Anti-Trust/Competition Law Compliance Statement

1. Anti-Trust/Competition Law Compliance Statement INTERTANKO’s policy is to be firmly committed to maintaining a fair and competitive environment in the world tanker trade, and to adhering to all applicable laws which regulate INTERTANKO’s and its members’ activities in these markets. These laws include the anti-trust/competition laws which the United States, the European Union and many nations of the world have adopted to preserve the free enterprise system, promote competition and protect the public from monopolistic and other restrictive trade practices. INTERTANKO’s activities will be conducted in compliance with its Anti-trust/Competition Law Guidelines.

2. UPDATE ON TECHNICAL COMMITTEE ISSUES INTERTANKO North American Panel April 2010

3. ISSUES 1. Mercury in cargoes 2. Verification of damage stability on tankers 3. MSDS (developing a guide) 4. Condition of class 5. Inert gas on small tankers 7. Lifeboat safety 8. Recovery systems 9. Bunker Sub-Committee issues

4. MERCURY IN CARGOES • Some crude oils contain mercury (Hg) • Amounts at parts per billion (ppb) levels but still significant • OCIMF has developed an awareness guide • The scope of it is to raise awareness and provide information and guidance on: • mercury as a natural element, its toxicity and hazards • what would be a hazard threshold value of mercury content in liquid • methods to detect and measure mercury content • how to handle the cargo and measures of personal protection • safety guidance for COT cleaning & handling the wash water/sludge • procedures for COT decontamination

5. MERCURY IN CARGOES • Apparently oil companies have own information on crude oils with Hg • Tankers, not aware of the Hg content on previous cargoes, may lose contracts • Cost of decontamination on $1 mill level • Singapore MPA accepts hot work on their port only for Hg decontamination of COT • OCIMF Guide might not contain a list of crude oils experiences with high Hg

6. MERCURY IN CARGOESINTERTANKO Requests • Include Hg content for each cargo in the MSDS • Information to be provided well in advance of loading • Release an indicative list of crude oils indentified as having (possible) high Hg content, or • Release an indicative list of fields/wells with crude oils having Hg content • List updated as soon as information on a new crude oil or a new well with high content of mercury is detected • Measures for Hg decontamination of COT indicated by charterers

7. DAMAGE STABILITY IN TANKERS • Onboard stability booklet not a sufficient tool for checking compliance • IMO agreed to develop guidelines for both: • verification of compliance with the requirements for damage stability at the design stage of the vessel • verification at the various operational stages • The completion estimated in two years • UK MCA, INTERTANKO, OCIMF and ICS to work on the operational guidelines

8. DAMAGE STABILITY IN TANKERS • Paris MoU Concentrated Inspection Campaign (CIC) in September 2010 • Verification questionnaire ready in May 2010 • Means to prove compliance: • being loaded in a condition as per stability booklet • long-handed calculations • class-approved software onboard • another method • INTERTANKO to comment on the Paris MoU questionnaire

9. MSDS(Material Safety Data Sheets) • MSDS for: • oil/fuel oil as cargo and • bunkers • SOLAS VI/5-1 – into force on Jan 1, 2011 • MSC 288(86) – IMO Guidelines for MSDS format and content • INTERTANKO to suggest guidance for tankers in case MSDS is: • not provided • provided but data not sufficient/in accordance with the IMO guidelines or generic and not specific to the cargo • Adding a new criterion in the TVD for reports on MSDS • C/P clause to cover issues linked to the supply of MSDS and the accuracy of the information provided

10. CONDITION OF CLASS (CoC) • Some oil companies do not accept tankers with CoCs on the hull condition • No matter where, no matter the extent • Maybe an overkill type of reputation risk management protection policy • Penalty on transparency & integrity in reporting • Removes good practice of pre-drydock survey • Pre-drydock surveys CoC to be corrected at dry-docking but . . . • Tankers risk losing business before that! • Regrettable hindrance of a good industry practice!

11. VIQ 2.15 - Is the vessel free of CoC or significant recommendations, memoranda or notations? • Record any CoC or significant recommendations, memoranda or notations of any nature, including due dates as an Observation. • Where class records address structural issues of concern, including bottom pitting, areas of substantial corrosion, cracks, buckling or serious indents, record the details as to the extent and the measures taken to arrest further development. • Where a CoC has been postponed, the details including the CoC, original date and the new date for completion should be recorded as an Observation.

12. CONDITION OF CLASS (CoC)Actions • Class alternative wording for the Notes to the VIQ 2.15 • IACS invited to the OCIMF General Purpose Committee to explain or demonstrate that VIQ 2.15 can cause more safety problems • OCIMF statistics from SIRE 2009 reports: • Out of 18,586 inspections (not vessels!) in SIRE database: • 2,470 (13%+) contain negative comments linked to CoC • 15,997 (86%+) contain no CoC related issues • 119 - not applicable or not decided OCIMF to re-run as these statistics are not representative • INTERTANKO to substantiate the new text of VIQ 2.15 has triggered an increase on CoC related observations • Class review the standardisation of the language and terms used on CoC • Call for a workshop

13. AMENDED VIQ – MORE OBSERVATIONS New VIQ wording triggers more observations The rate of Observations issued under the new VIQ 2.15 increased significantly.

14. INERT GAS ON SMALL TANKERS • Draft amendments to SOLAS regulation II-2/4.5.5 • IG plant for 5000 DWT <all new tankers < 20,000 DWT carrying liquid cargoes having flashpoint < 60°C • For Chemical Tankers, application of inert gas may take place after the tank has been loaded but • before [the ship leaves the berth of loading or in the event of loading at anchorage] [arrival at the discharge port] [prior to commencing of discharge], before the ship leaves the anchorage position (alt.1) • before commencement of discharge and must continue to be applied until that cargo tank is next gas free (kept inerted during discharge, during tank cleaning)(alt.2) • For chemical tankers, nitrogren as inerting medium • INTERTANKO policy: • all tankers to have an IG plant • study to consider feasibility of IG plant on smaller tankers

15. LIFBOAT SAFETY • IMO develops guidelines for evaluating existing hooks against the new hook design criteria: • when the hook is fully reset in the closed position, the weight of the lifeboat does not cause any force to be transmitted to the operating mechanism, which could cause the inadvertent release of the lifeboat; • locking devices cannot turn to open position due to forces from the hook load; and • if a hydrostatic interlock is provided, it shall automatically reset upon lifting the boat from the water • Design review by administrations and take into account wear and tear of the critical parts (no criteria given though)

16. LIFEBOAT SAFETY • IMO develops guidelines to include a hook stability test • The hooks should remain closed throughout the hook stability test while under load • If any hook opens during the test, all other hooks of the same type should be tested in the case of cargo ships • If the hooks do not remain closed throughout the test while under load, the hooks should be replaced at the earliest available opportunity and no later than the next scheduled dry-docking. Until the hooks are replaced, additional safety measures must be taken, including use of fall preventer devices • ISTEC: responsibility for testing & evaluating existing hooks not with manufacturers but with Flag/RO • Hook replacement should be a transparent, achievable and practical evaluation process

17. RECOVERY SYSTEMS • IMO develops performance standards on recovery systems • Suggestions that all ships have systems "capable to recover unconscious persons from the sea with significant wave heights of at least 3 metres, with a rate of 10 persons per hour ". • Performance standards are unrealistic • Pragmatic approach for procedures in using existing equipment rather than introducing new equipment • Urge Coastal States to improve their respective SAR responsibilities and capabilities rather than imposing unrealistic and cumbersome equipment onboard merchant ships

18. REGULATIONS ON BUNKERS • ANNEX VI TO MARPOL CONVENTION • limits the sulphur content in marine fuels • different sulphur limits in open sea and in ECAs • requires quality criteria for the marine fuels • EU SULPHUR DIRECTIVE • additional provision: use of 0.10% sulphur content fuel when ships ”at berth” (1 January 2010) • MGO/MDO on the EU market should have < 0.1% S content (1 January 2010) • CALIFORNIA AIR RESOURCE BOARD (CARB) • use marine distillates within 24nm of the shore • sulphur content in the marine distillates: • before 1 January 2012 – MDO < 0.50% ; MGO <1.50% • after 1 January 2012 - MDO/MGO< 0.10%

19. APPLICATION DATES & CAPs HFO MGO LSFO MDO/MGO MDO MGO

20. CHALLENGES FOR SHIPS • Switching between at least 3 grades of fuel • Calling at EU ports, ships need to use: • Deep sea fuel (HFO) • ECA fuel (LSFO) • EU - ”at berth”/”at anchor” fuel (MGO) • Onboard storage & segregation capacity • Increase risk of fuel incompatibility • Increases the risks of boiler incidents • Safety requires upgrading/modifications • Viscosity, lubricity, flash point temp.

21. OPTIONS FOR SHIP OWNERS • CARB/EU regulations (2009/2010) • use of MGO • alternative technology not available • shore power – little supply; safety & legal liability issues for tankers • fuel supply: so far no problems reported • IMO/ECA (1 Jan. 2015) • will have a greater impact • MGO increase demand • alternative technologies? existing ships? • alternative fuels – if any, for local trade only

22. OPTIONS FOR SHIP OWNERS • IMO Global (1 Jan. 2020/2025) • complete change to marine distillates (?) • expected demand in range of 500 mill. t/year • gradual phase-in due to ECAs • Scrubbers dilemma • availability & Coastal States policies on scrubbers • use HFO but more cleaning installations and more hazardous waste to dispose; or • use MGO but remove cleaning installations and minimise onboard generated waste; less incidents • Alternative fuels • natural gas: possible but not yet for long voyages • bio fuels: not recommended for shipping

23. NORTH AMERICAN ECA Entry into force 1 August 2012 • Challenges: • Extent • Fuel availability • Ship bunker capacity 200 nm 200 nm Caribs?

24. N AMERICAN ECA - COST IMPACT* • Extra costs of a VLCC (2 m bbls) for a round trip of 400 nm : $40k to $100k (premiums for MGO of $200/t and $500/t respectively) • 0.8% to 2.0% increase in transportation costs for a 2 m bbls VLCC from Persian Gulf to US Gulf • Apparently US and Canada will have minimal problems to ensure supply * Poten Fuel Oil Monthly Opinion, 6 April 2010

25. GLOBAL BUNKERING Marine distillates on EU market: < 0.10% sulphur content Source: Poten & Partners

26. FUEL OIL QUALITY - REGULATION 18 • blend of HC derived from petroleum refining • free from inorganic acid • should not include any substance or chemical waste which: • jeopardise ship safety and adversely affects machinery • is harmful to personnel • contributes to overall addition to the air emissions • Annex VI – Regulation 18 does not define parameters for a fuel oil standard • Annex VI – Regulation 18 requires MARPOL sample & BDN guaranteeing fuel compliance

27. FUEL OIL QUALITY - REGULATION 18 • Ship owners buy a product (i.e. bunker) • Bunkers cannot be used as bought and need onboard treatment • Ship owners still do not know what they receive and test the product they buy against a very short specification • Ship engines – only engines in transportation being damaged by the fuel used!

28. TANKER ENGINE INCIDENTS *102 days Based on data from LMIU, + others

29. COMPLIANCE - BDN INFORMATION • Name and IMO Number of receiving ship • Port • Date of commencement of delivery • Name, address, & tel. number of marine fuel oil supplier • Product name(s) • Quantity in metric tons • Density at 15°C, kg/m3 • Sulphur content (%m/m) • A declaration signed and certified by the fuel oil supplier’s representative that the fuel oil supplied is in conformity with the applicable subparagraph of regulation 14.1 or 14.4 and regulation 18.3 of this Annex. HOW IS THIS ASCERTAINED? ACTUAL or TYPICAL VALUES?

30. CONTROL OF FUEL OIL • Port Authority obligations: • take measures to promote availability • require suppliers to provide BDN and sample • maintain a register of local suppliers • supplier certifies fuels meet Reg. 14 & 18 • BUT • No official authority involved in control and monitoring prior to fuel delivery • Control by commercial fuel tests only • Responsibility for quality compliance and control should not be left with ships • Quality/type of fuel has become very relevant • Bio-contamination, catfines & ignition quality

31. INTERTANKO SUGGESTS • MARPOL Annex VI includes relevant safety parameters from ISO 8217 • Registers of local suppliers with IMO • Control of bunkers before supply • No onboard blending during delivery • Monitoring reports from Administrations on non-compliant fuel deliveries • Keep updated list of these reports on the web • Set up a web page where INTERTANKO Members can record their experiences with suppliers

32. CONCLUDING REMARKS • European refining has to catch up on efficiency • Switch to MGO most probable and possible • Marine distillates will be provided if required • Alternative fuels – long term solution • Technologies – long term solutions • Onboard sulphur cleaning is not the real solution to environmental challenges • Business will stay but will change significantly in terms of: • quality control • type of products

33. THANK YOU For more information please visit www.intertanko.com dragos.rauta@intertanko.com