INTERTANKO International Association of Independent Tanker Owners

Leading the way; Making a difference

INTERTANKOInternational Association of Independent

Tanker Owners

Hellenic Mediterranean Panel

Athens 29th March 2012

Overview:Association Finance

Priorities + Strategic PlanAir + GHG Emissions

Katharina StanzelDeputy Managing Director

INTERTANKO


MEMBERSHIP

230+ Members

3,200+ Tankers

280+ Million DWTMembers in 40+ countries

> 75% of Global Independent Tanker Fleet

320 Associate Members


MEMBERSHIP

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

0

57

114

171

228

285

0

680

1,360

2,040

2,720

3,400

No. members

m dwt

No. ships

Million dwt / number of members Number of ships

Fleet Composition and Fee Structure

-10% -5%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

USD/ship 1,415 1,415 1,415 1,486 1,635 1,800 2,000 1,800 1,800 1,800 1,710

USD/dwt 0.0080 0.0080 0.0080 0.0084 0.0092 0.0101 0.0101 0.0090 0.0090 0.0090 0.0086

Min US 5,000 5,000 5,000 5,250 5,250 6,350 7,000 6,300 6,300 6,500 6,175

Max US 52,000 52,000 52,000 54,600 65,000 80,000 85,000 76,500 76,500 76,500 72,675

Type dwt #crude 205,248,439 1,317

product 36,607,690 664 chem/oil 24,147,166 729 chemical 10,013,343 418

gas 4,947,552 143 special 4,916,022 77

285,880,212 3,348


1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

8

9

10

11

12

13

14

15

16

Average Age Membership Fleet


BUDGET

2010 membership fees reduced by 10%

No change in 2011 membership fees

2012 membership fees reduced by 5%


BUDGET (US$)

2011 2011 2012 (Actual) (Budget) (Budget)

Operating Income 7,753,228 7,572,650 7,401,925

Operating Expenses -6,886,593 -7,217,450 -7,373,997

Operating Result 866,635 355,200 27,928

Non-operating Income/expenses 87,303 -25,000 -25,000

Result for Year 953,938 330,200 2,928


Key Focus AreasSafety/Technical Seafarers Environment Marine

OperationsRegulatory /

Legal Information

Top priorities for 2012

Damage stability Inert gas

Shipyard standards Class standards

Fuel quality Mercury in crude

Criminalization Crew competence

Shore access Fair treatment of

Seafarers

GHG emissions Ballast water

Reception facilities Air emissions

Piracy Vetting

Port State Control Chemical

operations

Sanctions Limits of liability

insurance Oil spill

compensation

Tanker market Panel meetings

IO web page

Other work plan issuesTanker design

Structural Integrity Machinery/equipment

Fuel switching Safe tank entry Gas detection

Biofuels Cargo properties

Crew visas Seafarer ID docsAccommodation

sp. Cadet berthing

Ship recycling Anti-Fouling

Waste management

Noise pollution Response mgmt. Hull biofouling

Ship striking mammals

Loadlines off SA Lifesaving app

PilotagePort & TerminalsNavigation issues

Offshore operations

Ship/Ship transfer ISPS Code

Security OfficersShip sec alert sys

Accident investigations

Conflict in lawUNCLOS

LegislationCharter parties

FDIPDemurrageIntellectual

propertyWorldscale

Anti-corruption

Weekly NewsAnnual review/

reportPublications

PresentationsTanker statisticsIncident analysis

WorkshopsSeminarsBulletins

Global political/ economic

environment

Macro-environment

Political

Global Economic Shift of Powers -China/ India/

Brazil- Europe failing

Free market distortions- Regional

Protectionism

Regulatory Environment politicised - Regional regulation

- Sanctions etc.

Security Issues (Piracy)

Economic

Market Dynamics(Fleets, Cargos,

Finance)Tonne mile

demandFuel availability/

costGrowing national

protectionism

Growth of national fleets/

interests

Environmental

Globalised Concerns, e.g. Ballast WaterNox, Sox, PM,

GHG

Technological

Compliance options through

technology

Availability of abatement/

treatment tec.

Availability of FuelsLNG

Distillates

Socio- cultural

Human Resources:

- Availability/ Recruitment

- Competency- Training

Expectations from

Legislators Politicians

Public

Overregulation

Political decision making

Need for Cooperation with

other associations/ orgs

ANNUAL TANKER EVENT

• Venue: Conrad Hotel Singapore

• May 9 – Council dinner

• May 10 – Council meeting

• May 11 – Tanker Seminar- Tanker market

- Piracy

- Technical session


Emissions to Air

Air Emissions• SOx

• NOx • Particulate

Matter

Greenhouse Gas Emissions• Carbon Dioxide• Methane etc.

Marpol Annex VI

• Compliance through S content• Equivalent Measures accepted • Addresses Marine Fuel Oil

Quality


MARPOL Annex VI Reg. 18.3

Fuel Oil Availability and Quality

Fuel oil . . shall meet the following requirements:• blend of HC derived from petroleum refining• free from inorganic acid• should not include any substance or chemical waste

which:• jeopardize ship safety and adversely affects machinery• is harmful to personnel• contributes to overall addition to air emissions

Þ Quality and Safety standards


HFO Quality – Recent developments

Blending to meet required sulphur limits can result in:

• Increased average density• Increased average catfines levels (Al+Si)• Increase in sludging problems• Reduced ignition and combustion quality• Increased problems with chemical contamination of fuel

13


Fuel Quality Issues


Quality Control of Bunkers• Need to clarify responsibility for ensuring bunkers delivered to

ships meet relevant criteria set in ISO 8217:2010 and MARPOL Annex VI & ensure stricter enforcement of Reg. 18 and involve local authorities in quality control of fuels

• Require bunker suppliers to have quality control system for fuels they sell & take corrective actions when off spec bunkers are delivered

BUT currently• No official authority involved in control and monitoring prior to

fuel delivery• Control by commercial fuel tests/owners only • Responsibility for quality compliance and control should not be

left with ships• Quality/type of fuel has become very relevant

Leading the way; making a difference

Proliferation of Regulations

• complicated application requirements

• safety challenges (e.g. fuel switching)

• lack of predictability of available alternatives − global availability of different bunker types ?− abatement technologies still adapting to ship use

Danger of increasingly regionalised not harmonized regimescausing:


Emission Control Areas - ECAs

NORTH SEA & BALTIC SEA

NORTH AMERICA


2015 Compliance Options: Fuel

Liquid Natural Gas (LNG) as main fuel• High costs for retrofit & new building • Supply network to be built• Methane slip

Low Sulphur fuel (0.10% MGO)• Rel. easy but expensive• Additional/converted storage capacity for MGO ?• total segregation between MGO and HFO fuel systems• High price premium (currently ~US$ 350/t) • potential availability issues


Compliance Options: Scrubbers

Exhaust Gas Cleaning Systems

• Maturity• Availability• Performance reliability

One scrubber for each main engine or up to 3 auxiliary engines

Time needed for retrofit:2-3 weeks planning installation7-10 days off hire2 weeks testing for certification


Cost Assessment

Voyage MGO premium/year

Price Scrubber Payback periodvs MGO usage

AG – LOOP US$ 1.4 m US$ 10 m 13 yrs

US$ 8 m 10 yrs

US$ 6 m 8 yrs

AG - Rotterdam US$ 1.3 m US$ 10 m 14 yrs

US$ 8 m 11 yrs

US$ 6 m 8 yrs

Suezmax shuttle North Sea

US$ 5.25 m US$ 8 m 2.7 yrs

US$ 6 m 2 yrs

Aframax shuttle North Sea

US$ 3.5 m US$ 6 m 3 yrs

US$ 5 m 2.5 yrs


Scrubbers: Issues to Consider

Test results Is technology proven for application at sea ? Does it work with SCRs

Dimensions / physical footprint / weightCAPEX OPEX energy consumption

sludge treatment / disposalProve compliance usage + water wash discharge

monitoringPerformance monitoring & documentationRedundancyManufacturer capacityCrew issues: training and qualification


ECA 2015 Strategy

Cost efficiency is related to time spent in ECAs

ALTERNATIVE CAPEX OPEX

LNG > US$20 m/ship up to 20% fuel saving

MGO low premium US$ 350/tbut up to 4% fuel saving

SCRUBBERS US$5 m or more/ ship

2-3% fuel penalty in useincreased CO2 emissions


Greenhouse Gas Emission Reductions

• Technical & Operational Measures• Ship Energy Efficiency

Management Plans (SEEMP)

• Energy Efficiency Design Index (EEDI)

• Market Based Measures (MBMs)


GREENHOUSE GASES

Policy on implementation of IMO Energy Efficiency Design Index (EEDI) requirements

- 4 year waiver- method of compliance

Policy on Market Based Measures (MBM)

Better acceptance of “Virtual Arrival” project with charterers


Ship Energy Efficiency Management Plans

Best practice guidance – TEEMP

In co-operation between members and other stakeholders

• Company & Shipmanagement Plans• Voyage optimisation• Propulsion resistance management• Machinery optimisation • Cargo handling optimisation• Energy Conservation Awareness Plan


INTERTANKO POSITION

1. Welcome adoption of amendments to MARPOL Annex IV, mandating energy efficiency measures (EEDI/SEEMP regs)

2. Advocate: a) “level playing field”: implementation of EEDI to all new

build ships from the same dateb) Compliance with EEDI focussed on improved hull design,

propulsion efficiency & energy optimisation, not predominantly reduced speed designs

c) Measures taken to comply with EEDI not to jeopardise or have adverse effect on safety of the ship

3. Emphasise that EEDI measure for new ships only


MARKET BEASED MEASURES - MBMs

Governments do not believe that ships can meet GHG reduction targets without MBMs

EEDI & SEEMPs ‘unlikely to be sufficient’ but: no reduction targets have been set!

Number of proposals discussed at IMO:Mandatory CO2 reduction targets, Efficiency Incentive Schemes, Emissions Trading Schemes , GHG Funds

Impact Study to assess suggested proposals


INTERTANKO POSITION

Market Based Measures not justified at this time (Industry is already incentivised by high fuel prices)

Should MBMs be required, they should:• be implemented through an international regime• be simple to enforce and to monitor• drive the right behaviour• Provide transparency to maintain current level playing field• not place disproportionate financial and operational

burden on the industry


SUSTAINABILITY

Deep 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.”


Thank You

[email protected]

INTERTANKO International Association of Independent Tanker Owners

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