Latin American Panel October 31, 2012

Leading the way; making a difference

Latin American Panel October 31, 2012

INTERTANKO OVERVIEW

REPORTJOSEPH ANGELO

DEPUTY MANAGING DIRECTOR


MEMBERSHIPBUDGET

SECRETARIATCURRENT MAJOR ISSUES

TANKER INCIDENTSANNUAL TANKER EVENT


MEMBERSHIP230+ Members

3,200+ Tankers

280+ Million DWTMembers in 40+ countries

MORE THAN 75% OF THE INDEPENDENT TANKER FLEET

330+ Associate Members


m dwt/number members number ships

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0

58

116

174

232

290

0

680

1,360

2,040

2,720

3,400No. members m dwt No. ships


BUDGET 2010 2011 2012 (Actual) (Actual) (Budget)

Total Operating Income (US$) 7,381,600 7,753,228 7,401,925

Total Operating Expenses (US$) 7,062,856 6,886,593 7,373,997

Operating Result 318,744 866,635 27,928

Non-operating Income/expenses -21,179 88,303 -25,000

Result for Year 297,565 954,938 2,928


SECRETARIAT21 STAFF MEMBERS IN 4+ OFFICES Oslo (8), London (11), Singapore (1), USA (1) + Brussels

STAFF INCLUDES- Managing Director - Deputy Managing Director & Director of Regulatory Affairs- Technical Director (+ new Technical Manager in London)- Marine Director- General Counsel


CURRENT MAJOR ISSUES

SustainabilityFive-Year Strategic Plan

Ballast water managementPiracy

Greenhouse gas emissionsHigh level discussions with OCIMF


SustainabilityDeep 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.”


Click to edit Master title styleTANKER 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



Click to edit Master title styleTANKER 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


SustainabilityINTERTANKO Council (Nov 2011) agreed that the Secretariat should:1. Engage in a dialogue with OCIMF on the ship’s speed which is currently used in charter party agreements, in an effort to reduce air emissions.2. Engage with stakeholders to brainstorm ways to address the concerns while ensuring there is not an erosion of the safety/quality standards in the current market conditions.


INTERTANKO Council (May 2012) agreed to: 1. development of an optimal speed model to show the relationship between the time charter equivalent earnings and CO2 emissions, based on a known freight rate for a specific route and different tanker speeds. 2. expand scope of the WorldScale Committee to include commercial issues that have an impact on tanker operations, including:

• proper promotion of speed optimization• rising fuel costs• broker’s fees• certain charter party clauses regarding purging

and cargo heating; and • possible decoupling the fuel costs from the

commercial transactions.


TC equivalent and emission at various speeds

$/day

7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 17.00

8,000

16,000

24,000

32,000

40,000

0

3,000

6,000

9,000

12,000

15,000

CO2 emission

TCE Laden

TCE Ballast

Speed

Assumed market $12,000 per day bunker price $600 per tonne

Tonnes CO2 emisson


EXCOM (Sept 2012):• acknowledged tanker owners contributed to the problems

by over-ordering;• agreed that current market levels could actually endanger

the supply chain element of safe, sustainable transportation of oil, products and chemicals;

• agreed that INTERTANKO should explore mechanisms to redress the risk/reward balance for owners with a view of ensuring future sustainability of the industry as a whole and a transparent, balanced and functioning tanker market; and

• focus will be on engagement with all stakeholders, including brokers, charterers and oil companies


Five-Year Strategic Plan• Scenario planning looking at macro environment

and influences• Key influences:

Market conditionsGeo-political situation worldwideEnvironmental concerns• Most likely scenario for the next five years –

Strong environmental concerns within an unstable geopolitical situation


Five-Year Strategic PlanMajor Issues• Sustainability • Human Element • Tanker safety and performance• Greenhouse Gas Emission reduction• Air emissions reduction• Ballast water management • Maritime security threats


Five-Year Strategic PlanDesired OutcomesSustainability• Members have access to tools, models and

information to enable them to continue operating

Tanker Safety & Performance• Members proactively positioned for top

performance with regard to safety & performance


Five-Year Strategic PlanDesired OutcomesHuman Element • Criminalization of seafarers• Visas and shore access• Seafarer welfare and fair treatment• Competence• Availability


Five-Year Strategic PlanGreenhouse Gas Emission Reduction• Members’ new tankers meet, preferably exceed,

required EEDI values and CO2 emission reductions targets

• Development of solid industry practices and a monitoring system relevant to GHG emission reductions from tankers in operation, in cooperation with other stakeholders such as OCIMF, allowing Members’ tanker fleets to achieve & demonstrate increases in efficiency

• While legislation on MBMs is not justified at this time, if it were to be implemented, the Association will support/ promote the most practical and transparent MBM alternative at IMO, but not at regional level


Five-Year Strategic PlanDesired outcomesAir Emission Reduction• Promote global switch to MGO• Members fully advised on best choices for compliance

with ECA requirements (and on how to assess/select scrubbers)

• Revised EU Sulphur Directive aligned w/MARPOL

Ballast Water Management• Members able to achieve compliance with current and

future discharge standards (both regionally and internationally)


Five-Year Strategic PlanDesired outcomesGlobal Maritime Security Threats• Members suitably informed to protect vessels

and crew from maritime security threats• Key stakeholders develop policies and positions

benefiting the whole industry to ensure freedom of navigation

• Members suitably informed of sanctions that affect their trading patterns to enable them to make informed decisions on lawful trade


Greenhouse gas emissionsEnergy Efficiency Design Index (EEDI)• Amendments to the MARPOL Convention • Enter into force Jan 1, 2013 for new ships• Provisions for 4 year waiver• Method of compliance??

Ship Energy Efficiency Management Plan (SEEMP)

• Applies to new and existing ships• Ship-specific plan developed by the ship owner• INTERTANKO guide on Tanker EEMP


Greenhouse gas emissionsINTERTANKO policy on implementation of IMO Energy Efficiency Design Index (EEDI) requirements:• 4 year waiver – Apply equally to all new ships• Method of compliance – Improved hull

design, propulsion efficiency and energy optimisation, rather than predominantly on reduced speed designs


Greenhouse gas emissionsMarket Based Measures (MBMs)• Governments believe EEDI is not enough• Nine proposals under consideration at IMO• Fund, Emission Trading Scheme (ETS),

Efficiency incentive scheme

INTERTANKO Policy on MBMs• MBMs are not justified at this time• If an MBM should be required:

1. Fund is simplest and most transparent2. Not in favor of an ETS


High level discussions with OCIMF• Greenhouse gas emissions

• Piracy – Armed guards

• Tanker officer competency and experience

• Vetting matters

• Mercury in crude oil, safety aspects

• Sustainability of the Tanker industry


Source: INTERTANKO, based on incident reports from LMIU and pollution figures from ITOPF

Tanker incidents - all tanker types and sizes

Number incidents 1,000 ts oil spilt

Accidental oil pollution from tankers was record low in 2010 and again in 2011

1978

19

80

1982

19

84

1986

19

88

1990

19

92

1994

19

96

1998

20

00

2002

20

04

2006

20

08

2010

20

12

0

210

420

630

840

1050

0

120

240

360

480

600

Miscellaneous Fire/Expl

Hull & Machinery Grounded

Coll/Contact Oil pollution

Information is based on reports from Lloyd's Mar-itime Information Unit and The International Tanker Owners Pollution Federation2012 is a projection based on 228 days


ANNUAL TANKER EVENT

Venue – Grand Hotel, Oslo, Norway

Dates – May 28 – 31, 2013

Events: Executive Committee MeetingCouncil Dinner and MeetingAnnual General MeetingGala DinnerTanker SeminarWorkshops


THANKYOU!!WWW.INTERTANKO.COM

Documents

Latin American Panel October 31, 2012