Single Hull Tankers Phase-out and conversion

Nicholas FistesChairman, INTERTANKO

Dalian, 6 November 2008

World shipping (China) summit 2008

INTERTANKO

MISSION• To provide leadership to the Tanker Industry in serving the

world with safe, environmentally sound and efficient seaborne transportation of oil, gas and chemical products.

VISION FOR THE TANKER INDUSTRY• A responsible, sustainable, respected Tanker Industry,

committed to continuous improvement and constructively influencing its future.

THE POSEIDON CHALLENGE COMMITTMENT- to continuous improvement- to working with all partners- striving to achieve the goals of:Zero fatalities, Zero pollution, Zero detentions

World oil demand

mbd

65

70

75

80

85

90

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Oil demand by area

mbd

Source: BP/IEASource: BP/IEA

0

4

8

12

16

20

24

28

32

36

4019

65

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

Es0

9

Europe US

China Japan

ROW*

*includes FSU, India, other SE Asia

Oil consumption per capita (2008)

Litres per year

0

300

600

900

1,200

1,500

1,800

2,100

2,400

2,700

3,000

USA Japan UK Europe Russia China

Chinese oil imports(Approx 90% from Middle East in 2008)

Source: BP Review/IEASource: BP Review/IEA

mbd

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

Products

Crude

The importance of oil tanker transportation

World Oil Consumption 4.0 billion ts per year

Transported by sea 2.6 billion ts per year

60% transported by sea - of which 8% to China

Global Financial Crisis Fleet Development & Seaborne Oil Trade

0

50

100

150

200

250

300

350

400

450

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Projected

Actual

Oil tanker fleet

m dwt

Source: INTERTANKO, Fearnleys

0

2,500

5,000

7,500

10,000

12,500

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06P0

8P1

0

Oil products

Crude oil

???

Source: INTERTANKO, Fearnleys

Seaborne oil trade

bn tonne milesbn tonne miles

Tanker fleet growth

m dwtm dwt

0

90

180

270

360

450

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 110

1,160

2,320

3,480

4,640

5,800

dwt number

numbernumber

The tanker market facing

• Financial and economic “crisis”

• Abating demand

• Demand primarily powered by China

• Probable cancellation of contracts

• Increasing fleet 2009-2011

• Scrapping up …

… as conversions to dry bulk halted

Global Financial Crisis Tanker Fleet Removals

Source: INTERTANKOSource: INTERTANKO

m dwtm dwt

ConversionsConversions 2005 2006 2007 2008 2009

Small 2Small 2 0 0 13 13 23 23Aframax 0Aframax 0 4 4 19 19 14 14Suezmax 0Suezmax 0 6 6 13 13 9 9VLCC 2VLCC 2 9 9 15 15 30 30

0

6

12

18

24

3019

6919

7019

7119

7219

7319

7419

7519

7619

7719

7819

7919

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

08

Conversions

Scrapping

?

?

Investment in new tankers

• Some $ 370 billion invested since 2000 with the result that 96% of tanker fleet double hulled in 2010*

6

22

5159

67 68 73 78 8491 96

94

78

4941

33 32 27 22 169 4

0

20

40

60

80

100

1991

1997

End

02

End

03

End

04

End

05

End

06

End

07

End

08

End

09

End

10

SH/DB/DS

DH

% dwt share:

*Assuming only DB/DS tankers continue to trade beyond 2010, some SH tanker will most probably continue until the age of 25 years old

Single-hull phase-out regulation

U.S. OPA 90DH for new tankers SH phase-out by 2010(by 2015 LOOP and lightering areas)

IMO – MARPOLDH for new tankersSH phase-out from 2005 through 2010SH phase-out by 25 years or by 2015 (whichever earlier)

- subject to flag/port administration

IMO – MARPOL 13H Bans HGO as cargo in SH tankers

SH trading beyond 2010 ?

Australia NoChina NoEU NoMexico NoRomania NoS Korea No*Philippines No*UAE No*

(*No official note sent to IMO yet)

Bahamas Yes

Barbados Yes

Liberia Yes

Marshall Isl. Yes

Panama Flag Yes

Japan Yes

Singapore Yes

India Yes

Hong Kong Yes**

(** Max. 20 years old)

Flag/Port State positions re MARPOL 13G trading up to the age of 25 years

United States N/A (OPA90)

Tanker deliveries, removals, max phase-outAll tankers > 25,000 dwt

m dwtm dwt

Assumed balanced market end 2007

-35

-15

5

25

45

65

85

105

125

-02 03 04 05 06 07 08 09 10 11 12 13 14 15

Max phase out

Deletions

Delveries

Surplus zerotrade growthSurplus 2.5%trade growthSurplus 4%trade growth

year

Removals in addition to phase out (conversions)

Critical tanker issues

Maintaining an international framework of consistent, high standards and regulations

Delivering best environmental performance

Ensuring availability of qualified and motivated seafarers (and quality ships)

to ensurehigh quality and environmental friendly tanker

transportation

“Proud of our People”

Human Resources

Our greatest asset

Thank you 谢谢大家

For more information, please visit:www.intertanko.com

www.poseidonchallenge.comwww.shippingfacts.com

www.maritimefoundation.com

Tanker deliveries, removals, max phase-out 25,000 – 59,999 dwt

m dwtm dwt

Assumed balanced market end 2007

-5

-3

-1

1

3

5

7

9

11

13

15

-02 03 04 05 06 07 08 09 10 11 12 13 14 15

Max phase out

Demolition

Delveries

Surplus tonnage 0%increase trade

Surplus tonnage 2.5%increase trade

Surplus tonnage 4%increase trade

year

Tankers that according to our records should have been scrapped before 2008

Tanker deliveries, removals, max phase-out Panamaxes 60,000 – 79,000 dwt

m dwtm dwt

Assumed balanced market end 2007

-3

-2

-1

0

1

2

3

4

5

6

7

-02 03 04 05 06 07 08 09 10 11 12 13 14 15

Max phase out

Demolition

Delveries

Surplus tonnagezero increasedemand

Surplus tonnage2.5% increasedemand

Surplus tonnage4% increasedemand

Tanker deliveries, removals, max phase-outAframaxes 80,000 – 119,999 dwt

m dwtm dwt

Assumed balanced market end 2007

-5

-3

-1

1

3

5

7

9

11

13

15

17

19

21

23

25

-02 03 04 05 06 07 08 09 10 11 12 13 14 15

Max phase out

Deletions

Delveries

Surplus tonnage0% increaser indemandSurplus tonnage2.5% increaser indemandSurplus tonnage4% increaser indemand

year

Tankers that according to our records should have been scrapped before 2008

Tanker deliveries, removals, max phase-outSuezmaxes 120,000 – 199,999 dwt

m dwtm dwt

Assumed balanced market end 2007

-4

0

4

8

12

16

20

24

28

-02 03 04 05 06 07 08 09 10 11 12 13 14 15

Max phase out

Deletions

Delveries

Surplus tonnagezero demandincreaseSurplus tonnage2.5% demandincreaseSurplus tonnage4% demandincrease

year

Tanker deliveries, removals, max phase-outVLCCs 200,000 dwt +

m dwtm dwt

Assumed balanced market end 2007

-20

-12

-4

4

12

20

28

36

44

52

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Max phase out

Actual Deletions

Delveries

Surplus zeroincrease

Surplus 2.5%increase

Surplus 4%increase

year

Assumed removals ahead of phase out 2008