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Intertanko “Preparing for the Unpredictable” Robert P. Curt ExxonMobil Marine Transportation

Intertanko “Preparing for the Unpredictable” Robert P. Curt ExxonMobil Marine Transportation. Points to be Covered. What makes the tanker market move? What causes oil spill legislation? ExxonMobil’s efforts to reduce these causes ExxonMobil’s oil spill record

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Intertanko “Preparing for the Unpredictable” Robert P. Curt ExxonMobil Marine Transportation

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  1. Intertanko “Preparing for the Unpredictable” Robert P. Curt ExxonMobil Marine Transportation INTERTANKO APRIL 2003

  2. Points to be Covered • What makes the tanker market move? • What causes oil spill legislation? • ExxonMobil’s efforts to reduce these causes • ExxonMobil’s oil spill record • ExxonMobil’s demurrage claims initiative • Positioning for the next event INTERTANKO APRIL 2003

  3. Tanker market responds to critical events – generally short-term rates go up INTERTANKO APRIL 2003

  4. Pre-Gulf War escalating peaks are a sign of improved balance between supply & demand INTERTANKO APRIL 2003

  5. Dealing of Wild Cards becoming more frequent INTERTANKO APRIL 2003

  6. The late 2002/early 2003 rate jump: • Weather • Prestige sinking • Venezuelan strike • War • New/increased long haul VLCC cargoes • Carib crude to Far East • European/American fuel to Singapore • Black Sea crude to Far East & USWC INTERTANKO APRIL 2003

  7. Certain oil spills result in changes in legislation, even if they are not the largest Source: ITOPF INTERTANKO APRIL 2003

  8. ExxonMobil Focus on Flawless Operations • Rigorous vetting reduces unpredictable events • Focus on improvements that can benefit both charterer and owner • Flexible chartering coverage strategy based on mix of term and spot that provides ability to cope with unpredictable events INTERTANKO APRIL 2003

  9. ExxonMobil Vetting Requests Have Significantly Increased ** More owners meet criteria today with far less failing vetting INTERTANKO APRIL 2003

  10. ExxonMobil Has Significantly Improved Oil Spill Performance of Owned and Chartered Vessels • Our vetting affiliate works closely with owners to assist them in • meeting improved standards • Development of Marine Environmental & Safety Criteria • Term Business with High Quality Owners • Oil to Water incidence rate has dropped from 1 per 100 • port calls in 1984 to .02 per 100 port calls in 2002 INTERTANKO APRIL 2003

  11. Recent ExxonMobil Oil Spill History Continuous improvement in operated fleet performance In 2002, operated and time chartered fleets spilled a total of ~2 barrels - Or 2.3 teaspoons spilled / 1 million gallons transported INTERTANKO APRIL 2003

  12. ExxonMobil Claims Processing Improvement Problem: No standard was in place for submitting demurrage claims • No administrative guidance • Extensive recycling of documents • Required great personnel effort • Excessive delay before settlement INTERTANKO APRIL 2003

  13. ExxonMobil Claims Processing Improvement • Shipowners and charterers working together to improve efficiency • New clause implemented to improve claims processing • Initial reluctance from industry: • Why change? • “This can’t be good for owners!” INTERTANKO APRIL 2003

  14. ExxonMobil Initiative For Efficient Demurrage Claim Processing • Supporting Documentation Needed: • Completed ExxonMobil Port Log • Notice of Readiness Messages at all ports/berths • Bills of lading for co-loads and parcels tankers • Notes of protest given or received by vessel • Pumping logs • Crude Oil Washing logs (if applicable) • Statement of facts/Port logs/ Terminal time sheets • Agents’ time sheets INTERTANKO APRIL 2003

  15. Claims Processing Improvement Initiative • Following the administrative procedure will speed • up claims processing • Average claims processing time has been reduced • in half after implementation of the clause • Although initial industry reluctance to accept • change, results have been favorable to owners • Charterer’s administrative efforts reduced • Owner gets paid sooner • Broker gets commission sooner • Win - Win - Win INTERTANKO APRIL 2003

  16. Continuous Improvement • Electronic submissions of ExxonMobil Port Log • Electronic submission of all time logs to further reduce complications • These initiatives will allow the analysts to spend their time reviewing claims instead of reentering data • Goal: Get demurrage to be as standard as freight INTERTANKO APRIL 2003

  17. Where do we go from here? • Maintain rigorous vetting programs that reward quality vessels, owners and operators • Operate flawlessly • Generate contingency plans for possible economic, market, and operational risks • Maintain operational/chartering flexibility to meet unforeseeable contingencies • The next unpredictable event – will the industry be ready? INTERTANKO APRIL 2003

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