Post on 04-Jan-2016
The Product Tanker Market andPhase-Out Implications
byErik.Ranheim@INTERTANKO.com
Manager Research and Projects
4th Annual Combined Chemical & Product Tankers Conference London, 5 December 2007
‘
International Association of Independent Tanker Owners
Trade association established in Oslo in 1970 Spokesman, information service, meeting place
Membership280 Members40+ countries
2,800+ tankers230 million dwt
75% of independent tanker fleet300 Associate Members
INTERTANKO
Product tanker market and phase out
• Product tanker demand• Phase-out review• Phase-out consequences
Market trends
Tanker segments
Average tankers
Advanced tankers/operators
Low quality tankers
Bad market
Alang beachNewbuildings
Product tanker trade
'000 m tonnes
Source: BP Review
400
450
500
550
600
650
700
1999 2000 2001 2002 2003 2004 2005 2006
2004 7.2% increase 2005 9.6% increase2006 14.1% increase
Product tanker trade
'00 m tonnes
Source: Fearnleys
2004 5.3% increase2005 8.9% increase2006 5.0% increase2007 4.7% increase2008 3.8% increase
80
100
120
140
160
180
200
220
240
260
280
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005 P07
Miles
Tonnes
Tonne-miles
Product import to the US, Japan and Europe
mbd
Source: IEA/PAJ/EIA
BiodieselMore mpg
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1999 2000 2001 2002 2003 2004 2005 2006 2007
Europe US Japan
New Refinery distillation capacity projects by region 2007-12
mbd
Source: Source: Petroleum Economist/INTERTANKO
Firm capacity expansion 9.3 mbd + 2.5 mbd planned0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
US/Canada L America Africa Europe/Eurasia Middle East Asia Pacific
Expansion 2.0 mbd
Planned 2.5 mbd
New 6.8 mbd
New Refinery distillation capacity projects by region 2007-12
mbd
Source: Petroleum Economist/INTERTANKO
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2008 2009 2010 2011 2012 Planned
0.0
0.5
1.0
1.5
2.0
2.5
3.0Expansion
New capacity
Oil demand incease - 1.4%
Source:Petroleum Economist
The world is moving away from HFOOil consumption by product - % share
Source: INTERTANKO/BP Review
% share mbd
12%
17%
22%
27%
32%
37%
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
25
37
49
61
73
85
Middle/heavy distillates
Fuel oil
Total
Refineries are moving away from HFO
• ……..company’s early commitment in the mid-1990s to making cleaner fuels, and by being proactive about finding the technology needed to achieve this.
Why switching to distillates? Why switching to distillates?
A simple solution :
1. Significant global reduction of emissions• SOx, - 60 - 80%, • PM, - 80 - 90%, • NOx, - 15%, • No heavy metals, • Less soot
2. A more healthy environment for crew and dockworkers
3. No onboard waste4. Reduces overall fuel consumption
(and CO2 emission))
5. Better and easier control or monitoring of ships
Cleaner, Simpler and more Efficient ships
Why switching to distillates? Why switching to distillates?
• ..continue:
6. Fewer engine breakdowns and potential pollution accidents
7. Less pollution when spilled8. Provides opportunity for the
development of more efficient engines (with less emissions)
9. Applies to all ships and all current engines 10. No safety problem in connection
with switching fuels
Cleaner, Simpler and more Efficient ships
Why not scrubbers?Why not scrubbers?
• Still under testing (2 ship limited scale)
• Large • Expensive• Difficult (impossible?) to install• CO2 emission (buffering effect)• leaves hazardous waste• waste disposal – no-one wants it• Tonnes of seawater need to be processed/added
We are involved in transportation – not waste treatment
Phase-out
Phase-out history
• After Exxon Valdez, on 18 August 1990, the US President signed into law the US Oil Pollution Act of 1990 (OPA 90). This was the first regulation to mandate double hull design for tankers with a building contract after 30 June 1990 and with a delivery after 31 December 1992.
• First IMO phase-out initiated by the US OPA 90 - ratified by the IMO March1992 - enforced as from July 1993.
• Accelerated IMO phase-out initiated by Europe as a result of the ERIKA accident outside France - ratified by the IMO April 2000 - enforced as from September 2001.
• Further acceleration of IMO phase-out initiated by Europe as a result of the PRESTIGE accident outside Spain - ratified by the IMO December 2003, enforced as from April 2005 - enforced by Europe as from October 2003.
• The European Union’s Regulation (1726/2003) on single hull tankers took effect on 21st October 2003.
• Revised Annex II was implemented 1 January 2007 NOT phase-out.• Both ERIKA and PRESTIGE carried Heavy Fuel Oils that can pollute up to
ten times more than crude oil. IMO therefore adopted a new regulation – Regulation 13H of Annex I of MARPOL 73/78 – banning the carriage of heavy grade oil as cargo in single hull oil tankers as from 5 April 2005.
Tanker recycling by receiver country
No.No.
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 07
Others/NN
Bangladesh
Pakistan
India
Taiwan
Korea
China
Accelerated phase outAccelerated phase out
Tanker recycling 10,000- 79,999 dwt
m dwtm dwtAccelerated phase outAccelerated phase out
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
2002 2003 2004 2005 2006 2007
Phase-out of small tankers as from 2008Tankers 600 - 4,999 dwt by hull - 3,429 tankers – 8 m dwt
No.No.
0
200
400
600
800
1000
Pre 50s 1950s 1960s 1970s 1980s 1990s 2000s Order
No info
SH
DS/DB
DH
Tankers 600 - 4,999 dwt by type - 3,429 tankers
No.No.
-180
20
220
420
620
820
1,020
Pre 50s 1950s 1960s 1970s 1980s 1990s 2000s Order
Tanker
Products
Chem/Oil
Bunker
Bitumen
Asphalt
Tanker deliveries, phase-out, demolition 5,000 - 9,999 dwt – 1095 tankers, 385 SH
NumberNumber
• Fragmented, many geographical segments• Cabotage trade• Phase-out overhang, 118 tankers
-210
-160
-110
-60
-10
40
90
140
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuilding tobalanceMax phase out
Demolition
Delveries
Surplus tonnage
Assume balanced market end 2006.2.5% increase in demand
Overhang, should have been phased out before 2007
Tanker deliveries, phase-out, demolition and 10,000 - 24,999 dwt
NumberNumber
• Fleet - 5.2 m dwt, 419 tankers• Phase-out – 0.6 m dwt, 187 tankers• Orderbook - 3.1 m dwt, 39 tankers• Phase-out overhang 70 – removed 2008 – 2001
-80
-60
-40
-20
0
20
40
60
80
100
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuilding tobalance
Max phase out
Demolition
Delveries
Surplus tonnage
Assume balanced market end 2006.2.5% increase in demand
year
Overhang
Tanker deliveries, phase-out, demolition and 25,000 - 34,999 dwt
NumberNumber
• Fleet – 18.4 m dwt, 776 tankers• Phase-out – 3.7 m dwt, 124 tankers• Orderbook - 2.3 m dwt, 123 tankers• Phase-out overhang - 3.9 m dwt, 70 – assumed removed 2008 – 2011
-75-65-55-45-35-25-15-55
15253545556575
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuilding tobalance
Max phase out
Demolition
Delveries
Surplustonnage
year
Overhang
Tanker deliveries, phase-out, demolition and 35,000 - 52,999 dwt
NumberNumber
• Fleet – 53.0 m dwt, 1,225 tankers• Phase-out – 7.0 m dwt, 168 tankers• Orderbook – 24.8 m dwt, 533 tankers• Phase-out overhang - 0.7 m dwt, 9 – removed 2008 – 2010
-60
-20
20
60
100
140
180
220
260
300
340
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuildingto balance
Max phaseout
Demolition
Delveries
Surplustonnage
Assume balanced market end 2006. Assumed 'demand increase 3.5%
Year
Tanker deliveries, phase-out, demolition, 53,000 dwt - 79,999 dwt
NumberNumber
• Fleet – 27.3 m dwt, 399 tankers• Phase-out – 6.1 m dwt, 95 tankers• Orderbook – 8.4 m dwt, 166 tankers• Only handful on order 53,000 dwt – 73,000 dwt
-42
-32
-22
-12
-2
8
18
28
38
48
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuildingto balance
Max phaseout
Demolition
Delveries
Surplustonnage
Assume balanced market end 2006. Assumed 'demand increase 3.5%
Tanker deliveries, max. phase -out, demolition and 5,000 - 79,999 dwt
NumberNumber
• Fleet – 111.8 m dwt, 3,914 tankers• Phase-out – 22.3 m dwt, 957 tankers• Orderbook – 38.7 m dwt, 1,131 tankers
-12
-7
-2
3
8
13
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuilding tobalance
Max phase out
Deletions
Delveries
Min phase out
Surplus tonnage
year
Removals in addition to phase out
Assume , balanced market end 2006 and increase in demand of 3.5%.
Tanker deliveries, min. phase-out, demolition and 5,000 - 79,999 dwt
M dwtM dwt
• Fleet – 111.8 m dwt, 3,914 tankers• Phase-out – 22.3 m dwt, 957 tankers• Orderbook – 38.7 m dwt, 1,131 tankers
-10
-5
0
5
10
15
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuilding tobalance
Max phase out
Deletions
Delveries
Surplus tonnage
Min phase out
year
Removals in addition to phase out
Position of administrations
SH trading beyond 2010?
– Australia No– China No– EU
No– Mexico No– Romania No
– Bahamas Yes– Barbados Yes– Liberia Yes– Marshall Isl. Yes– Panama Flag Yes– Japan Yes– Singapore Yes– India Yes– Hong Kong * Yes
*20 years
Flag/Port States positions Trading until the age of 25 years
– United States N/A
Hulls
Tankers 5,000 - 79,999 dwt by hull
0%
20%
40%
60%
80%
100%
5-9,999 10-24,999 25-34,999 35-52,999 53-79,999
Unknown
DH
DS-DB
SH
45% 40% 78% 86% 78%
Tankers 5,000 - 79,999 dwt phase-out - orders - fleet
m dwtm dwt
of which overdueof which overdue3.7 m dwt3.7 m dwt
0
23
46
69
92
115
SH - 22 m dwt - 21% Orders - 30 m dwt - 30% Fleet - 112 m dwt - 100%
53 - 79,999 dwt
35 - 52,999 dwt
25 - 34,999 dwt
10 - 24,999 dwt
5 - 9,999 dwt
47%13%
22%
31%
Conclusion
Conclusion
• Structural changes in the product tanker market • Phase-out on schedule with no major problems
• Phase-out minor market impact
• 2010 situation still unclear