Maritime Trades Department Executive Board Meeting

March 8-9, 2012

TANKER INDUSTRY OVERVIEW

JOSEPH ANGELOMANAGING DIRECTOR

INTERTANKO

WORKPLAN PRIORITIES

TANKER MARKET

TANKER INCIDENTS

CURRENT MAJOR ISSUES

INTERTANKO

INTERNATIONAL ASSOCIATION OF INDEPENDENT TANKER OWNERS

• Non-profit organization• Established in 1970• Voice of the independent tanker

owners

MEMBERSHIP

MEMBERSHIP is open to independent tanker owners and operators of oil and chemical tankers (i.e. non-oil companies and non-state controlled tanker owners) who meet the membership criteria.

ASSOCIATE MEMBERSHIP is available to any entity with an interest in the shipping of oil and chemicals.

INTERTANKO

MISSION Provide Leadershipto the Tanker Industry in serving the World

with the SAFE, ENVIRONMENTALLY SOUND AND EFFICIENT seaborne

transportation of oil, gasand chemical products

INTERTANKOPRIMARY GOAL

Lead the CONTINUOUS IMPROVEMENTof the Tanker Industry’s Performance in striving to achieve the Goals of:

• Zero Fatalities• Zero Pollution

• Zero Detentions

MEMBERSHIP

• 230+ Members• 3,200+ Tankers

• 280+ Million DWT• Members in 40+ countries

• MORE THAN 75% OF THE INDEPENDENT TANKER FLEET

• 330+ Associate Members

Graphs-Power-Membership.pptx

SECRETARIAT• 21 STAFF MEMBERS IN 4+ OFFICES

Oslo (8), London (11), Singapore (1)USA (1) + Brussels

• STAFF INCLUDES- Managing Director - Deputy Managing Director - Technical Director- Director, Regulatory Affairs- Marine Director - General Counsel

WORKPLAN PRIORITIESCORE PURPOSES

• Safety/Technical

• Seafarers

• Environment

• Marine Operations

• Regulatory/Legal

• Tanker Information

SEAFARERS• Criminalization• Crew competence• Shore access • Fair treatment of seafarers• Crew visas• Seafarer Id documents• Accommodation spaces• Cadet berthing• Fatigue• ILO/MLC 2006

TANKER MARKET• Deep concern that the current tanker market rates are

consistently below ship owners’ operating costs.

• INTERTANKO’s Chairman, Capt Graham Westgarth

“If these rate levels continue for a long period, this could lead to a situation where sustainability of the oil transportation industry is threatened.”

“Our Members operate tankers to the highest standards and will continue to do so. Operating for a prolonged period in an environment where tanker owners are not even covering their operating costs is obviously not a situation that can be maintained.”

TANKER MARKET

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

VLCC AG-Japan, 250,000 ts

Suezmax Wafr-US 130,000 ts

Aframax N Sea-UKCont, 80,000 ts

Product Caribs-US, 38,000 ts

$/day

TANKER SUPPLY19

92

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

275

329

383

437

491

545

3,300

3,920

4,540

5,160

5,780

6,400

dwt Number

numberm dwt

TANKER SUPPLY

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-25

-5

15

35

55

75

95Last phase out

Deletions

Delveries

Surplus zero trade growth

Surplus 2.5% trade growth

Surplus 4% trade growth

Surplus 6% trade growth

year

Assumed market balance end 2008

Minus 2% growth in 2009 and the above scenarios later

Assumed removal of double hull tankers

m dwt

Under above assumptions, 6% growth is necessary to regain same market balance in 2014 as in 2008

Tanker Incidents and accidental pollutionIncludes all tankers types and sizes

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

0

210

420

630

840

1050

0

120

240

360

480

600

Fire/Expl Miscellaneous

Hull & Machinery Grounded

Coll/Contact Oil pollution

No. of incidents ‘’000 tons pollution

Information based on reports from Lloyd's Maritime Iin-formation Unit and The International Tanker Owners Pollution Federation

MAJOR ISSUES

High level discussions with OCIMFPiracy*

Greenhouse gas emissionsBallast water management

Sustainability of the Tanker industryTanker Safety/Performance

PIRACY - Somalia• 2010 Statistics (IMB) - 219 attempted incidents

- 49 hijackings (21% of incidents)

• 2011 Statistics (IMB) - 237 attempted incidents- 28 hijackings (11% of incidents)

• 2012 Statistics (IMB) (As of Feb 29) - 26 attempted incidents

- 4 hijackings (15% of incidents)

PIRACY

INTERTANKO FOCUS• Actions members can take to

protect themselves

• Actions we want governments to take to protect our members

FOCUS AREAS - INDUSTRY

• Best Management Practices (BMP)

• Citadels

• Armed guards

BMP4

Three essential requirements that cannot be over emphasized:

• Register with MSCHOA

• Report to UKMTO

• Implement Self Protection Measures

CITADELSIndustry developed guidance on citadels• Describes the construction and use of a Citadel in order

to provide effective protection against determined intrusion

• Guidance does not recommend or endorse the use of a Citadel; aim to present the relevant facts to enable the Ship Owner/Operator to reach a reasoned conclusion as to whether or not to utilise a Citadel

• Guidance has been approved by NATO, EUNAFOR and CMF and is available on their web sites

ARMED GUARDSINTERTANKO position regarding the use of armed guards

• INTERTANKO believes it is the responsibility of the international navies to ensure the right of free passage on the high seas including the use of vessel protection detachments on merchant ships

• INTERTANKO does not advocate the arming ships' crews

• INTERTANKO believes that the use of private armed guards or private security forces onboard merchant ships has to be a matter for each individual owner or manager to assess as part of their own voyage risk assessment

ARMED GUARDSIMO Maritime Safety Committee• MSC.1/Circ.1405 – Interim Guidance to Shipowners,

Ship Operators and Ship Masters on the use of Privately Contracted Armed Security Personnel on Board Ships in the High Risk Area

• MSC.1/Circ.1406 – Interim Recommendations for Flag States regarding the use of Privately Contracted Armed Security Personnel on Board Ships in the High Risk Area

• MSC.1/Circ.1408 – Interim Recommendations for Port and Coastal States regarding the use of Privately Contracted Armed Security Personnel on Board Ships in the High Risk Area

FOCUS AREAS - GOVTS• Increased "Government Will" to eradicate

piracy off Somalia• Cease the use of mother ships• Increased prosecution of convicted pirates• Increased naval assets in the region• Increased public awareness to drive the

desired increase in "Government Will“• Action to address the root cause of piracy

ashore in Somalia

SOS CAMPAIGN• SaveOurSeafarers (SOS) campaign initiated by

INTERTANKO. Joined by BIMCO, ICS, ITF and INTERCARGO

• Contracted with PR firm to increase public, business and government awareness

• Phase One –

- Ad in Financial Times and World Street Journal- www.SaveOurSeafarers.com web site- Letters to UN SG, Heads of State and EU President- Interviews with press and news media- Press releases after incidents

SOS CAMPAIGN

• Phase Two –- Social media (Blog, Twitter, Facebook, etc)- Actively engage policy makers- Further ads, press releases and interviews- Seek high profile name to assist in cause

• Wider industry involvement, now includes support from 30 maritime associations/organizations

• Steering committee established to brainstorm ideas, prioritize work items and manage budget

• Phase Three - More focus on high level politicians

THANKYOU!!

WWW.INTERTANKO.COM