions

• Despite disruptions, fundamentals still strong, but ….

• The dust has not settled neither from the financial crises nor the Japanese earthquake/tsunami, and the Arab insurgency continuous

• Tanker deliveries high next two years and the fleet is young

thank you

For more information please visit www.intertanko.com

tim.wilkins@intertanko.com