North American Panel October 23, 2012

1. North American PanelOctober 23, 2012 INTERTANKO OVERVIEW REPORT JOSEPH ANGELO DEPUTY MANAGING DIRECTOR

2. MEMBERSHIP BUDGET SECRETARIAT CURRENT MAJOR ISSUES TANKER INCIDENTS ANNUAL TANKER EVENT

3. MEMBERSHIP 230+ Members 3,200+ Tankers 280+ Million DWT Members in 40+ countries MORE THAN 75% OF THE INDEPENDENT TANKER FLEET 330+ Associate Members

4. m dwt/number members number ships

5. BUDGET2010 2011 2012 (Actual) (Actual) (Budget) Total Operating Income (US$) 7,381,600 7,753,228 7,401,925 Total Operating Expenses (US$) 7,062,856 6,886,593 7,373,997 Operating Result 318,744 866,635 27,928 Non-operating Income/expenses -21,179 88,303 -25,000 Result for Year 297,565 954,938 2,928

6. SECRETARIAT 21 STAFF MEMBERS IN 4+ OFFICES Oslo (8), London (11), Singapore (1), USA (1) + Brussels STAFF INCLUDES - Managing Director - Deputy Managing Director & Director of Regulatory Affairs - Technical Director (+ new Technical Manager in London) - Marine Director - General Counsel

7. CURRENT MAJOR ISSUES Sustainability Five-Year Strategic Plan Ballast water management Piracy Greenhouse gas emissions High level discussions with OCIMF

8. Sustainability INTERTANKO Council (Nov 2011) agreed that the Secretariat should: 1.     Engage in a dialogue with OCIMF on the ship’s speed which is currently used in charter party agreements, in an effort to reduce air emissions. 2.     Engage with stakeholders to brainstorm ways to address the concerns while ensuring there is not an erosion of the safety/quality standards in the current market conditions.

9. INTERTANKO Council (May 2012) agreed to: • 1. development of an optimal speed model to show the relationship between the time charter equivalent earnings and CO2 emissions, based on a known freight rate for a specific route and different tanker speeds. • 2. expand scope of the WorldScale Committee to include commercial issues that have an impact on tanker operations, including: • proper promotion of speed optimization • rising fuel costs • broker’s fees • certain charter party clauses regarding purging and cargo heating; and • possible decoupling the fuel costs from the commercial transactions.

10. TC equivalent and emission at various speeds $/day Tonnes CO2 emisson

11. EXCOM (Sept 2012): • acknowledged tanker owners contributed to the problems by over-ordering; • agreed that current market levels could actually endanger the supply chain element of safe, sustainable transportation of oil, products and chemicals.; • agreed that INTERTANKO should explore mechanisms to redress the risk/reward balance for owners with a view of ensuring future sustainability of the industry as a whole and a transparent, balanced and functioning tanker market; and • focus will be on engagement with all stakeholders, including brokers, charterers and oil companies

12. Five-Year Strategic Plan • Scenario planning looking at macro environment and influences • Key influences: • Market conditions • Geo-political situation worldwide • Environmental concerns • Most likely scenario for the next five years – • Strong environmental concerns within an unstable geopolitical situation

13. Five-Year Strategic Plan Major Issues • Sustainability • Human Element • Tanker safety and performance • Greenhouse Gas Emission reduction • Air emissions reduction • Ballast water management • Maritime security threats

14. Five-Year Strategic Plan Desired Outcomes • Sustainability • Members have access to tools, models and information to enable them to continue operating • Tanker Safety & Performance • Members proactively positioned for top performance with regard to safety & performance

15. Five-Year Strategic Plan Desired Outcomes • Human Element • Criminalization of seafarers • Visas and shore access • Seafarer welfare and fair treatment • Competence • Availability

16. Five-Year Strategic Plan • Greenhouse Gas Emission Reduction • Members’ new tankers meet, preferably exceed, required EEDI values and CO2 emission reductions targets • Development of solid industry practices and a monitoring system relevant to GHG emission reductions from tankers in operation, in cooperation with other stakeholders such as OCIMF, allowing Members’ tanker fleets to achieve & demonstrate increases in efficiency • While legislation on MBMs is not justified at this time, if it were to be implemented, the Association will support/ promote the most practical and transparent MBM alternative at IMO, but not at regional level

17. Five-Year Strategic Plan Desired outcomes • Air Emission Reduction • Promote global switch to MGO • Members fully advised on best choices for compliance with ECA requirements (and on how to assess/select scrubbers) • Revised EU Sulphur Directive aligned w/MARPOL • Ballast Water Management • Members able to achieve compliance with current and future discharge standards (both regionally and internationally)

18. Five-Year Strategic Plan Desired outcomes • Global Maritime Security Threats • Members suitably informed to protect vessels and crew from maritime security threats • Key stakeholders develop policies and positions benefiting the whole industry to ensure freedom of navigation • Members suitably informed of sanctions that affect their trading patterns to enable them to make informed decisions on lawful trade

19. Greenhouse gas emissions • Energy Efficiency Design Index (EEDI) • Amendments to the MARPOL Convention • Enter into force Jan 1, 2013 for new ships • Provisions for 4 year waiver • Method of compliance?? • Ship Energy Efficiency Management Plan (SEEMP) • Applies to new and existing ships • Ship-specific plan developed by the ship owner • INTERTANKO guide on Tanker EEMP

20. Greenhouse gas emissions • INTERTANKO policy on implementation of IMO Energy Efficiency Design Index (EEDI) requirements: • 4 year waiver – Apply equally to all new ships • Method of compliance – Improved hull design, propulsion efficiency and energy optimisation, rather than predominantly on reduced speed designs

21. Greenhouse gas emissions • Market Based Measures (MBMs) • Governments believe EEDI is not enough • Nine proposals under consideration at IMO • Fund, Emission Trading Scheme (ETS), Efficiency incentive scheme • INTERTANKO Policy on MBMs • MBMs are not justified at this time • If an MBM should be required: • Fund is simplest and most transparent • Not in favor of an ETS

22. High level discussions with OCIMF • Greenhouse gas emissions • Piracy – Armed guards • Tanker officer competency and experience • Vetting matters • Mercury in crude oil, safety aspects • Sustainability of the Tanker industry

23. Tanker incidents - all tanker types and sizes Number incidents 1,000 ts oil spilt Source: INTERTANKO, based on incident reports from LMIU and pollution figures from ITOPF Accidental oil pollution from tankers was record low in 2010 and again in 2011

24. ANNUAL TANKER EVENT Venue – Grand Hotel, Oslo, Norway Dates – May 28 – 31, 2013 Events: Executive Committee Meeting Council Dinner and Meeting Annual General Meeting Gala Dinner Tanker Seminar Workshops

25. THANKYOU!! WWW.INTERTANKO.COM