FFSAInsurance and Legal Committee

The Tanker Industry Today“The World’s Tanker Fleet”

12 February 2008

Peter M Swift,MD INTERTANKO

                     

                                    

Importance of oil tanker transportation - delivering energy for the world

World Oil Consumption 3.8 billion ts

Transported by sea 2.4 billion ts

> 60% transported by sea

Gasoline price at pump – Dec 2007

$/gallon

0.0

2.0

4.0

6.0

8.0

USA Japan UK

Long haulfreight rates

Marketing/ refining/etc

Oil price

Tax

Cost elements making up the gasoline price:

Based on Dec. 2007 figures from IEA and the Baltic Exchange

13% 39% 63%

Move to Double Hulls

• More than USD 500 billion invested since 2000 with the result that >85% of tanker fleet double hulled in 2010

622

5159

67 68 73 76 79 82 85

9478

4941

33 32 27 24 21 18 15

0

20

40

60

80

100

19

91

19

97

En

d 0

2

En

d 0

3

En

d 0

4

En

d 0

5

En

d 0

6

En

d 0

7

En

d 0

8

En

d 0

9

En

d 1

0

SH/DB/DS

DH

% dwt share

Assumes phase out according to regulations (rounded upwards), max 25 y.o./2015 after 2010.

Average age tankers above 10,000 dwt(1970-2007)

AGE (years)

6

8

10

12

14

16

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006

Tanker fleet: by hull type and size segment

m dwtm dwt

0

20

40

60

80

100

120

140

5-24,999 25-59,999 Panamax Aframax Suezmax VLCC

SH

DB/DS

DH

(Single Hull) Tanker Phase Out- an “uncertainty” post 2010

m dwtm dwt

Assumptions :MARPOL phase out allows for trading until the age of 25 years old, max 2015The EU alternative does not allow SH trading after 2010.DB/DS can trade until the age of 25 years old, but here cut off 2015

0

10

20

30

40

50

60

70

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

MARPOL (min phase out - trading of SHuntil 25 years)

EU + no SH after 2010

OPA90

Future for Single Hulls

Options today

• Conversion to

- DH Tanker

- FSU/FPSO

- Bulk Carrier

• Recycling

• Continued Trading

Continued Trading

• Subject to (i) Flag state and (ii) Coastal state acceptability after 2010

• But now uncertainty over- Korea- Japan- China- India- Others

Tanker Incidents

INTERTANKO Database

Incidents 2007 by type and accidental pollution

1000 ts oil pollutionNo. incidents

0

200

400

600

800

100078 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

0

100

200

300

400

500

600

700

War

Hull & Machinery

Fire/Expl

Grounded

Coll/Contact

Misc.

Pollution - bars

Source: INTERTANKO/LMIU/ITOPF/various

Accidental oil pollution into the sea

Source: ITOPF/Fearnleys

10001000ts spiltts spilt

bn bn tonne-mtonne-m

0.0

0.7

1.4

2.1

2.8

3.5

1970s 1980s 1990s PR00s

0

26

52

78

104

130

1000 ts spilt

'0000 bntonne-miles

- 63% -6% -78%

-45% -33% -82%-45% -33% -82%Reduction per tonne milesReduction per tonne miles

Reported tanker incidents

Number

0

200

400

600

800

1000

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

0

84

168

252

336

420

00 01 02 03 04 05 06 07

War

H & M

F & E

Grounding

Collis.

M isc

Source: INTERTANKO/LMIU/various

Tanker incidents 2007 by type

Source: INTERTANKO/LMIU/various

1%

28%

14%

29%

9%

20%

Collision/contact

Grounding

Fire/Explosion

Hull & machinery

Misc/unknown

Hostilties

Collision Grounding

Hull & Machinery 95 of which 56 engine ralated

Misc.

Fire & Expl.

Reported tanker 325

incidents 2007

Tanker incidents 2007 by age

Built 1970s -

Built 1980s

Built 1990s

Built 2000s

Incidents/no tankers:

0.000 0.200

Built1970s

Built1980s

Built1990s

Built2000s

325 incidents

13%

21%

33%

33%

Tanker engine related incidents

2007 incidents<10,000 dwt - .32%; 10,-30,000 dwt - .69%; 30,-100,000 – .49%; >100,000 dwt - .65%

No

Source: INTERTANKO/LMIU/various

0 10 20 30 40 50 60

2002

2003

2004

2005

2006

2007

Below 10,000

10-29,999 dwt

30-99,999 dwt

Above 100,000 dwt

Tanker incidents: engine related

2007 incidents1970s - .06%; 1980s - .51%; 1990s – .44%; 2000s - .65%

No

Source: INTERTANKO/LMIU/various

0 10 20 30 40 50 60

2002

2003

2004

2005

2006

2007

1970s1980s1990s2000s

NK

Built:

PSC Detentions

Annual Report EQUASIS Database

Detention rates:

INTERTANKO fleet –1.7%

Non-INTERTANKO fleet – 3.1 %

Despite being subjected to three times more inspections

Thank you

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

www.poseidonchallenge.comwww.shippingfacts.com

www.maritimefoundation.com

Average age tankers above 10,000 dwt(1970-2007)

Years

6

8

10

12

14

1619

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

07

Average age total tanker fleet

INTERTANKOmembers

Average age of tankers involved in incidents