INTERTANKO MEETING

Houston

Presented by

Eric Osen24 September 2002

ChevronTexaco Shipping Company LLCChevronTexaco Shipping Company LLC

Clearance & Vetting SystemClearance & Vetting System

ChevronTexaco Shipping Company LLC (CTS)ChevronTexaco Shipping Company LLC (CTS)

the Companythe Company

• Established in 1896• The exclusive provider of marine transportation

and services to the ChevronTexaco companies• Provides day-to-day support to Logistics &

Trading• Manages 30 vessels including FSOs and FPSOs

and LPG carriers• Negotiates spot, period and bareboat charters• Provides marine and analytical expertise for

upstream and downstream projects• Responsible for all ChevronTexaco marine

activities

ChevronTexaco Shipping Company LLCChevronTexaco Shipping Company LLC

Clearance & Vetting OrganizationClearance & Vetting Organization

T. Pappas

LondonS. Emilsson

+44 (0) 207 - 719 -3925

C. Hendry+44 (0) 207 - 719 -

3124

HoustonW. A. Siegel

+1 713 752 7422J. Smythe

+1 713 752 7713

SingaporeOng C. J.

+65 6318-1567Tan S. Y.

+65 6318-1133

San RamonF. Modugno

+1 925 973 4204E. Osen

+1 925 973 4299S. Webb

+1 925 973 4207M.J. Yeong

+1 925 973 4248T.D. Smith

+1 925 973 4125S. Brecht

+1 925 973 4163A. Vasania

+1 925 973 4277

ChevronTexaco Shipping Company LLCChevronTexaco Shipping Company LLC

DefinitionsDefinitions

Third-party Vessel – A vessel which is not owned, managed, chartered or in any way directly controlled by ChevronTexaco.

Clearance – The approval or disapproval of a chartering or cargo trading transaction. Each Clearance consists of an approval or disapproval of a vessel, and if approved, the associated vessel/terminal combinations are either approved or disapproved.

Vessel Inspection – An onboard inspection conducted in accordance with the OCIMF SIRE or CDI Inspection Program Format.

Terminal Feedback – An assessment of a vessel’s performance and/or condition made in conjunction with the vessel’s call at a marine terminal.

ChevronTexaco Shipping Company LLCChevronTexaco Shipping Company LLC

Clearance – What is it?Clearance – What is it?

• A Commitment to Protecting People and the Environment

• An opportunity to minimize the risks associated with using third-party vessels.

• An opportunity to balance risk and reward!• A tool which enables charterers to choose the

lowest risk alternative.

ChevronTexaco Shipping Company LLCChevronTexaco Shipping Company LLC

Why Clear Ships and Barges?Why Clear Ships and Barges?

• The quality of tank vessels varies across a broad range.

• Industry policing bodies are not effective enough.• Casualties can result in severe consequences.• Operational mishaps can be costly and can disrupt

the supply chain.• Public Scrutiny of tanker incidents is intense.• Charterers have a choice!

ChevronTexaco Shipping Company LLCChevronTexaco Shipping Company LLC

How do we assess risk?How do we assess risk?

Vet Vessels / Operators• Inspection Data

– Vessel age and condition– Crew Quality– Management System

• Shore Organization• ChevTex Experience

– Charter & Terminal

• Casualty History• Port State History• Industry Information• Overall Quality

– Owner and Fleet

Screen Each Transaction• Charter or FOB• Type Charter

– (VC, TC, Parcel)

• Type cargo• System Relationship• Environmental Sensitivity• Port/Terminal Risks• Quality of nominated

Vessel and Owner• Alternatives & Costs

Per YearPer YearChevronTexaco InspectionsChevronTexaco Inspections 17001700SIRE/CDI Inspections ReviewedSIRE/CDI Inspections Reviewed 20002000Terminal Feedback ReportsTerminal Feedback Reports 10001000Vessels Nominated for ClearanceVessels Nominated for Clearance 90009000

ChevronTexaco Shipping Company LLCChevronTexaco Shipping Company LLC

Activity Level Since MergerActivity Level Since Merger

ChevronTexaco Shipping Company LLCChevronTexaco Shipping Company LLC

Clearance ProcessClearance Process

Clearance Request Vessel Charter or FOB Type and Size

Cargo Dates Ports Terminals

Is Vessel Acceptable?

Does vessel meet rules fortype of Transaction? Management Policies Chevron Requirements Inspection History Terminal Feedback

History Chevron Charter History Owner Quality Casualty History Detention History Clearance History

Does Vessel fit Terminal(s) ? Does vessel meet

dimensional limits of ports /terminals / berths?

Does vessel have allnecessary equipment(mooring, booms, vaporrecovery, etc.)?

Vessel Approved as anException?

Stakeholders involved? Circumstances

appropriate? Risks Addressed? Conditions assigned? Management consulted

when appropriate?

Yes Yes

No

Terminal(s) Approved asan Exception?

Stakeholders involved(Including Terminal)?

Are dimensional limitscritical?

Is exception reasonable? Risks Addressed? Conditions assigned? Subject to Terminal

Approval?

NoYes

Yes

No No

Clearance Notification Requester and

stakeholders advised ofdecision.

Notification may includeconditions of approval.

If disapproved, reasons areprovided.

Normalprocessingtime is onehour.

ChevronTexaco Shipping Company LLCChevronTexaco Shipping Company LLC

Onboard Inspection ProgramOnboard Inspection Program

• Passing an onboard inspection does not guarantee acceptability for ChevronTexaco service.

• Vessels without an inspection on file with SIRE are generally not acceptable.

• ChevronTexaco participates in and fully supports OCIMF’s SIRE program.

• The inspection performance of one ship can effect our view of the entire fleet.

• We are working to keep the costs of inspections at a reasonable level.