NORTH AMERICAN PANEL April 27 2010 INTERTANKO OVERVIEW

NORTH AMERICAN PANEL April 27, 2010 INTERTANKO OVERVIEW REPORT JOSEPH ANGELO DEPUTY MANAGING DIRECTOR

MEMBERSHIP BUDGET SECRETARIAT COUNCIL ISSUES EXCOM ISSUES

MEMBERSHIP • 250+ Members • 3, 000+ Tankers • 260+ Million DWT • Members in 40+ countries • MORE THAN 75% OF THE INDEPENDENT TANKER FLEET • 320+ Associate Members

MEMBERSHIP Members/million dwt No. of tankers

BUDGET 2008 2009 2010 (BUDGET) Total Operating Income (US$) 8, 689, 980 8, 603, 025 7, 291, 509 Total Operating Expenses (US$) 8, 473, 822 6, 511, 325 6, 767, 825 Operating Result 216, 158 2, 091, 700 523, 684 Non-operating Income/expenses -291, 883 270, 000 -25, 000 2, 361, 700 498, 684 Result for the Year -75, 725

BUDGET • Reasons for large operating surplus for 2009 year end - Virtual retention of all members in 2009 - Disciplined control of discretionary expenditures (limiting of activities) - Expenditures benefiting from strong US dollar against British pound and Norwegian Kroner • Membership fees for Members and Associate Members in 2010 to be reduced by 10%.

SECRETARIAT • 24 STAFF MEMBERS IN 4+ OFFICES Oslo (12), London (10), Singapore (1) USA (1) + Brussels, Manila (consultant) • STAFF INCLUDES - Managing Director - Technical Director - Director, Regulatory Affairs - Marine and Chemical Director - General Counsel

COUNCIL ISSUES NEW LEADERSHIP ORGANIZATION REVIEW TANKER MARKET CRIMINALIZATION OF SEAFARERS FACILITATION PAYMENTS PILOTS

NEW LEADERSHIP CHAIRMAN – Graham Westgarth Teekay Shipping (Canada) VICE CHAIRMEN – David Koo, Valles Shipping (Hong Kong) Bengt Hermelin, SAMCO (Singapore) Robert Johnston, OSG (USA) FOUR NEW EXECUTIVE COMMITTEE MEMBERS, including Carlos Juan Madinabeitia, Tradewinds (Venezuela)

ORGANIZATION REVIEW Operational • • • Clarify priorities Narrow scope Reduce administrative burden Improve communications Reduce number of meetings Subcommittees are of value, but there are too many Structural • Executive Committee role vs Council role is unclear • Structure is heavy • Regional panel role is unclear

ORGANIZATION REVIEW Council • Discusses and approves the key issues, policies and priorities of INTERTANKO for the following year • Elects the Executive Committee • Approves the membership fees for the following year • Approves the accounts and auditor’s report Executive Committee • Implements the strategy and priorities of INTERTANKO, as directed by the Council, and the direction of the secretariat • Establish working group to review priorities and scope of activities

ORGANIZATION REVIEW Regional panels • Panel Chairman a member of the Executive Committee • Panel Chairmen, in conjunction with the regional membership, to decide the appropriate arrangements and frequency of meetings for maximum effectiveness Committees • Decide frequency of meetings based upon workload Secretariat • Develop improved communications through web site and other available means • Reduce administrative workload

World GDP and oil demand change % Oil/tanker demand correlates with Economic growth Positive growth projected – but there is still uncertainty Source. IMF/BP/IEA/Fearnleys

Tanker deliveries, removal, phase out m dwt Growth in tanker fleet since 2000 The fleet will continue to grow even if all SH tankers are phased out (Delays in deliveries must be anticipated) Year

Tanker fleet development (Assumed max phase out, orderbook March 2009, include chemical tankers) m dwt Tanker fleet increase 2003 -2012: 70% number

Oil demand, tonne-mile, tanker fleet indices Tanker fleet increase 2002 -2010: 46% Source: IEA, Fearnleys, INTERTANKO

Tankers used for floating storage Number 17 61 12 42 Tankers tied up in storage has saved the market and may be major wild card in 2010 Source: EA Gibson

Chinese oil import mbd China will be the most important market for tankers

CRIMINALIZATION • Criminalization of seafarers - “Prestige”- Spain - “Hebei Spirit” (South Korea) - “Tosa” case (NYK VLCC – Taiwan) - “Full City” (COSCO Bulk carrier – Southern Norway) • Industry-wide support for adherence to the IMO-ILO Guidelines on the Fair Treatment of Seafarers in the event of a Maritime Accident • Council agreed that INTERTANKO - needs a strategy on the issue of criminalisation of seafarers as a base for its future work - develop a position paper for use in discussion with governments and others based on factual examples

FACILITATION PAYMENTS • Facilitation Payments are frequently made to Authorities, Pilots, Terminal Officials, Inspectors, and more for “smooth” trade • However, Shipowners are expected to warrant that no bribes (and in some cases also no facilitation payments) will be paid during the performance of the contract and that owners are obliged to indemnify charterers from all consequences if any such payments are made.

FACILITATION PAYMENTS • Raise the issue with OCIMF, Round Table partners and Governments, as applicable • Members are encouraged to report incidents to INTERTANKO • INTERTANKO Documentation Committee is developing model clauses, e. g. for Voyage Charters: …. . any waiting time caused by the owners refusal to pay a facilitation payment or bribe shall count as laytime or if on demurrage time on demurrage, even if the vessel formally lacks any local certificates, clearances or there any other … circumstances or formalities that ordinarily could prevent laytime from starting, if the reason the owners do not have such approval etc. is because owner has refused a facilitation payment or bribe.

PILOTS • Discussion Group meetings with the leadership of the International Maritime Pilots Association (IMPA) and the American Pilots Association (APA) • Aim is to improve maritime safety and to explore areas for future cooperation with pilot groups • Issues have included bridge resource management, criminalisation of seafarers, maritime casualties, engine failures and pilot safety when embarking • Meetings have been very successful in gaining trust • IMPA/APA President proposed joint signing of Memorandum of Agreements (MOAs) to formalize relationship • Council has authorized Chairman to sign MOAs

Pilotage in the Straits of Malacca Consideration of voluntary pilotage for laden VLCCs through-out Malacca and Singapore Strait transits Developments: • Indonesia leading littoral states in new pilotage requirements (voluntary) • Littoral states studying pilotage needs as well as carrying capacity in Straits Considerations: • Availability of qualified pilots (marine advisors) – PSA Class A 1 only? • Charterers support : Chevron, Exxon and Total already suggest/request • Possibility for littoral states to make mandatory and increase pilotage dues • above has implications for other parts of the world • Why limited to only laden VLCCs? What of smaller tankers or other ship types?

EXCOM ISSUES GREENHOUSE GAS EMISSIONS PIRACY US POLICY ISSUES EU ISSUES WORKPLAN PRIORITY REVIEW CHINESE MARINE POLLUTION REGS CONDITIONS OF CLASS MERCURY IN CRUDE OILS IMO YEAR OF THE SEAFARER FDIP

China Oil Pollution Regs Regulations on the Prevention and Control of Ship. Induced Pollution of the Marine Environment • • • 1 st March 2010 Any ship-induced pollution accident or any ship-related operation that causes or may cause pollution damage to the internal waters, territorial seas, and the contiguous zones, exclusive economic zones and continental shelves of the PRC and all other sea areas under the jurisdiction of the PRC Need for ship emergency response plans All ships, except those of less than 1, 000 gt and not carrying oil cargoes, must carry insurance to cover claims for pollution The limit of liability is that in the PRC Maritime Code (LLMC 76). The insurance must be provided by an entity approved by the China MSA The operators of any ships carrying bulk hazardous and pollutant liquid cargo shall contract with an MSA approved local clean-up contractor It would seem that there this no limit of liability PRC Maritime Code (LLMC 76) Receivers of persistent oil cargoes are required to contribute to the PRC Fund, which would compensate for ship-induced pollution claims that are in excess of CLC limits. Provisions for discharge and receipt of waste (port reception facilities)

China Oil Pollution Regs Regulations on the Prevention and Control of Ship. Induced Pollution of the Marine Environment INTERTANKO Observations and Queries 1. 2. 3. 4. 5. 6. 7. 8. Not certain whether CLC 92 for persistent oil or Bunker Convention 2001 for ships over 1, 000 gt would suffice in terms of insurance Entities approved by the China MSA to provide insurance cover – P&I? Require a list of approved clean-up contractors asap so companies can begin establishing contracts by the 1 st March deadline Although China is not a party to the Fund, contributions to a PRC Fund would seem to be a local variation on the CLC Fund principle Assumed that SOPEP and SMPEP would suffice as the ship emergency plans Not clear whether standardised advance notification forms and waste delivery receipts for port waste reception facilities will be used Await an official english translation and further guidance IG P&I clubs state delay for 3 months – no official proof/evidence received

FDIP Freight and Demurrage Information Pool • Helps members with demurrage and other claims against charterers which are not dealt with on a timely basis • On average, takes only 30 days from reporting a claim to the FDIP before payment is received • Last year the FDIP assisted in the settlement of claims totalling over USD 5 million • Annual fee is USD 1440 for entire fleet no matter how many claims are chased • For further information contact Michele White (michele. white@intertanko. com)

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