ASTM INTERNATIONAL SEMINAR ENVIRONMENTAL REQUIREMENTS DECEMBER 9, 2009

1. ASTM INTERNATIONAL SEMINARENVIRONMENTAL REQUIREMENTSDECEMBER 9, 2009 MARINE FUEL STANDARDS JOE ANGELO DEPUTY MANAGING DIRECTOR

2. INTERTANKO INTERTANKO is the International Association of Independent Tanker Owner representing more than 80% of the world’s independent tanker owners Our Members primary goal is to lead the continuous improvement of the tanker industry’s performance in striving to achieve the goals of: - Zero fatalities - Zero pollution - Zero detentions

3. FUEL STANDARD ISSUES • Fuel quality • Fuel lubricity • Fuel viscosity • Fuel switching

4. PROPOSAL TO IMO In 2006 INTERTANKO submitted a proposal to IMO to reduce air emissions from ships • Ships should use distillate fuels with a sulphur cap of 1% (later to 0.5%) • To ensure fuel quality, the fuel should comply with a fuel specification based upon the ISO 8217 standard

5. OUTCOME IMO adopts amendments to Annex VI (entry into force on July 1, 2010) • Jan 2012 – fuel with sulphur content of 3.5% max worldwide outside ECA (Jan 2020 – 0.5% max) • July 2010 - fuel with sulphur content of 1% max in ECA (July 2015 – 0.1% max) IMO requests ISO to review the marine fuel specifications ISO conducting review of ISO 8217 - Specifications of marine fuels

6. FUEL QUALITY Annex VI, Reg 18 - Fuel Oil Quality • Fuel oil shall be free from inorganic acid • Fuel oil should not include any substance or chemical waste which: - jeopardizes ship safety or adversely affects machinery performance- is harmful to personnel- contributes to additional air emissions • Fuel supplier certifies that the fuel meets requirements

7. FUEL QUALITY • Party obligations: • take measures to promote fuel availability • require suppliers to provide BDN and fuel sample • maintain a register of local fuel suppliers • take action against fuel suppliers that provide non-compliant fuel to ship • Control by commercial fuel tests only • No official authority involved in control and monitoring prior to fuel delivery

8. FUEL QUALITY • Plenty of requirements for the ship, the fuel supplier and parties to Annex VI • Ship leaves the port with the assumption that the fuel is compliant BUT, • No mandatory control mechanism to ensure that the fuel is compliant • Potential to expose ship to enforcement action by port states and/or engine problems with bad quality fuel

9. FUEL QUALITY • Documentation indicates that fuel is compliant, but ship encounters problems: - Engine failure - Ship black out - Fuel pump failure - Reduced engine power • Further analysis has shown: - Chemical wastes added to fuel - Fuel does not meet ISO specs - Fuel contains solid contaminates - Sulfur exceeds allowable limits

10. FUEL QUALITY Number of Tanker Engine and Hull/Machinery Incidents Based on data from LMIU, ITOPF + others

11. FUEL QUALITY INTERTANKO believes more can be done • Elimination of poor fuel quality needs to be addressed proactively, rather than reactively after a serious accident occur • Appropriate test methodologies and standards are in place • IMO should adopt a fuel standard with a mandatory control mechanism to ensure compliant fuel

12. RELATED DEVELOPMENT California Air Resource Board (CARB) requires oceangoing vessels to use: • July 2009 – MDO with sulphur content of 0.5% max or MGO • Jan 2012 – MDO or MGO with sulphur content of 0.1% max • INTERTANKO commented at CARB hearings supporting intent, but recommending delaying dates

13. FUEL LUBRICITY • One of the main reasons INTERTANKO proposed later dates was to gain more knowledge and experience with the use of distillate fuels with sulphur content of less than 1% • INTERTANKO’s initial concern with distillate fuel with a sulphur content of less than 1% was lack of lubricity resulting in excessive engine wear

14. FUEL VISCOSITY • Since the introduction of the CARB requirements there has been an increase in vessel power losses, loss of fuel pump pressure and engines not responding to speed orders in California ports • Viscosity of the fuel is driving the propulsion losses and equipment failures

15. ISO 8217 FUEL STANDARD • ISO has completed Draft International Standard (DIS) that is currently out for balloting until December 17 • DIS has minimum viscosity of 2 for DMA (diesel) and 1.4 for DMX (gasoil) • A minimum viscosity of at least 3 is recommended • American National Standards Institute (ANSI) is US voting body

16. ISO 8217 FUEL STANDARD Friday, October 23 Lloyd’s List “Revisions to fuel oil standards could put seafarers at risk” “DNV Petroleum Services has raised serious concerns that a proposed revision of the International Standards Organization/Draft International Standard 8217 marine fuel oil quality specification “may have a negative impact on ship operation and crew safety. DNV is…calling for re-evaluation of viscosity limits for gas oils. In a circular, DNV said: “If no precautions are taken, the actual injection viscosity will be below the lowest limit recommended by major engine makers.”

17. FUEL SWITCHING • US Coast Guard recognizes problems of switching from residual to distillate fuels and issues two SAFETY ALERTS • American Petroleum Institute issues document “Technical Considerations of Fuel Switching” • US Coast Guard leads ISO Working Group to develop ISO standard on “Critical systems for propulsion”

18. RECOMMENDATIONS • ISO should finalize standard on “Critical Systems for Propulsion”, including provisions on fuel switching • Government and industry should express safety concerns to ANSI about minimum viscosity levels in DIS 8217 • Engine manufacturers should develop performance additives to ensure good lubricity for use of 0.1% fuels

19. RECOMMENDATIONS • IMO should adopt a fuel standard • IMO should develop criteria for control of fuels prior to delivery to ships • Fuel compliance should be verified by test results performed prior to delivery of fuel to ship • Verification should be performed by or monitored by government authority

20. THANK YOU! WWW.INTERTANKO.COM