The Eighth City of London Biennial Meeting

INTERTANKO 2016

17th November 2016 IMO, London

Dr. Nikolas Tsakos

Leading the way; making a difference

MEMBERSHIP 2016

Leading the way; making a difference

INTERTANKO evolution

•1970 establishment of INTERTANKO in Oslo

1970s/1980s

INTERTANKO’s role mainly commercial. Protecting owners’ interests in the aftermath of the ‘73 – ‘79 oil crisis

1990s/2000s OPA 90

INTERTANKO primarily focused on technical, operational and regulatory issues following the “EXXON VALDEZ” incident and OPA90 implementation

2015/2016

INTERTANKO Members keep valued technical/operational/ regulatory work and add back focus on commercial issues and sustainabilty

2016

INTERTANKO represents more than two thirds of the independently-owned tanker fleet and gas fleet

Leading the way; making a difference

INTERTANKO 2016a GLOBAL association with Headquarters in London and representatives in all shipping hubs

a FORUM where Members meet to share information and best practice with each other and the wider industry. Close cooperation with oil companies through OCIMF quarterly meetings

an ADVISOR for Members providing guidance on issues affecting their interests both commercial and technical close cooperation with class IACS and flag states

the VOICE that speaks on behalf of and acts for independent tanker owners in the international fora. Active member in IMO close cooperation with ICS, BIMCO, INTERCARGO and Roundtable participants

INTERTANKO MEMBERS... Lead the continuous improvement of the tanker industry’s performance

Strive to achieve the goals of:

YES safe operationsYES quality service YES SUSTAINABLE RETURNS

NO casualtiesNO pollutionNO detentions

Safety Seafarers Environment OperationsCommercial

Sustainability

Tanker design/construction

- Enforcement of CSR- Classification standards

Machinery/ equipment- Lifesaving appliances- Classification standards

Fuel- Quality- Sampling- Switching operations- LNG, Biofuels- Alternate fuels

Cargo- Properties- Safe tank entry- Gas detection- Inert gas- Biofuels

Fair treatment - Criminalization- Shore access/visas- Medical treatment

Crew competence- Training requ’mnts

(ECDIS, BWM)- Tanker Officer

TrainingStandards (TOTS)

- Officer matrix

Seafarer welfare - Accomm’n. space - Cadet berths- Fatigue/rest hours

Emissions to water- Ballast water - Reception facilities& waste minimization- Hull fouling man’t

Emissions to air- SOX, NOX, VOC

MARPOL Annex VI - Greenhouse gas

emissions- Energy efficiency- Monitoring,

Reporting &Verification (MRV)

Ship Recycling

EPA VGP- Recordkeeping- Monitoring

Vetting & Risk Assessment

Ports- Port state control- Ports & Terminals- Offshore Ops

Maritime Security- Piracy- Sanctions

Safe navigation- ECDIS- Pilotage- eNavigation

Chemical tanker ops

Gas tanker ops

Refugees

Payment performance

Charter party terms &Documentation

Worldscale

Insurance- Compensation- Liability limits- Reinsurance

Anti-corruption

Main Focus Areas

Crude33%

Product16%

Chem/Oil29%

Chem.8%

LNG6%

LPG7%

Other1%

Membership Fleet 2016 - Tanker Types

2016 Membership

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Numbertankers

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66Members

41 Members21

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21 Members

48Members

INTERTANKO represents more than two thirds of the independently-owned tanker fleet

20th Annual General Meeting

Leading the way; making a difference

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Others

Singapore

Norway

Russia

Luxembourg

Malaysia

Bahamas

Cyprus

Switzerland

Hong Kong

Japan

Greece

Countries+ 5 m dwtin 2016included

m GT

INTERTANKO membership by reg. country

Leading the way; making a difference

North American Panel

Chairman: Oscar Pinto

Valles Steamship (Canada)Secretary : Joe Angelo

European Panel

Chairman: Dr. Stephan Polomsky

Claus-Peter OffenTankschffreederei

Secretary : Phil Belcher

Latin American Panel

Chairman: Carlos Juan Madinabieta

Tradewind TankersSecretary : Joe Angelo

Hellenic Mediterranean

PanelChairman:

Vasilis Bacolitsas, Sea Pioneer Shipping

Secretary : Bill Box

Asian PanelChairman:

Kenneth Koo

Valles Steamship

Secretary:

Tim Wilkins

5 Regional Panels

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MAKE TANKER RATESGREAT AGAIN

Future

Leading the way; making a difference

Virtual NB Delivery Center

KARAOKE

KARAOKE

APPENDICES

Round Table Topics for Coordination & Cooperation

Piracy

Greenhouse Gas Emissions

Ballast Water Management

Marpol Annex VI

Fair Treatment (& Criminalisation)

Places of Refuge

Reception Facilities

Corruption (& PSC)

Members working for Members

Leading the way; making a difference

INTERTANKO’s strength in its Committees:

Human Element in Shipping (best practices, safety cultures, competency-based training, holistic approach to human element in regulation)

ISTEC Safety & Technical (cooperation with tanker safety bodies, representation/intervention at IMO, advice, policy drafting)

Bunker Sub-Committee (guidance, protection, intervention, information)

Vetting (look after member interests with dialogue with PSC MoUs, OCIMF-SIRE/CDI, reduce multiple inspections, intervention when unfair observation/detention, promote recognition for owners’ programmes)

Environmental (developing proactive environmental policies at IMO and elsewhere, dialogue with green groups)

Gas Tanker (Promoting and protecting tanker owner interests, promote best practice, provide expertise)

Chemical Tanker (promote/protect interests of chemical tanker owners)

Insurance & Legal (further tanker owner interests re insurance/liabillity, resources for Council)

Commercial/Documentary/Worldscale/Chartering (chartering practice, freight/demurrage collection, slow erosion of c/p terms and clauses, dialogue with Worldscale)

Leading the way; making a difference

INTERTANKO 2016

New growth into gas tanker membership

•New focus back into commercial issues

Leading the way; making a difference

Gas - INTERTANKO and SIGTTO

INTERTANKO can address and provide support on commercial (charter party, documentary), vetting, human element, legal, claims, safety and operational issues affecting all aspects of gas tanker operations and chartering

INTERTANKO provides operational support and advice in real time (with a proven track record of excellent speed of response and responsiveness to Member’s issues, e.g. Chinese domestic ECA issue etc.)

INTERTANKO’s activities and advice are based on a community of tanker owner experts firmly focused on independent owners’ needs. Input and support also from our associate member community including energy company and terminal interests, class, flag etc, But tankers owners drive the agenda.

SIGTTO remains engaged in its original purpose: to specify and promote high standards and best practices among all industry members throughout the world, and hence to maintain confidence in the safety of the liquefied gas industries and maintain their acceptance, by society at large, as responsible industrial partners.

Leading the way; making a difference

Biggest technical issue facing gas tanker owners:

The new International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk (IGC Code).

INTERTANKO was part of these discussions during IMO’s recent Maritime Safety Committee (MSC) session (MSC 96).

• MSC 93 adopted amendments to the IGC Code by resolution MSC.370 (93). The amendments to the IGC Code entered into force 1.1.2016.

• At MSC 96, Norway proposed that the new IGC Code be re-examined to remove inconsistencies, omissions and ambiguous wording, to ensure a consistent implementation.

• Many delegates raised concerns and opposed Norway’s proposal. However, all agreed that there are inconsistencies and ambiguities that need to be addressed.

• MSC 96 agreed to refer the IGC Code to the Carriage of Cargoes and Containers (CCC) Committee and address any proposals, inconsistencies, and ambiguities through unified interpretations.

Leading the way; making a difference

Commercial issues

Commercial / documentary / chartering / Worldscale

• Members and OCIMF networking forum

• C/p terms/clauses (BPVoy 5 discussion with BP Shipping)

• Best commercial/chartering practices

• Worldscale issues

• Payment delays (PPS)

• Payment collection assistance (FDIP)

($3.5m pa collected for members)

• Sustainability

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NAVIGATING THE CYCLES

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BARRELS OF OIL PER CAPITA PER ANNUM(Source: BP Statistical Review of World Energy June 2015)

United States Japan EU Thailand China (incl. HK) India

Source: International Energy Agency, Oil Market Report & Clarkson Shipping Intelligence Network

Oil Price vs. Global Oil Demand (in mbpd)

Strong potential of China and India with a combined population of 2.5 billion in a world of 7.0 billion. Their per capita oil consumption is at extremely low levels and have already embarked on an aggressive industrialization program

If China reaches the same levels of consumption per capita as Thailand, Chinese oil demand (based on existing population) would rise to 18mbpd, an increase of 10mbpd from current levels

Non-OECD demand and in particular China and India remain the main drivers behind oil demand growth in 2016. China expected growth in 2016 +3.0% to 11.5mbpd. India expected growth for 2016 +5.8% to 4.2mbpd

Oil demand expected to remain positive in the non-OECD (forecasted up 2.4% from 2016) and slightly higher than 2015 in the OECD as the economic recovery continues (with US demand expected to grow by 100,000 pd when the rest of the OECD is expected to be flat year over year)

IEA expects oil demand to continue growing => 94.7mbpd in 2015, +1.8mbpd over 2014 and 95.9mbpd in 2016, +1.2mbpd over 2015

Crude oil tankers at strong levels and products following due to high global refinery utilization and strong refinery margins

Global activity continues to strengthen. IMF expects global GDP to grow to 3.1% in 2015 and 3.2% in 2016

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85.0

87.086.3

85.5

88.4 89.090.1

91.992.9

94.795.9

$65$72

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$79

$111 $111 $108

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E

Oil Demand Oil Price (Brent)

20th Annual General Meeting

Demand Positive L/T Outlook

Current >15yrs Current O/B 2016 2017 2018

Over 15yrs 782

VLCC 123 50 46 27

Suezmax 115 38 65 12

Aframax 163 54 70 39

Panamax 68 28 30 10

Handy/MRs 253 123 94 36

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Handy/MRs Panamax Aframax Suezmax VLCC

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Source: Clarkson Research Studies, Oil & Tanker Trades Outlook - 2016

Total Orderbook of 722 tankers (312 of which are Products or 43%) vs. 782 vessels (308 of which Products or 39%) in fleetover 15 years of age

58% of product tanker orderbook are MRs

In 2010 the tanker orderbook (vessels >30K dwt) was at 22.3%. In May 2016 it stood at 15.6%

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NB Delivery Schedule

Tanker Orderbook/Delivery Schedule vs. Fleet >15 years

Tanker Safety… the next chapter

Just launched:Joint Safety Initiative with OCIMF

• Human Factors/ behavioural safetyProcesses • Safety management systems• Risk Management• Training & CPDCulture (attitude/ wellness..)

• Learning from Incidentsreporting, sharing, analysing, learning lessons

• Misc (design & automation, port ops etc.)

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Low Oil Prices Boost For Demand, Seaborne Trade and Tanker Rates

Chinese Seaborne Oil Imports

YE 2013: 255mt

Chinese Seaborne Oil Imports

YE 2016E: 327mt

Source: Clarkson Research Studies, Oil & Tanker Trades Outlook

6.4% CAGR

109 110107

109 111114

105100

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5347 48 49

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Brent Oil Price 1YR TCE VLCC (Modern)

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Lower Bunker Prices Significantly Benefit Profitability

YE2015

$215

YE2013

$600

Note: Bunker averages from ports of Fujairah, Rotterdam, Houston and Singapore

Source: Clarkson Research Studies, Oil & Tanker Trades Outlook - March 2016

Bunkers: $0.9K

TCE: $41,000pd

Bunkers: $0.3K

TCE: $58,000pd

-64%

Typical Suezmax Roundtrip (West Africa / Philadelphia) at WS100

41%

$6 million benefit from lower bunker prices straight to the bottom line from just one vessel