NORTH AMERICAN PANELNORTH AMERICAN PANEL April 27, 2010

INTERTANKO INTERTANKO OVERVIEW OVERVIEW

REPORTREPORTJOSEPH ANGELO

DEPUTY MANAGING DIRECTOR

MEMBERSHIP MEMBERSHIP

BUDGETBUDGET

SECRETARIATSECRETARIAT

COUNCIL ISSUESCOUNCIL ISSUES

EXCOM ISSUESEXCOM ISSUES

MEMBERSHIPMEMBERSHIP

• 250+ Members

• 3,000+ Tankers

• 260+ Million DWT• Members in 40+ countries

• MORE THAN 75MORE THAN 75%% OF THE OF THE INDEPENDENT TANKER FLEETINDEPENDENT TANKER FLEET

• 320+ Associate Members

MEMBERSHIPMEMBERSHIP

0

55

110

165

220

275

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0

500

1,000

1,500

2,000

2,500

3,000

3,500

No. members

m dwt

No. ships

Members/million dwt No. of tankers

BUDGETBUDGET

2008 2009 2010

(BUDGET)Total Operating Income (US$) 8,689,980 8,603,025 7,291,509

Total Operating Expenses (US$) 8,473,822 6,511,325 6,767,825

Operating Result 216,158 2,091,700 523,684

Non-operating Income/expenses -291,883 270,000 -25,000

Result for the Year -75,725 2,361,700 498,684

BUDGETBUDGET

• Reasons for large operating surplus for 2009 year end

- Virtual retention of all members in 2009- Disciplined control of discretionary expenditures (limiting of activities)- Expenditures benefiting from strong US dollar against British pound and Norwegian Kroner

• Membership fees for Members and Associate Members in 2010 to be reduced by 10%.

SECRETARIATSECRETARIAT

• 24 STAFF MEMBERS IN 4+ OFFICES

Oslo (12), London (10), Singapore (1)

USA (1) + Brussels, Manila (consultant)

• STAFF INCLUDES

- Managing Director

- Technical Director

- Director, Regulatory Affairs

- Marine and Chemical Director

- General Counsel

COUNCIL ISSUESCOUNCIL ISSUES

NEW LEADERSHIP

ORGANIZATION REVIEW

TANKER MARKET

CRIMINALIZATION OF SEAFARERS

FACILITATION PAYMENTS

PILOTS

NEW LEADERSHIPNEW LEADERSHIPCHAIRMAN – Graham Westgarth

Teekay Shipping (Canada)

VICE CHAIRMEN –

David Koo, Valles Shipping (Hong Kong)

Bengt Hermelin, SAMCO (Singapore)

Robert Johnston, OSG (USA)

FOUR NEW EXECUTIVE COMMITTEE MEMBERS, including

Carlos Juan Madinabeitia, Tradewinds (Venezuela)

ORGANIZATION REVIEWORGANIZATION REVIEW

Operational• Clarify priorities• Narrow scope• Reduce administrative burden• Improve communications• Reduce number of meetings• Subcommittees are of value, but there are too

many

Structural• Executive Committee role vs Council role is

unclear• Structure is heavy• Regional panel role is unclear

ORGANIZATION REVIEWORGANIZATION REVIEW

Council• Discusses and approves the key issues, policies and

priorities of INTERTANKO for the following year• Elects the Executive Committee• Approves the membership fees for the following year• Approves the accounts and auditor’s report

Executive Committee • Implements the strategy and priorities of

INTERTANKO, as directed by the Council, and the direction of the secretariat

• Establish working group to review priorities and scope of activities

ORGANIZATION REVIEWORGANIZATION REVIEW

Regional panels• Panel Chairman a member of the Executive Committee• Panel Chairmen, in conjunction with the regional

membership, to decide the appropriate arrangements and frequency of meetings for maximum effectiveness

Committees• Decide frequency of meetings based upon workload

Secretariat• Develop improved communications through web site

and other available means• Reduce administrative workload

World GDP and oil demand change

Source. IMF/BP/IEA/Fearnleys

-3

-1

1

3

5

7

9

11

19

87

19

88

19

89

19

90

19

91

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

GDP growth - IMF

Oil demand growth - IEA

Tonne miles growth - Fearnleys

%

Oil/tanker demand correlates with Economic growthPositive growth projected – but there is still uncertainty

Tanker deliveries, removal, phase out

m dwt

YearGrowth in tanker fleet since 2000The fleet will continue to grow even if all SH tankers are

phased out(Delays in deliveries must be anticipated)

-35

-25

-15

-5

5

15

25

35

45

55

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Deliveries

Phase out

Conversion

Demolition

Deliveries - deletions = fleet increase

Tanker fleet development(Assumed max phase out, orderbook March 2009, include chemical tankers)

Tanker fleet increase 2003-2012: 70%

m dwt number

290

339

388

437

486

535

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

3,300

3,920

4,540

5,160

5,780

6,400

dwt

number

Oil demand, tonne-mile, tanker fleet indices

Source: IEA, Fearnleys, INTERTANKO

Tanker fleet increase 2002-2010: 46%

95

100

105

110

115

120

125

130

135

140

145

150

155

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

Oil demand index

Tonne miles crude tanker index

Tanker fleet index

Tankers used for floating storage

Source: EA Gibson

Number

17

61

12

42

Tankers tied up in storage has saved the marketand may be major wild card in 2010

0

20

40

60

80

100

120

140

Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

LR1/Panamax

LR2/Aframax

Suezmax

VLCCs

Source: E.A. Gibson

Chinese oil import

China will be the most important market for tankers

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Products

Crude

Source: BP Review/IEA

mbd

CRIMINALIZATIONCRIMINALIZATION

• Criminalization of seafarers- “Prestige”- Spain- “Hebei Spirit” (South Korea)- “Tosa” case (NYK VLCC – Taiwan)- “Full City” (COSCO Bulk carrier – Southern Norway)

• Industry-wide support for adherence to the IMO-ILO Guidelines on the Fair Treatment of Seafarers in the event of a Maritime Accident

• Council agreed that INTERTANKO- needs a strategy on the issue of criminalisation of seafarers as a base for its future work- develop a position paper for use in discussion with governments and others based on factual examples

FACILITATION PAYMENTSFACILITATION PAYMENTS

• Facilitation Payments are frequently made to Authorities, Pilots, Terminal Officials, Inspectors, and more for “smooth” trade

• However, Shipowners are expected to warrant that no bribes (and in some cases also no facilitation payments) will be paid during the performance of the contract and that owners are obliged to indemnify charterers from all consequences if any such payments are made.

FACILITATION PAYMENTSFACILITATION PAYMENTS• Raise the issue with OCIMF, Round Table partners and

Governments, as applicable

• Members are encouraged to report incidents to INTERTANKO

• INTERTANKO Documentation Committee is developing model clauses, e.g. for Voyage Charters:….. any waiting time caused by the owners refusal to pay a facilitation payment or bribe shall count as laytime or if on demurrage time on demurrage, even if the vessel formally lacks any local certificates, clearances or there are any other  … circumstances or formalities that ordinarily could prevent laytime from starting, if the reason the owners do not have such approval etc. is because owner has refused a facilitation payment or bribe.

PILOTSPILOTS

• Discussion Group meetings with the leadership of the International Maritime Pilots Association (IMPA) and the American Pilots Association (APA)

• Aim is to improve maritime safety and to explore areas for future cooperation with pilot groups

• Issues have included bridge resource management, criminalisation of seafarers, maritime casualties, engine failures and pilot safety when embarking

• Meetings have been very successful in gaining trust

• IMPA/APA President proposed joint signing of Memorandum of Agreements (MOAs) to formalize relationship

• Council has authorized Chairman to sign MOAs

Pilotage in the Straits of Malacca

Consideration of voluntary pilotage for laden VLCCs through-out Malacca and Singapore Strait transits

Developments:• Indonesia leading littoral states in new pilotage requirements (voluntary)

• Littoral states studying pilotage needs as well as carrying capacity in Straits

Considerations:• Availability of qualified pilots (marine advisors) – PSA Class A1 only?

• Charterers support : Chevron, Exxon and Total already suggest/request

• Possibility for littoral states to make mandatory and increase pilotage dues

• above has implications for other parts of the world

• Why limited to only laden VLCCs? What of smaller tankers or other ship types?

EXCOM ISSUESEXCOM ISSUES

GREENHOUSE GAS EMISSIONSPIRACY

US POLICY ISSUESEU ISSUES

WORKPLAN PRIORITY REVIEWCHINESE MARINE POLLUTION REGS

CONDITIONS OF CLASSMERCURY IN CRUDE OILS

IMO YEAR OF THE SEAFARERFDIP

China Oil Pollution Regs

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

• 1st March 2010• Any ship-induced pollution accident or any ship-related operation that causes or may

cause pollution damage to the internal waters, territorial seas, and the contiguous zones, exclusive economic zones and continental shelves of the PRC and all other sea areas under the jurisdiction of the PRC

• Need for ship emergency response plans• All ships, except those of less than 1,000gt and not carrying oil cargoes, must carry

insurance to cover claims for pollution• The limit of liability is that in the PRC Maritime Code (LLMC 76). • The insurance must be provided by an entity approved by the China MSA • The operators of any ships carrying bulk hazardous and pollutant liquid cargo shall

contract with an MSA approved local clean-up contractor• It would seem that there this no limit of liability PRC Maritime Code (LLMC 76) • Receivers of persistent oil cargoes are required to contribute to the PRC Fund, which

would compensate for ship-induced pollution claims that are in excess of CLC limits.• Provisions for discharge and receipt of waste (port reception facilities)

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

INTERTANKO Observations and Queries

1. Not certain whether CLC 92 for persistent oil or Bunker Convention 2001 for ships over 1,000gt would suffice in terms of insurance

2. Entities approved by the China MSA to provide insurance cover – P&I?

3. Require a list of approved clean-up contractors asap so companies can begin establishing contracts by the 1st March deadline

4. Although China is not a party to the Fund, contributions to a PRC Fund would seem to be a local variation on the CLC Fund principle

5. Assumed that SOPEP and SMPEP would suffice as the ship emergency plans

6. Not clear whether standardised advance notification forms and waste delivery receipts for port waste reception facilities will be used

7. Await an official english translation and further guidance

8. IG P&I clubs state delay for 3 months – no official proof/evidence received

China Oil Pollution Regs

FDIPFDIP

Freight and Demurrage Information Pool

• Helps members with demurrage and other claims against charterers which are not dealt with on a timely basis

• On average, takes only 30 days from reporting a claim to the FDIP before payment is received

• Last year the FDIP assisted in the settlement of claims totalling over USD 5 million

• Annual fee is USD 1440 for entire fleet no matter how many claims are chased

• For further information contact Michele White (michele.white@intertanko.com)

THANKTHANKYOU!!YOU!!

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