76th. ANDREW LAING LECTURE

“TANKER BUSINESS TODAY”

1 May 2008

Peter M Swift,MD INTERTANKO

“TANKER BUSINESS TODAY”

• INTERTANKO

• Industry Today – Fleet & Performance

• Key Challenges

INTERTANKO Today

290 + members operating ca. 2950 ships > 80% of the independent oil tanker fleet and > 85% of

the chemical carrier fleet

330 + associate members: in oil and chemical tanker related businesses

15 Committees – 5 Regional PanelsPrincipal Offices – London and Oslo

Representative Offices in US, Asia and BrusselsObserver Status at IMO, IOPC, OECD and UNCTAD

INTERTANKO – The Voice of the Tanker Industry

MISSION• To provide leadership to the Tanker Industry in serving the world

with safe, environmentally sound and efficient seaborne transportation of oil, gas and chemical products.

VISION FOR THE TANKER INDUSTRY• A responsible, sustainable, respected Tanker Industry, committed

to continuous improvement and constructively influencing its future.

ONE OF THE ASSOCIATION’S PRIMARY GOALS• Lead the continuous improvement of the Tanker Industry’s

performance in striving to achieve the goals of:

Zero fatalities, Zero pollution, Zero detentions

SHIP OWNER OIL COMPANY SPOKESMAN

The Rogues of the Oil Tanker Industry

The image ?

Perception or Reality

                     

                                    

Global dependence on oil tanker transportation

World Oil Consumption 3.8 billion ts

Transported by sea 2.4 billion ts

> 60% transported by sea

The Tanker Industry Today

Tanker Industry’s Goals:

aligned to those of the IMO

• Safe and secure • Environmentally

responsible• Reliable• Efficient (Low cost)

Tanker Industry is accustomed to being under the spotlight

Watched by:• Regulators• Politicians• Public

Licences to trade rigorously applied by:

• Flag states• Classification Societies• Insurers• Charterers

Monitored by:• Coastal and Port states

Investment in New Tonnage - Move to Double Hulls

• More than USD 500 billion invested since 2000 with the result that ~95% of tanker fleet double hulled in 2010

622

5159

67 68 73 78 84 91 9694

78

4941

33 32 27 22 16 9 4

0

20

40

60

80

100

1991

1997

End

02

End

03

End

04

End

05

End

06

End

07

End

08

End

09

End

10

SH/DB/DS

DH

% dwt share:

Assumed all SH tankers phased out by 2010

Tanker fleet development

m dwtm dwt

0

90

180

270

360

450

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 110

1,160

2,320

3,480

4,640

5,800

dwt number

numbernumber

Average age tankers above 10,000 dwt(1970-2007)

Years

6

8

10

12

14

16

197019731976 197919821985 1988199119941997 200020032006

Future for Single Hulls

Options today

• Conversion to

- DH Tanker

- FSU/FPSO

- Bulk Carrier

• Recycling

• Continued Trading

Continued Trading

• Subject to (i) Flag state and (ii) Coastal state acceptability after 2010

• But now uncertainty over- Korea- Japan- China- India- Others

2007 Oil imports - single/double hull

‘‘000 dwt000 dwt

Source: Fearnleys

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

India S Korea Asia RS Africa China Japan ROW

DH

non-DH

Tanker incidents 2007 by type and accidental pollution

1000 ts oil pollutionNo. incidents

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 07

0

100

200

300

400

500

600

700

War

Hull & Machinery

Fire/Expl

Grounded

Coll/Contact

Misc.

Pollution - bars

Source: INTERTANKO/LMIU/ITOPF/various

Accidental oil pollution into the sea

Source: ITOPF/Fearnleys

10001000ts spiltts spilt

bn bn tonne-mtonne-m

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

- 63% -6% -78%

-45% -33% -82%-45% -33% -82%Reduction per tonne milesReduction per tonne miles

Reported tanker incidents

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 07

0

84

168

252

336

420

00 01 02 03 04 05 06 07

War

H & M

F & E

Grounding

Collis.

M isc

Source: INTERTANKO/LMIU/various

Tanker incidents 2007 by type

Source: INTERTANKO/LMIU/various

1%

27%

13%

29%

9%

20%

Collision/contact

Grounding

Fire/Explosion

Hull & machinery

Misc/unknown

Hostilties

Collision Grounding

Hull & Machinery 95 of which 56 engine related

Misc.

Fire & Expl.

Reported tanker 325

incidents 2007

Tanker incidents 2007 by age

Built 1970s -

Built 1980s

Built 1990s

Built 2000s

Incidents/no tankers:

0.000 0.200

Built1970s

Built1980s

Built1990s

Built2000s

325 incidents

13%

21%

33%

33%

Tanker incidents: engine related

No

Source: INTERTANKO/LMIU/various

0 10 20 30 40 50 60

2002

2003

2004

2005

2006

2007

1970s1980s1990s2000s

NK

Built:

0.0% 0.2% 0.4% 0.6%

1970s

1980s

1990s

2000s

2007 incidents by

% of fleet per decade of build:

INTERTANKO’S Poseidon Challengeencourages all parties to commit to:

- continuous improvement- working with all partners

Key challenges for tanker industry- not unique to the sector

• Maintain an international framework of consistent, high standards

• Deliver best environmental performance

• Ensure availability of good people and quality ships

Regulation vs. Self Regulation

Acting in parallel !

• Promoting self-regulation

Adopting “best practices”

Producing industry guidelines

Developing programmes, procedures, etc.

• Support “effective” regulations

“Effective” Regulation

• Developed at the global level, wherever appropriate (consistent with existing law)

• Fit for purpose (provides solutions)

• Properly considered (stakeholders involved)

• Impact(s) fully assessed (economic and social)

• If adopted, implemented uniformly and promptly

Upholding International Regulation and customary international law

• Supporting IMO with active participation

• Encouraging ratification of IMO (and ILO) Conventions

• Also engaged in US (Washington), Europe (Brussels) and elsewhere

Acting together- examples

• Pilotage in international straits as per IMO recommendations

• Development of a Marine Electronic Highway

• Establishment of a lifeboat user group with manufacturers to seek remedies for shortcomings

• Campaign to ensure availability of safety-related information on the characteristics of dangerous cargoes

• Development of Incident Information exchanges

• Development of guidelines on tanker maintenance and repair procedures

Consistency in International Standards- examples

• FLAGS Administrations - IMO Member State Audit scheme plus transparency in findings

• Development of Common Structural Rules for Tankers

• Tripartite dialogue between international shipbuilders, classification societies and shipowners

• Harmonisation uniformity in procedures across Port State Control regimes

Tanker Industry’s Environmental Agenda- Highlights

• Anti-fouling Systems • Ballast Water Management • Biofouling• Ship Recycling• Port Reception Facilities• Waste Management• Marine Noise Pollution• Whale Strikes • Spill Prevention and Response Planning• VOC reductions• Atmospheric Pollution - Revision of MARPOL Annex VI

• Green House Gas Emissions • Environmental Benchmarking

Green House Gas Emissions - issues

• Reduction optionsTechnical and commercial feasibility assessments

• Carbon (CO2) indexingDesign Index (New); Operational Index (existing)

• Market Mechanisms (Economic Instruments)Emissions Trading, Carbon Levy (Fuel tax), Incentive Schemes

• ResearchNew and existing ships, energy saving; hull, machinery

One litre of fuel on a modern VLCC (Very Large Crude Carrier) moving one tonne of cargo more than 2,500 kilometres - more than twice as far as 20 years ago

Environmental Benchmarking

Establishing our Environmental Credentials

Examples

• Pollution to ocean – cargo, bunkers, lubes, etc.• Pollution to atmosphere – VOCs, bunker

management • Management of wastes – including Annex V

• Ballast water management• Antifouling usage• Biofouling management• Recyclability – Green Passport, HM List

• Noise pollution

• CO2 performance

The People Challenge

Availability and Quality Issues

But a guiding principle:Human Resources are respected as an asset, not treated as a cost !

The People Challenges- recruitment, training and retention

• Raising awareness (www.maritimefoundation.com)

• Co-operation with educators/trainers

• Policies for cadet berths and training facilities on all new ships

• Developing industry standards for Tanker Officer Training, (TOTS), covering proficiency and experience

• Caring for crew’s welfare and well-being

Our crew’s welfare and well-being

• Speaking out against unjustified criminalisation

• Campaigning for improved conditions for shore access when security constraints active

• Working to reduce multiple and overlapping inspections

• Promoting solutions to lessen technical and operational burden of equipment, systems and associated paperwork

• Prepared guidelines for safe handling of cargoes and fuels, tank cleaning and entry, and more

• Developed guidelines on implementing ILO Convention on “work and rest hours”

• Promoting higher standards of accommodation as industry “norms”; (including e.g. broadband, etc.)

Tanker Industry Today

• Proud of our people, proud of our ships

• Proud of our performance – but not complacent !

THANK YOU

“Proud of our people, Proud of our ships”

For more information, please visit:

www.intertanko.com www.poseidonchallenge.com

www.shippingfacts.comwww.maritimefoundation.com

Tanker phase out, deliveries, scrapping tankers 5,000 dwt+ assuming various demand increases

m dwtm dwt

-30

-20

-10

0

10

20

30

40

50

60

70

80

90

100

-02 03 04 05 06 07 08 09 10 11 12 13 14 15

Newbuilding tobalanceMax phase out

Deletions

Delveries

Surplus 4% tradegrowthSurplus 2.5%trade growthSurplus zero tradegrowth

year

Removals in addition to phase out (conversions)