INTERTANKO and the tanker Industry WMU Oslo 24 September 2007
Manager Research and Projects
International Association of Independent Tanker Owners
A non-governmental organization established in Oslo in 1970 to speak authoritatively and proactively on behalf of tanker
operators at international, regional, national and local level
Membership
260 Members40+ countries
2,650+ tankers220 million dwt
75% of independent tanker fleet300 Associate Members
2. INTERTANKO
MISSION “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 and
respected Tanker Industry, committed to continuous improvement and
constructively influencing its future.”
2. INTERTANKO
Annual General Meeting
Council
Regional PanelCommittee
Member Company
Regional Manager Issue Manager
Member Company
Executive Committee
INTERTANKO Position
Issue
Developing an INTERTANKO Position
2. INTERTANKO
INTERTANKO represents and promotes the interests of the responsible
tanker owners worldwideand
provides members with advice, information and support on technical, operational, documentary, port and other
issuesand
is a meeting place and discussion forum for tanker owners
INTERTANKO Services
25 Secretariat Oslo, London, Washington & Singapore 14 Committee’s and 4 Regional Panels
50+ Work Items on the Agenda
2. INTERTANKO
• advice on charter party questions
• advice on international regulations
• market information– statistics– world economy– oil market– tanker and chemical fleet– casualties and oil spills
• guidance and information publications– 50% off the purchase price of publications
• Freight and Demurrage Information Pool– a database of charterers' records on settlement of freight and demurrage– receive assistance in securing payment of outstanding demurrage claims
INTERTANKO Services: Using INTERTANKO
Air emission
Human element
Criminalisation of seafarer
Liability for oil pollution
Competition rules
International regulations
INTERTANKO’s most important issues
Liaison
• INTERCARGO• International Chamber of Shipping (ICS)• BIMCO
• Oil Companies International Marine forum (OCIMF)• Individual oil companies• Ports Associations (reception facilities, terminal vetting)• Pilots• PSC (MoUs)• Local, National, Regional and International regulatory bodies
2. INTERTANKO
Round Table of International
Shipping Associations (RTisa)
1. Requirements• Independent owners• Entry of all tankers into Membership• IACS Classification Societies• The International Group P&I• Transparency of ownership• Limited detentions in ports• Approved by the council
2. Best Practices • Budget Resources• Breaches of MARPOL• Reporting Deficiencies to Class• Leading Industry Performance• IMO Pilotage Recommendations for Danish Waters• Guide for Correct Entries in the Oil record book• Right Whale Avoidance • Best Practice - Cadet Berths • IMO Guidelines for Lifeboat Safety• Incident Transparency• Ballast Water Management Plan
Emergency Response for Damage Stability
INTERTANKO Membership criteria
The State of the tanker Industry
The State of the tanker Industry
• High safety• Low pollution• Low age• End of high earnings
Tanker incidents by cause 1978-1Q07
Number incidents
Source: Based on incident reports from Lloyd’s Maritime Information Service
0
200
400
600
800
1000
0
100
200
300
400
500
600
700
War
Hull & Machinery
Fire/Expl
Grounded
Coll/Contact
Misc.
Pollution - bars
2007 is a projection based on 8.7 ms
Oil pollution – 1000 ts
Tanker incidents by cause 2006
Source: Based on incident reports from Informa
13%28%
9%
33%17%
Collision
Grounding
Fire/Explosion
Hull & machinery
Misc/unknown
Collision
Groundings
Hull & Machinery (32 engine, 3 hull related)
Misc.
F & E
Reported tanker incidents Jan-Dec 2006 -
total 265
Tanker accidents and trade
Source: ITOPF/Fearnleys
0
100
200
300
400
500
600 '000 Tonnes Trade in Tonne miles
Trade in Tonne-miles (Fearnleys)
1000 ts spilt Bn tonne-miles trade
Pollution rate 1000 ts spilt per bn tonne miles carried
Source: ITOÅF/Fearnleys
10001000ts spiltts spilt
bn bn tonne-mtonne-m
0
400
800
1,200
1,600
1971-76 1977-82 1983-88 1989-94 1995-00 2001-06
-8,000
11,000
30,000
49,000
68,000
Accidental pollution
Tonne-miles
+97%
-52 %
+50 % -26%-80%
Accidental pollution from tankerslargest accidents
Source: ITOPF
0
100
200
300
400
500
600
1967
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
Independenta
Amoco Cadiz Castillo de Bellver
Exxon Valdez
Odyssey
ABT Summer
Erika
Erika
Prestige
Tasman Spirit
Atlantic Empress
Assimi
1000 ts spilt
Accidental pollution from tankerslargest accidents and age
Source: Informa/INTERTANKO
0
220
440
660
880
1100
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
0.0
3.2
6.4
9.6
12.8
16.0
Incidents
Age
Number incidents Average age
Total losses, tankers and bulkers
Source: Clarkson
Number
0
2
4
6
8
10
12
14
16
18
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Tankers 47
Bulkers 155
World CO2 emission, energy use and population - indices
Source: CO2 emission: US Energy Information AdministrationEnergy use: BP ReviewPopulation: UN
CO2 emission increase stronger than energy and population increase due to relatively stronger increase in coal consumption
90
100
110
120
130
140
150
160
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Population
Energy use
CO2 emission
Index
World CO2 emission
Shipping 2%
Other transportation
Eelectricity/heat
Industry +
Industrial processes
Land use change
Agriculture
WasteSource; World Resource Institute
TankerMarket
Oil price and VLCC freight rates
$ per day freight rate $ per barrel oil price
0
40,000
80,000
120,000
160,000
200,0002-
Jan-
01
30-A
pr-0
1
23-A
ug-0
1
17-D
ec-0
1
18-A
pr-0
2
13-A
ug-0
2
4-D
ec-0
2
3-A
pr-0
3
30-J
ul-0
3
20-N
ov-0
3
19-M
ar-0
4
15-J
ul-0
4
5-N
ov-0
4
7-M
ar-0
5
1-Ju
l-05
21-O
ct-0
5
20-F
eb-0
6
16-J
un-0
6
10-O
ct-0
6
7-F
eb-0
7
7-Ju
n-07
28-S
ep-0
7
0
16
32
48
64
80
Oil price, Brent Blend
VLCC rate, 250,000 dwt, AG - Japan
Oil price and VLCC freight rates
$ per day freight rate$ per barrel oil price
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2001 2002 2003 2004 2005 2006 9m07
VLCC AG-Japan
Suezmax Wafr-US
Aframax N Sea-UKCont
Product Caribs-US
VLCC spot and break-even rates
$ per day freight rate
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
1989 19901991 1992 19931994 19951996 1997 19981999 2000 20012002 2003 20042005 20062007
Current VLCC price in any year, interest rate average LIBOR for period + 1.25% (7.1%) , docking costs $1-4 m per 5 year period, residual value $6m after 25 years. Based on NPV calculations
Break-even rates
Freight rates
VLCC break-even rates
$ per day freight rate
21,000
26,000
31,000
36,000
41,000
46,000
1989 19901991 1992 19931994 19951996 1997 19981999 2000 20012002 2003 20042005 20062007
Break-even rates
Source: INTERTANKO
Oil price and freight rate
$/barrel
0
10
20
30
40
50
60
70
80
71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07
Nominell pris Arab Light
Reell pris Arab Light
Nominell frakt rate AG-Vest
Reell frakt rate AG-Vest
Source: INTERTANKO
Gasoline price at the pump
$ per litre
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
USA Japan Germany UK
Long haulfreight ratesMarketing
Oil price
Tax
Cost elements making up the gasoline price:
mbd
Source: IEA
World oil demand - mbd
65
70
75
80
85
901993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
litres
Source: BP Review
Oil consumption per capita
0
2
4
6
8
10
12
US Japan UK World FSU China Africa
mbd
Oil consumption if world populations consumed oil as Americans
0
50
100
150
200
250
300
350
400
450
500
World oil cons Oil cons. if all consumed as Americans
mbd
s
86 mbd 451 mbd
Seaborne oil trade and Middle East oil production
mbd
Source: Fearnleys/IEA
'000
bil tm
0
5
10
15
20
25
0
2,600
5,200
7,800
10,400
13,000
Tonne miles
Middle East Oil Production - mbd
Tanker productivity – tonne-miles/dwt
Source: Fearnleys/IEA
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 P07
mbd
Source: IEA
Sources of European oil imports - mbd
0.0
1.0
2.0
3.0
4.0
5.0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2Q07
0.00
2.70
5.40
8.10
10.80
13.50
America
Europe
Middle East
Africa
FSU
Others
Total
mbd
mbd
Source: IEA
Sources of US oil imports - mbd
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.519
98
1999
2000
2001
2002
2003
2004
2005
2006
2Q07
N America
Europe
M. East
Ven/Ecu
Africa
Others
Source: IEA
Source: IEA
Sources of Asian oil imports
3%
6%82%
5%
4%
Indonesia
Middle East
Africa
Others
Asia
Source: IEA
World oil demand increase - mbd
mbd
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
3.2
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
** Rest of world
*Middle East
USA
China
95% 7% 50% 35% 19% 19% 61% 30% 20%
Increase 2008 Rest of world:Other Asia: 0.23 mbdLatin America: 0.14 mbd Africa: 0.11 mbdEurope: 0.26 mbdOthers 0.34 mbdTotal 1.08 mbd
Source: IEA
Chinese net oil imports - mbd
mbd
0.000
0.500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
1985
198619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
07
Products
Crude
Source: BP Review/IEA
World oil supply - mbd
Source: IEA
mbd
0
3
6
9
12
15
18
21
24
2719
65
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
N America
S&C America
Europe
FSU
Middle East
Africa
Asia Pacific
TankerSupply
Tanker contracting $ bn$ bn m dwtm dwt
VLCC VLCC 13. 4 $ bn 13. 4 $ bnSuezmax: 5.9 ”Suezmax: 5.9 ”Aframax: 8.8 ”Aframax: 8.8 ”Panamax: 2.8 ”Panamax: 2.8 ”Handy: 22.9 ” (43%)Handy: 22.9 ” (43%) Source: INTERTANKO/Clarkson Shipyard MonitorSource: INTERTANKO/Clarkson Shipyard Monitor
0
10
20
30
40
50
60
70
80
Handy
Chem/Spec)
Panamaxes
Aframaxes
Suezmaxes
VLCCs
1993 and earlier sizes except VLCCs were defined differently
Tanker fleet, orderbook and phase outtankers above 30,000 dwt
m dwtm dwt
0
50
100
150
200
250
300
350
SH - 23% Orders - 39% Fleet - 100%
VLCC
Suezmax
Aframax
Panamax
Handy
29%
42%
79 m dwt 133 m dwt
Phase out SH tankers above 30,000 dwt
m dwtm dwt
0
10
20
30
40
50
60
2007 2008 2009 2010 2011 2012 2013 2014 2015
Min phase out
Max Phase out
MARPOL phase out assumes SH tankers to trade after 2010 until the age of 25 years old, EU+ phase out assumes that SH tankers all are removed from the market by end 2010 (except DB or DS ones)
Tanker fleet double-hull development
Source: Clarkson
%
622
5159
67 68 71 74 77
9478
4941
33 32 29 26 23
0
20
40
60
80
10019
91
1997
End
02
End
03
End
04
End
05
End
06
End
07
End
10*
DH SH/DB/DS
% dwt share*:
* Assumes phase out according to regulations (rounded upwards, 25 years after 2010.
Tanker deliveries, removals, max phase-out
m dwtm dwt
-40
-30
-20
-10
0
10
20
30
40
50
-02 03 04 05 06 07 08 09 10 11 12 13 14 15
Newbuilding tobalance
Max phase out
Deletions
Delveries
Surplustonnage
year
Removals in addition to phase out
Tanker fleet developmentOil and chemicals
m dwtm dwt
0
98
196
294
392
490
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 P07 P08 P09 P100
1,180
2,360
3,540
4,720
5,900
dwt
number
VLCC fleet development
Number
Source: INTERTANKO
122
137
152
167
182
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 P07P08P09P10420
462
504
546
588
630
dwt
number
m dwt
Conclusion
• High safety performance• Strong earnings – until now• Strong fleet increase• Reduced earnings