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  1. INTERTANKOSeminar 8th April 2011

  2. INTERTANKO SeminarSchedule Friday 8th April 2011 0930 Welcome and introduction INTERTANKO Overview Vetting and Benchmarking Piracy Environmental Issues Regional Issues INTERTANKO Work Plan Open discussion on all issues 1200-1300 Lunch

  3. 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.

  4. Tanker Market Overview

  5. The state of the Tanker Industry • 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

  6. Tanker MarketWorld GDP and oil demand change % Oil/tanker demand correlates with Economic growth Positive growth projected – but there is still uncertainty Because the extra barrel is taken from the Middle east, tonne-miles growth is stronger Source. IMF/BP/IEA/Fearnleys

  7. Tanker MarketOil price and freight rates 1970-2011 $ per barrel

  8. Tanker MarketVLCC newbuilding prices and break even rates m $ $/day Based on LRFairplay

  9. Tanker Marketa fragmented industry VLCCs 550 Some 140 owners 7% Suezmaxes 420 Some 110 owners 10% 7% Aframaxes 890 Some 230 owners Based on LRFairplay

  10. Tanker DemandIncrease in world oil demand bn tonne-miles Based on Fearnleys

  11. Tanker DemandTanker trade bn tonne-miles Based on Fearnleys

  12. Tanker DemandSeaborne Oil Trade and Middle East Oil production mbd 000 bn tonne-miles • Asia 80% dependent on Middle East, Europe 18% and US 17% - some 15 mbd crude oil through Hormuz 2010 Based on Fearnleys/IEA

  13. Tanker DemandCrude oil seaborne trade 38 mbd in 2010 3057 bn tonne miles in 2010

  14. Tanker DemandOil balance: production - consumption mbd Source: INTERTANKO / IEA

  15. Tanker DemandMiddle East Oil production Jan - 2000 to Feb - 2011 mbd Based on Fearnleys/IEA

  16. Tanker DemandTrade movements mbd Based on BP

  17. Tanker SupplyTanker fleet development m dwt number Assumed max phase out, orderbook March 2009, include chemical tankers Tanker fleet increase 2003-2013 some 75%

  18. Tanker SupplyTanker phase out, deliveries, scrapping tankers 10,000 dwt+ balance assuming various demand increases m dwt

  19. ConclusionsOil demand, tonne-mile, and tanker fleet indices Tanker fleet increase 2002-2010: 46% Source: IEA, Fearnleys, INTERTANKO

  20. 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

  21. ConclusionsStrategic tanker consideration • China expected drive demand and the Middle East has the reserves • Successful Green House Gas reduction will mean reduced oil consumption • Market balance set to weaken the next couple of years • Costs reduction needs carful risk management

  22. ConclusionsAverage age tanker fleet above 10,000 dwt Years Based on LRFairplay

  23. Vetting Issues Update

  24. 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)

  25. 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.

  26. 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)

  27. Smart Vetting 4 • Vetting Committee objectives & updates: • INTERTANKO Guide for Engaging Independent Ship Inspectors: Raised with SIRE: Potential for greater usage of 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

  28. INTERTANKO Benchmarking and Databases

  29. Terminal Vetting Database (TVD) 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 record Who • 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 in partnership with INTERTANKO • Access is usually set up within one business day

  30. 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

  31. TMSA related • TMSA 2 Gap Analysis Document • TMSA 2 Benchmarking database • Guidance on Change management

  32. TMSALTIF AND TRCF Lost Time Frequency T. Rec. Case Frequency TRCF Pool Average: 3.23 Entries below pool average: (68%) LTIF Pool Average: 1.39 Entries below pool average: (65%)

  33. TMSACREW & OFFICER RETENTION Crew Retention Rate (Average 93.6%) Officer Retention Rate (Average 91.3%) Entries Entries

  34. 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

  35. VIQ Benchmarking(example output data) Intertanko Fleet Gas Average Intertanko Fleet Petroleum Average Intertanko Fleet Chemical Average Petroleum Chemical Gas

  36. 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

  37. 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

  38. Environmental Issues

  39. Environmental Issues • GHGs - Ship Energy Efficiency Management Plan • Mandatory application after MEPC 62 (July 2011) • Charterers already referencing SEEMP (IMT MESQAC) • Biofouling • Voluntary Guidelines to be adopted MEPC 62 • Ballast Water Management • ...!!

  40. Environmental IssuesBallast Water Management IMO BWM Convention • The BWM Convention will enter into force 12 months after ratification by 30 States, representing 35 per cent of world merchant shipping tonnage. • As at 2 March 2010: 21 countries representing 22.63% of world merchant shipping tonnage • Slowing of ratification, but... • Implementation dates still important due to retroactive application

  41. Environmental IssuesBallast Water Treatment IMO BWM Convention Summary of implementation dates: Ship constructed before 2009 BW 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 2009 BW 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 2012 with a BW capacity of greater than 5000m3 shall be constructed with a BW treatment system

  42. Environmental IssuesBallast Water Treatment Concern expressed over treatment systems to meet 2012 deadline INTERTANKO Environmental Committee & ISTEC need to find solutions to assist members and seek evidence that systems will work in practice

  43. Environmental IssuesBallast Water Treatment IMO BWM Convention • States continue to implement IMO Convention, e.g. Norway • Other States seek to go beyond IMO Convention, e.g. USA • Implementation issues arising: Ballast Water Record Book format • IMO list of Guidelines continues to be important but overlooked by operators:

  44. Regional Issues

  45. 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: