TANKERS ADAPTING TO NEW RULES AND REGULATIONS

Peter M. SwiftManaging Director, INTERTANKO

International Association of Independent Tanker Owners

260 + members: > 80% of the independent oil tanker fleet and > 85% of the chemical

carrier fleet

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

15 Committees - 4 Regional Panels

Representative Offices in Europe, US and Asia

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

Tankers Adapting to New Rules and Regulations

AGENDA:• Fleet developments:

- Oil and Chemical fleets

• Adapting to …………………..- MARPOL revisions (principally Annexes I & II)- ISGOTT- Common Structural Rules- Related developments/issues

• In the pipeline:- Annex II revisions- Annex VI revisions

• Commitment to continuous improvement

Tanker fleet developmentm dwtm dwt

0

92

184

276

368

460

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 P07 P08 P090

1,040

2,080

3,120

4,160

5,200

dwt

number

NoNo

Assumptions for period until 2009:Scheduled phase out for the period: 15.5 m dwt including 4.2 m dwt that should already have been phased out earlier than 2007Assumed removals 2007 – 2009: 29 m dwt (including conversion + other demolition)

Record ordering - despite high prices (mdwt)

20

40

60

80

100

120

Dec-9

2

Jun-9

3

Dec-9

3

Jun-9

4

Dec-9

4

Jun-9

5

Dec-9

5

Jun-9

6

Dec-9

6

Jun-9

7

Dec-9

7

Jun-9

8

Dec-9

8

Jun-9

9

Dec-9

9

Jun-0

0

Dec-0

0

Jun-0

1

Dec-0

1

Jun-0

2

Dec-0

2

Jun-0

3

Dec-0

3

Jun-0

4

Dec-0

4

Jun-0

5

Dec-0

5

Jun-0

6

Dec-0

6

95/105,000 dwt

150,000 dwt

280,000 dwt

40/45,000 dwt

Source: Fearnleys

0

10

20

30

40

50

60

70

80

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Handy

Chem/Spec)

Panamaxes

Aframaxes

Suezmaxes

VLCCs

1993 and earlier sizes except

VLCCs were defined differently

Demolition: slowed in recent years(mdwt)

0

4

8

12

16

20

24

28

3219

69

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

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

Others/NK

Bangladesh

Pakistan

India

Taiwan

Korea

China

Average age steadily reducing (tankers above 10,000 dwt)

Years

6

8

10

12

14

16

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006

Double-hull percentage rising steadily

%

6

22

5159

67 68 73 76 79 82 85

94

78

4941

33 32 27 24 21 18 15

0

20

40

60

80

1001

99

1

19

97

En

d 0

2

En

d 0

3

En

d 0

4

En

d 0

5

En

d 0

6

En

d 0

7

En

d 0

8

En

d 0

9

En

d 1

0

SH/DB/DS

DH

% dwt share* :

* Assumes

phase out

according to

regulations

(rounded

upwards, 25

years after 2010

.

(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

Chemical Carrier Fleet

• 70% of fleet double hull, almost all of remainder double bottom or double side – average age 11.5 years,

• Large order book (37% of existing fleet by dwt),• Significant changes to MARPOL Annex II from Jan 2007,

principally in carriage of veg oils – several uncertainties.

Chemical tanker fleet by hull

numbernumber

0

200

400

600

800

1,000

1,200

1,400

DB DH DS SH No info.

40,000 dwt+

30,000-39,999 dwt

20,000-29,999 dwt

10,000-19,999 dwt

5,000-10,000 dwt

Source: Chemindex/Inge Steensland

Chemical tanker fleet and age distribution

m dwt

0

2

4

6

8

10

12

14

Existing On order Existing On order Existing On order Existing On order

3-10,000 dwt 10-17,000 dwt 17--30,000 dwt 30,000 dwt +

18+

15-27

20-24

15-19

0-14

Age

years :

18%55% 37% 38%

3,000 - 17,000 dwt: 32% orderbook

Source:

Inge

Steensland

Shipbrokers

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

ISGOTT

The International Safety Guide for Oil Tankers and Terminals

Fifth Edition (2006)

Principal changes are the recommendations covering:

• Operating procedures with the introduction of the ISM Code

• Operating procedures for Tank Cleaning – moving to “Inerted” or “Not Inerted”

Common Structural Rules

• Championed from outset by owners

• Already implemented• Experiences to be

accumulated / revisions will follow in time

• Some shipyards struggling with coating performance requirements

OTHER - (Industry views)

MARPOL Annex I:• Woeful inadequacy in the provision of oily waste

reception facilities• Welcome for new requirements for the protective

location of Bunker Tanks

Need:• Reception facilities for Annex II cargoes• Timely ratification of HNS & Bunker Conventions

&

• To speak out against unjust Criminalisation

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.

Changes in the pipeline

Air Emissions:

• Revision of MARPOL Annex VI

• Other local, national and regional regulations

Of particular concern to tramp sectors, trading internationally

Existing SECAs

NOV. 2007

MAY2006

Air emissions - shipowners’ concerns over multiplicity of new requirements:

• Expanded number of SECAs, some with different requirements

• Proliferation of port, state and regional requirements – often conflicting

• Installation/retrofitting of:- multi-fuel tanks,- scrubber technologies, exhaust filters, etc. (still to be proven)

• Onboard handling and disposal ashore of toxic wastes from exhaust gas scrubbing – in addition to existing sludge handling problems

• Further fuel treatment processing

• Operational and safety concerns during fuel switchovers

• Additional fuel log record keeping and reporting

• Onus of responsibility falling solely on the owner/operator

Our industry is committed to keeping Tanker Shipping

Safe, Reliable & Cost Effective

Accidental oil spill from tankers and tanker trade

m ts

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

m bn tonne miles

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

Muchas Gracias

For more information, please visit:www.intertanko.com

www.shippingfacts.comwww.maritimefoundation.com