LATIN AMERICAN PANEL

PANAMA8-9 February 2007

Peter M. Swift

ISSUES OVERVIEW

AGENDA:

• Fleet developments - Oil and Chemical fleets- Incident record (2006)

• EU Issues- Ship Source Pollution Directive (Status report) - Maritime Safety Package III- Green paper on future maritime policy for the EU- EU Competition Rules

• US Issues- California Air Resources Board Air Emission Standards- Massachusetts lawsuit- Lawsuit on Ballast Water discharges

• Panama Canal Expansion & Toll increases

• Other issues- IACS Early Warning System- ISGOTT revision - Port State Control / EQUASIS data analysis- Human Element in Shipping Committee- INTERTANKO Databases and Benchmarking systems

• 2007 Annual Meeting and Tanker Event

Tanker fleet developmentm dwtm dwt

0

92

184

276

368

460

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 P07 P08 P090

1,040

2,080

3,120

4,160

5,200

dwt

number

NoNo

Assumptions for period until 2009:Scheduled phase out for the period: 15.5 m dwt including 4.2 m dwt that should already have been phased out earlier than 2007Assumed removals 2007 – 2009: 29 m dwt (including conversion + other demolition)

Record ordering - despite high prices (mdwt)

20

40

60

80

100

120

Dec-9

2

Jun-9

3

Dec-9

3

Jun-9

4

Dec-9

4

Jun-9

5

Dec-9

5

Jun-9

6

Dec-9

6

Jun-9

7

Dec-9

7

Jun-9

8

Dec-9

8

Jun-9

9

Dec-9

9

Jun-0

0

Dec-0

0

Jun-0

1

Dec-0

1

Jun-0

2

Dec-0

2

Jun-0

3

Dec-0

3

Jun-0

4

Dec-0

4

Jun-0

5

Dec-0

5

Jun-0

6

Dec-0

6

95/105,000 dwt

150,000 dwt

280,000 dwt

40/45,000 dwt

Source: Fearnleys

0

10

20

30

40

50

60

70

80

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Handy

Chem/Spec)

Panamaxes

Aframaxes

Suezmaxes

VLCCs

1993 and earlier sizes except

VLCCs were defined differently

Demolition: slowed in recent years(mdwt)

0

4

8

12

16

20

24

28

3219

69

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

0

5

10

15

20

25

30

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

Others/NK

Bangladesh

Pakistan

India

Taiwan

Korea

China

Average age steadily reducing (tankers above 10,000 dwt)

Years

6

8

10

12

14

16

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006

Double-hull percentage rising steadily

%

6

22

5159

67 68 73 76 79 82 85

94

78

4941

33 32 27 24 21 18 15

0

20

40

60

80

1001

99

1

19

97

En

d 0

2

En

d 0

3

En

d 0

4

En

d 0

5

En

d 0

6

En

d 0

7

En

d 0

8

En

d 0

9

En

d 1

0

SH/DB/DS

DH

% dwt share* :

* Assumes

phase out

according to

regulations

(rounded

upwards, 25

years after 2010

.

(Single Hull) Tanker Phase Out- an “uncertainty” post 2010

m dwtm dwt

Assumptions :MARPOL phase out allows for trading until the age of 25 years old, max 2015The EU alternative does not allow SH trading after 2010.DB/DS can trade until the age of 25 years old, but here cut off 2015

0

10

20

30

40

50

60

70

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

MARPOL (min phase out - trading of SHuntil 25 years)

EU + no SH after 2010

OPA90

Chemical Carrier Fleet

• 70% of fleet double hull, almost all of remainder double bottom or double side – average age 11.5 years,

• Large order book (37% of existing fleet by dwt),• Significant changes to MARPOL Annex II from Jan 2007,

principally in carriage of veg oils – several uncertainties.

Chemical tanker fleet by hull

numbernumber

0

200

400

600

800

1,000

1,200

1,400

DB DH DS SH No info.

40,000 dwt+

30,000-39,999 dwt

20,000-29,999 dwt

10,000-19,999 dwt

5,000-10,000 dwt

Source: Chemindex/Inge Steensland

Chemical tanker fleet and age distribution

m dwt

0

2

4

6

8

10

12

14

Existing On order Existing On order Existing On order Existing On order

3-10,000 dwt 10-17,000 dwt 17--30,000 dwt 30,000 dwt +

18+

15-27

20-24

15-19

0-14

Age

years :

18%55% 37% 38%

3,000 - 17,000 dwt: 32% orderbook

Source:

Inge

Steensland

Shipbrokers

Reclassification of Annex II products

Type of change Reclassified from/to Products and volumes

Re-categorisation of vegoils, soft oils and fats

D to IMO type 2, or IMO type 3 with DH meeting operational requirements

Palm oil 27 m tsSoybean oil 10 m tsSunflowerseed 3 m ts+ Other veg oils 3 m ts+Tallow + fatty acids+ 2 m ts+Total approximately 50 m ts

Other products with no previous requirements on ship type

IBC ch. 18 to IMO type 3 Methanol 17 m tsMTBE 5.5 m tsUAN 5 m tsMEG/TEG/DEG 5 m tsMethyl ethyl ketone, ethyl acetate 1 m ts

Change of ship type requirements

IMO type 3 to type 2 Xylenes >5 m tsAcrylonitrile <1 m ts

No requirements No change Molasses 5 m tsEthanol 3 m ts

Major exporters of vegetable oils

m tsm ts

Further information available at www.intertanko.com

November 2006

The Revisions toMARPOL Annex II

(entry into force 1/1/2007)

A Practical Guide

Changes in the pipeline

Chemical Carriers:

• Proposals from the Inter-industry Group to amend SOLAS to provide for the application of inert gas to new oil tankers of less than 20,000 DWT and to new chemical tankers.

• Review of Dangerous Cargo Endorsements through STW.

Accidental oil spill from tankers and tanker trade

m ts

0.0

0.7

1.4

2.1

2.8

3.5

1970s 1980s 1990s PR00s

0

26

52

78

104

130

1000 ts spilt

'0000 bntonne-miles

m bn tonne miles

Reported tanker incidents reducing – until 2005/6 !!

Number

0

200

400

600

800

1000

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

0

84

168

252

336

420

00 01 02 03 04 05 06

War

H & M

F & E

Grounding

Collis.

Misc

Tanker incidents 2006 by type

13%28%

9%

33%17%

Collision

Grounding

Fire/Explosion

Hull & machinery

Misc/unknown

Collision

Groundings

Hull & Machinery (27 engine, 3 hull related)

Misc.

F & E

Reported tanker incidents Jan-Dec

2006 - total 264

EU Issues

• Ship Source Pollution Directive (Status report)

• Maritime Safety Package III

• Green paper on future maritime policy for the EU

• EU Competition Rules

Maritime Safety Package III

• Revision of Port State Control Directive• Vessel Traffic Monitoring Directive• Athens Convention + extension

• Accident Investigation Directive

• Civil Liability / Financial Guarantees• Flag State Audit / Related Issues

• Revision of Classification Society Directive

EU Issues

• Ship Source Pollution Directive (Status report)

• Maritime Safety Package III

• Green paper on future maritime policy for the EU (Maritime space/ocean interests)

• EU Competition Rules

US Issues

• California Air Resources Board Air Emission Standards

• Massachusetts lawsuit

• Lawsuit on Ballast Water discharges

Panama Canal Expansion

Project details

• Referendum 22 October 2006 (78% yes)

• 7 years to complete (completion 2014 for the Centennial of the PC opening)

• New Dimensions for third lane: • 49 metres (160 ft) Beam• 366 metres (1,200 ft) LOA• 15 metres (50 ft) Draught• Up to about 170,000 DWT (12,000 TEU)

Panama Canal Tolls current & proposed

Current and future tariffs:

Tankers

Current: 5/2007: 5/2008: 5/2009:

L: $2.96 $3.29 (+11%) $3.70 (+12.5%) $3.98 (+7.6%)

B: $2.35 $2.61 (+11%) $2,94 (+12.6%) $3.18 (+7.5%)

(based on 1st 10,000 PC/UMS net tonnage)

Panama Canal Tolls Proposals for increases over next 3 years

Initial industry observations:

• Significantly higher than expected increases for next 3 years - with only 3 months notice.[Expected 3.5% real annual hike]

• Affects existing contracts and spot market• Uncertainty/ weakens confidence over future business

planning[Planned increases for post 2009?]

•

• Large upfront increases for doubtful (?) future benefits[Mostly capacity debottlenecking and extra 0.3-0.5 m. draft]

• Industry seeks gradual & predictable increases

Other Issues

• IACS Early Warning System

• Port State Control / EQUASIS data analysis

• ISGOTT revision

• Human Element in Shipping Committee

• INTERTANKO Databases and Benchmarking systems (TVD, TMSA, Op costs/performance, STS)

ISGOTT

The International Safety Guide for Oil Tankers and Terminals

Fifth Edition (2006)

Principal changes are the recommendations covering:

• Operating procedures with the introduction of the ISM Code

• Operating procedures for Tank Cleaning – moving to “Inerted” or “Not Inerted”

Other Issues

• IACS Early Warning System

• Port State Control / EQUASIS data analysis

• ISGOTT revision

• Human Element in Shipping Committee(Initially Availability, Training and Compliance)

• INTERTANKO Databases and Benchmarking systems (TVD, TMSA, Op costs/performance, STS)

Annual Meeting & Tanker Event 2007

Houston ’07

March

25 Golf tournament

Associate Members’ meeting

26-27 ExCom, Council

26-27 Tanker Event

28 Poseidon Challenge

AGM

29 Tanker Chartering seminar

Annual Meeting & Tanker Event 2007

Monday 26 March

• Executive Committee Meeting

• Council Meeting

• Vetting Seminar

• Casual Dinner

• Focus Sessions

- Technical Issues

- Air emissions

- Common Structural Rules

- Chemicals & Biofuels

- LNG Market

Annual Meeting & Tanker Event 2007

Tuesday 27 March

• Council meeting wrap-up

• Opening – Keynote speakers

• Tanker & Oil Market session

• Informal dinner

Annual Meeting & Tanker Event 2007

Wednesday 28 March

• Poseidon Challenge day

• Annual General Meeting

• Gala Dinner

Muchas Gracias

For more information, please visit:www.intertanko.com

www.shippingfacts.comwww.maritimefoundation.com