INTERTANKO International Association of Independent Tanker Owners

1. INTERTANKOInternational Association of Independent Tanker Owners Hellenic Mediterranean Panel Athens 29th March 2012 Overview: Association Finance Priorities + Strategic Plan Air + GHG Emissions Katharina Stanzel Deputy Managing Director INTERTANKO

2. MEMBERSHIP • 230+ Members • 3,200+ Tankers • 280+ Million DWT • Members in 40+ countries • > 75% of Global Independent Tanker Fleet • 320 Associate Members

3. MEMBERSHIP Number of ships Million dwt / number of members

4. Fleet Composition and Fee Structure

5. Average Age Membership Fleet

6. BUDGET • 2010 membership fees reduced by 10% • No change in 2011 membership fees • 2012 membership fees reduced by 5%

7. BUDGET (US$) 2011 2011 2012 (Actual) (Budget)(Budget) OperatingIncome 7,753,228 7,572,650 7,401,925 Operating Expenses-6,886,593-7,217,450-7,373,997 Operating Result 866,635355,200 27,928 Non-operating Income/expenses 87,303 -25,000-25,000 Result for Year 953,938330,200 2,928

8. Key Focus Areas

10. ANNUAL TANKER EVENT • Venue: Conrad Hotel Singapore • May 9 – Council dinner • May 10 – Council meeting • May 11 – Tanker Seminar - Tanker market - Piracy - Technical session

11. Emissions to Air • Greenhouse Gas Emissions • Carbon Dioxide • Methane etc. Marpol Annex VI • Air Emissions • SOx • NOx • Particulate Matter • Compliance through S content • Equivalent Measures accepted • Addresses Marine Fuel Oil Quality

12. MARPOL Annex VI Reg. 18.3Fuel Oil Availability and Quality Fuel oil . . shall meet the following requirements: • blend of HC derived from petroleum refining • free from inorganic acid • should not include any substance or chemical waste which: • jeopardize ship safety and adversely affects machinery • is harmful to personnel • contributes to overall addition to air emissions • Quality and Safety standards

13. HFO Quality – Recent developments Blending to meet required sulphur limits can result in: • Increased average density • Increased average catfines levels (Al+Si) • Increase in sludging problems • Reduced ignition and combustion quality • Increased problems with chemical contamination of fuel

14. Fuel Quality Issues

16. Quality Control of Bunkers • Need to clarify responsibility for ensuring bunkers delivered to ships meet relevant criteria set in ISO 8217:2010 and MARPOL Annex VI & ensure stricter enforcement of Reg. 18 and involve local authorities in quality control of fuels • Require bunker suppliers to have quality control system for fuels they sell & take corrective actions when off spec bunkers are delivered • BUT currently • No official authority involved in control and monitoring prior to fuel delivery • Control by commercial fuel tests/owners only • Responsibility for quality compliance and control should not be left with ships • Quality/type of fuel has become very relevant

18. Proliferation of Regulations • Danger of • increasingly regionalised • not harmonized regimes • causing: • complicated application requirements • safety challenges (e.g. fuel switching) • lack of predictability of available alternatives • global availability of different bunker types ? • abatement technologies still adapting to ship use

20. Emission Control Areas - ECAs NORTH AMERICA NORTH SEA & BALTIC SEA

21. 2015 Compliance Options: Fuel Liquid Natural Gas (LNG) as main fuel • High costs for retrofit & new building • Supply network to be built • Methane slip Low Sulphur fuel (0.10% MGO) • Rel. easy but expensive • Additional/converted storage capacity for MGO ? • total segregation between MGO and HFO fuel systems • High price premium (currently ~US$ 350/t) • potential availability issues

22. Compliance Options: Scrubbers • Exhaust Gas Cleaning Systems • Maturity • Availability • Performance reliability • One scrubber for each main engine or • up to 3 auxiliary engines • Time needed for retrofit: • 2-3 weeks planning installation • 7-10 days off hire • 2 weeks testing for certification

24. Cost Assessment

25. Scrubbers: Issues to Consider • Test results Is technology proven for application at sea ? Does it work with SCRs • Dimensions / physical footprint / weight • CAPEX • OPEX energy consumption • sludge treatment / disposal • Prove compliance usage + water wash discharge monitoring • Performance monitoring & documentation • Redundancy • Manufacturer capacity • Crew issues: training and qualification

26. ECA 2015 Strategy • Cost efficiency is related to time spent in ECAs

27. Greenhouse Gas Emission Reductions • Technical & Operational Measures • Ship Energy Efficiency Management Plans (SEEMP) • Energy Efficiency Design Index (EEDI) • Market Based Measures (MBMs)

28. GREENHOUSE GASES • Policy on implementation of IMO Energy Efficiency Design Index (EEDI) requirements - 4 year waiver - method of compliance • Policy on Market Based Measures (MBM) • Better acceptance of “Virtual Arrival” project with charterers

29. Ship Energy Efficiency Management Plans • Best practice guidance – TEEMP • In co-operation between members and other stakeholders • Company & Shipmanagement Plans • Voyage optimisation • Propulsion resistance management • Machinery optimisation • Cargo handling optimisation • Energy Conservation Awareness Plan

30. INTERTANKO POSITION • Welcome adoption of amendments to MARPOL Annex IV, mandating energy efficiency measures (EEDI/SEEMP regs) • Advocate: • “level playing field”: implementation of EEDI to all new build ships from the same date • Compliance with EEDI focussed on improved hull design, propulsion efficiency & energy optimisation, not predominantly reduced speed designs • Measures taken to comply with EEDI not to jeopardise or have adverse effect on safety of the ship • Emphasise that EEDI measure for new ships only

31. MARKET BEASED MEASURES - MBMs • Governments do not believe that ships can meet • GHG reduction targets without MBMs • EEDI & SEEMPs ‘unlikely to be sufficient’ but: • no reduction targets have been set! • Number of proposals discussed at IMO: • Mandatory CO2 reduction targets, • Efficiency Incentive Schemes, • Emissions Trading Schemes , • GHG Funds • Impact Study to assess suggested proposals

32. INTERTANKO POSITION • Market Based Measures not justified at this time (Industry is already incentivised by high fuel prices) • Should MBMs be required, they should: • be implemented through an international regime • be simple to enforce and to monitor • drive the right behaviour • Provide transparency to maintain current level playing field • not place disproportionate financial and operational burden on the industry

34. SUSTAINABILITY • Deep concern that the current tanker market rates are consistently below ship owners’ operating costs. • INTERTANKO’s Chairman, Capt Graham Westgarth “If these rate levels continue for a long period, this could lead to a situation where sustainability of the oil transportation industry is threatened.” “Our Members operate tankers to the highest standards and will continue to do so. Operating for a prolonged period in an environment where tanker owners are not even covering their operating costs is obviously not a situation that can be maintained.”

35. Thank You • www.INTERTANKO.com Katharina.Stanzel@intertanko.com