Singapore3 April 2007

COUNCIL AGENDA

&INTERTANKO ISSUES

Peter M. Swift

Council Agenda

Corporate Affairs: Election of Chairman, MD’s Report

Ship RecyclingRevision of MARPOL Annex VIInformation Sharing/Early Warning SystemPanama Canal Toll increasesBest practices to control inadvertent Cargo Vapour EmissionsFleet Development – including conversions of single hullsHuman Element in Shipping Committee (including Tanker Officer Training Standard)EU Ship Source Pollution DirectiveEuropean Issues US IssuesShipboard Waste Management – Revision of IMO regulations & guidelines on OWSPilotage – including Torres StraitsReception Facilities Lifeboat Safety (services and inspections)Terminal Vetting DatabaseQ-Quest Membership criteria

Committee ReportsRegional Panel Reports Poseidon ChallengeDate and Place of Next Meetings

INTERTANKO Singapore

Ship Recycling

Industry Interim Strategy

1. Ship owners should only use Recycling Facilities that have made demonstrable advances in terms of safety and environmental management requirements as established in Section C of the draft IMO Convention.

2. Each new and existing ship to have on board Part 1 of the Hazardous Materials Inventory, which identifies hazardous materials, their location and approximate quantities contained in the ship’s structure and equipment, with Parts 2 and 3 of the HMI being completed prior to recycling.

3. To prevent explosions during the recycling process, arrangements shall be made by the facility that hot work will only commence once the necessary void spaces have been declared gas-free for hot work.

4. A Ship Recycling Plan should be developed prior to the recycling of any ship.

5. Issuance of a Delivery Declaration for vessels that are deemed Ready for Recycling.

INTERTANKO Singapore

Panama Canal Toll increases

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

INTERTANKO Singapore

Fleet Development

(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

Conversions to Double Hulla further “uncertainty”

Built 10-30, 000 dwt

30-52, 000 dwt

60-72, 000 dwt

90-113, 000 dwt

(incl 6 obos)

120-148, 000dwt

VLCCs TOTAL

1970s 3 2 0 0 0 0 5

1980-1984

8 36 9 1 0 0 54

1986-1989

11 12 0 3 3 1 30

1990-1998

2 9 1 18 2 2 34

TOTAL 24 59 10 22 5 3 123

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.

INTERTANKO Singapore

European Issues

EU Issues

• Ship Source Pollution Directive (Status report)

• Maritime Safety Package III

• Green paper on future maritime policy for the EU

• EU Competition Rules

EU 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

INTERTANKO Singapore

US Issues

US Issues

• California Air Resources Board Air Emission Standards

• Massachusetts lawsuit

• Lawsuit on Ballast Water discharges

INTERTANKO Singapore

Shipboard Waste Management – Revision of IMO regulations & guidelines on OWS

Revision of IMO Regs & Guidelines on OWSs

IMO undertaking a critical review of all its regulations and guidelines related to oily-water waste treatment, including– the design of these installations,– clarification of the terminology and better definitions of the various elements

of these installations, – better and clearer interpretation of the record-keeping requirement in the

Oil Record Book, – inter-relation and harmonisation of regulations between regulations in

MARPOL Annex I and MARPOL Annex VI. – The revision will also consider the capacity of onboard incinerators,

including their storage facilities and the operational parameters for their design.

INTERTANKO’s “Guide for the Engine Room Wastes Treatment Associated Systems (ERWTAS)” – will now be aimed at providing guidance on how to apply in practice the new IMO mandatory requirements.

INTERTANKO’s “Guide for Correct Entries into the Oil Record Book” – may be updated to reflect new regulations and/or may be submitted to IMO as an IMO Guide for Correct Entries in the ORB.

INTERTANKO Singapore

Lifeboat Safety (services and inspections)

ILAMA / INTERTANKO / INTERCARGOJOINT FEEDBACK FORUM

LIFEBOAT USER GROUP

ILAMA, INTERTANKO and INTERCARGO have launched a joint feedback forum where end-users (crews) of lifeboats and other Life Saving Appliance (LSA) equipment can comment on how effective

such equipment is and how efficiently it functions.

The aim of the forum is to produce feedback and input to the manufacturers, which will help to improve design of life saving equipment and thereby enhance safety in the industry, taking a

crucial step towards achieving the goal of zero fatalities.

E-mails (which may be anonymous) will initially be channelled through INTERTANKO, noted and processed in the strictest

confidence, and then directed on to ILAMA for action.

PLEASE INFORM US OF YOUR CONCERNSemail : lifeboats@intertanko.com

INTERTANKO Singapore

Poseidon Challenge

Poseidon Challenge – Houston March 28

INTERTANKO Singapore

Date and Place of Next Meetings

Future Dates

Asian Panel

19 September, 2007 Tokyo

Council

15 November, 2007 London

Vetting Seminar

21 November, 2007 Hong Kong

Council & AGM

April, 2008 Istanbul

Other Issues

• Port State Control / EQUASIS data analysis

• Confidential PSC reporting system – Ukrainian ballast water requirements

• Cadet Berth survey

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

• Incident analyses

• Maritime (Industry) Foundation

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

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AIR EMISSIONS&

REVISION of MARPOL ANNEX VI

Drivers of Change

1. Society is driving the requirement for ships to reduce harmful air emissions from engine exhausts – particularly in Europe and the US and to a lesser extent in Japan and elsewhere

2. Legislators, regulators and others are taking action and planning more

3. The IMO has initiated a revision process for MARPOL Annex VI

States and industry are united in trying to ensure that Air Emissions are regulated internationally through the IMO

IMO MARPOL Annex VIPrevention of Air Pollution from Ships

• Covered by Annex VI– Oxides of Nitrogen (NOx) – create Ozone– Sulphur Oxides (SOx) – create acidification– Hydrocarbons (HC) – gas, soot and some particulates– Volatile Organic Compounds (VOC)– Refrigerant Gases

• Not covered (currently) by Annex VI– Other Particulate Matter– Carbon Dioxide (CO2) – Carbon Monoxide (CO)

Engine exhaust gases are dependent upon engine type, engine settings and fuel type

Challenges for IMO

” Reduce air emissions from ships ”

• What emissions- SOx, NOx, PM, VOCs ?- Later CO2 ?

• Where - Globally, Coastal regions ?

• Timing:- Phased, where/when/how ?

MARPOL Annex VIPROPOSALS FOR AMENDMENTS

• Lower limits for SOx & NOx emissions

• SECAs with lower S cap (1.0% or 0.5%)

• NOx emission limits on existing engines

• NECAs – NOx controlled areas

• Restrictions on Particulate Matters (PM) emissions

• Further controls on VOC emissions from cargo oil tanks

REVISION OF MARPOL ANNEX VIINTERTANKO PROPOSAL

• Distillate fuels & 2-tiered S cap program:– from [2010], a maximum of 1.00% S content

– for ships’ engines installed on and after [2015], a maximum [0.50]% S content

• A Global Sulphur Emission Control Area

• A New Fuel specification in Annex VI

• Simpler monitoring of compliance

Distillate/MDO Advantages:AIR EMISSIONS

• Applies to ALL existing ships/engines

• With no other measure, immediately reduces:– SOx emissions by 80% to 90%– PM emissions by 90%– NOx emissions by 10% to 15%

• Reduces fuel consumption with some 4%

from ALL ships and thus CO2 emissions

• Facilitates further NOx reductions by in-engine modifications for IMO’s Tier II & III

Distillate/MDO :ADDITIONAL BENEFITS

• ENVIRONMENTAL:– Reduces onboard fuel generated waste– No fuel heating/pre-treatment or waste incineration = energy saving– ALL ships become “greener” – “Cleaner” waste & free of hazardous elements contained in residual

fuels– Avoids use of abatement technologies = no further additional waste

& no need of further waste disposal– [Any bunker spill significantly less harmful]

• SAFETY:– Less incidents with engine breakdowns caused by poorer quality

fuels / lower maintenance load – No need of complex fuel change-over operations– No risk of incompatibility of blended fuels– Safer working environment for crews

FUEL OPTIONS TO REDUCE AIR EMISSIONS

At what cost and who takes responsibility ?

• High sulphur residual with abatement technology such as scrubbers, etc.

• Low sulphur residual

• Combination HS/LS residual

• MDO (Low sulphur)

CO2 Emissions – Net Environmental Benefit

• Additional refinery CO2 emissions from de-sulphurisation of residuals

• Additional refinery CO2 emissions from MDO production/distillation

• Ship CO2 emissions lower with MDO due to lower fuel consumption

• Ship CO2 emissions lower with MDO since no need to heat residual fuels prior treatment & injection

• High CO2 emissions in manufacturing & operating scrubbers

• Higher CO2 emissions with catatylic converters when using residual fuels rather than distillates

Volatile Organic Compounds (VOC) Emissions & their Control

VOCs generated both during loading and on passage

• Vapour return lines used in some ports

• INTERTANKO developed VOC control procedure (VOCON) with potential to reduce by more than 70% VOC emissions on passage

• System further enhanced by adoption of the Pres-Vac VOCON P/V valve

• Further industry development with KVOC loading system

• Norway advocating incorporation of VOC Management Plan in to Annex VI

• Ongoing work by INTERTANKO on VOC operational controls related to cargo Reed Vapour pressure

BLG Working Group Options: SOx

• A. Status Quo - No change• B. Sulphur Emissions Control Area (SECA):

– A global sulphur cap (unchanged or lower value) – SECA sulphur cap lowered in two tiers:

• 1.0% in [2010]• 0.5% in [2015]

• C1. Change to distillate fuels (no SECA) :– Use of distillate fuels for all ships– A global sulphur cap in two tiers:

• 1.0% in [2012]• 0.5% in [2015]

– Include in MARPOL Annex VI the specification for the distillate fuel to be used by ships

• C2. Global cap – As C1 but allows use of residual fuel + scrubbers

What next ?

• BLG : 16 -20 April 2007

• MEPC 56: 9-13 July 2007

• EU Commission to take stock of progress– Review of Sulphur Directive – 2008– Scope for Community measures to reduce ship

emissions pursuant to Council’s conclusions – 2008

• US considers own legislation if IMO does not deliver - ?