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International Association of Independent Tanker Owners

The Product Tanker Market and Phase-Out Implications by Erik.Ranheim@INTERTANKO.com Manager Research and Projects 4th Annual Combined Chemical & Product Tankers Conference London, 5 December 2007 ‘. INTERTANKO. International Association of Independent Tanker Owners

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International Association of Independent Tanker Owners

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  1. The Product Tanker Market andPhase-Out ImplicationsbyErik.Ranheim@INTERTANKO.comManager Research and Projects4th Annual Combined Chemical & Product Tankers ConferenceLondon, 5 December 2007‘

  2. INTERTANKO International Association of Independent Tanker Owners Trade association established in Oslo in 1970 Spokesman, information service, meeting place Membership 280 Members 40+ countries 2,800+ tankers 230 million dwt 75% of independent tanker fleet 300 Associate Members

  3. Product tanker market and phase out • Product tanker demand • Phase-out review • Phase-out consequences

  4. Market trends

  5. Tanker segments Advanced tankers/operators Average tankers Low quality tankers Bad market Newbuildings Alang beach

  6. Product tanker trade '000 m tonnes Source: BP Review

  7. Product tanker trade '00 m tonnes 2004 5.3% increase 2005 8.9% increase 2006 5.0% increase 2007 4.7% increase 2008 3.8% increase Source: Fearnleys

  8. Product import to the US, Japan and Europe mbd Biodiesel More mpg Source: IEA/PAJ/EIA

  9. New Refinery distillation capacity projects by region 2007-12 mbd Firm capacity expansion 9.3 mbd + 2.5 mbd planned Source: Source: Petroleum Economist/INTERTANKO

  10. New Refinery distillation capacity projects by region 2007-12 mbd Source: Petroleum Economist/INTERTANKO

  11. The world is moving away from HFOOil consumption by product - % share mbd % share Source: INTERTANKO/BP Review

  12. Refineries are moving away from HFO • ……..company’s early commitment in the mid-1990s to making cleaner fuels, and by being proactive about finding the technology needed to achieve this.

  13. Why switching to distillates? • A simple solution : • Significant global reduction of emissions • SOx, - 60 - 80%, • PM, - 80 - 90%, • NOx, - 15%, • No heavy metals, • Less soot • A more healthy environment for crew and dockworkers • No onboard waste • Reduces overall fuel consumption (and CO2 emission)) • Better and easier control or monitoring of ships Cleaner, Simpler and more Efficient ships

  14. Why switching to distillates? • ..continue: • Fewer engine breakdowns and potential pollution accidents • Less pollution when spilled • Provides opportunity for the development of more efficient engines (with less emissions) • Applies to all ships and all current engines • No safety problem in connection with switching fuels Cleaner, Simpler and more Efficient ships

  15. Why not scrubbers? • Still under testing (2 ship limited scale) • Large • Expensive • Difficult (impossible?) to install • CO2 emission (buffering effect) • leaves hazardous waste • waste disposal – no-one wants it • Tonnes of seawater need to be processed/added We are involved in transportation – not waste treatment

  16. Phase-out

  17. Phase-out history • After Exxon Valdez, on 18 August 1990, the US President signed into law the US Oil Pollution Act of 1990 (OPA 90). This was the first regulation to mandate double hull design for tankers with a building contract after 30 June 1990 and with a delivery after 31 December 1992. • First IMO phase-out initiated by the US OPA 90 - ratified by the IMO March1992 - enforced as from July 1993. • Accelerated IMO phase-out initiated by Europe as a result of the ERIKA accident outside France - ratified by the IMO April 2000 - enforced as from September 2001. • Further acceleration of IMO phase-out initiated by Europe as a result of the PRESTIGE accident outside Spain - ratified by the IMO December 2003, enforced as from April 2005 - enforced by Europe as from October 2003. • The European Union’s Regulation (1726/2003) on single hull tankers took effect on 21st October 2003. • Revised Annex II was implemented 1 January 2007 NOT phase-out. • Both ERIKA and PRESTIGE carried Heavy Fuel Oils that can pollute up to ten times more than crude oil.  IMO therefore adopted a new regulation – Regulation 13H of Annex I of MARPOL 73/78 – banning the carriage of heavy grade oil as cargo in single hull oil tankers as from 5 April 2005.

  18. Tanker recycling by receiver country No.

  19. Tanker recycling 10,000- 79,999 dwt m dwt

  20. Phase-out of small tankers as from 2008Tankers 600 - 4,999 dwt by hull - 3,429 tankers – 8 m dwt No.

  21. Tankers 600 - 4,999 dwt by type - 3,429 tankers No.

  22. Tanker deliveries, phase-out, demolition 5,000 - 9,999 dwt – 1095 tankers, 385 SH Number • Fragmented, many geographical segments • Cabotage trade • Phase-out overhang, 118 tankers

  23. Tanker deliveries, phase-out, demolition and 10,000 - 24,999 dwt Number • Fleet - 5.2 m dwt, 419 tankers • Phase-out – 0.6 m dwt, 187 tankers • Orderbook - 3.1 m dwt, 39 tankers • Phase-out overhang 70 – removed 2008 – 2001

  24. Tanker deliveries, phase-out, demolition and 25,000 - 34,999 dwt Number • Fleet – 18.4 m dwt, 776 tankers • Phase-out – 3.7 m dwt, 124 tankers • Orderbook - 2.3 m dwt, 123 tankers • Phase-out overhang - 3.9 m dwt, 70 – assumed removed 2008 – 2011

  25. Tanker deliveries, phase-out, demolition and 35,000 - 52,999 dwt Number • Fleet – 53.0 m dwt, 1,225 tankers • Phase-out – 7.0 m dwt, 168 tankers • Orderbook – 24.8 m dwt, 533 tankers • Phase-out overhang - 0.7 m dwt, 9 – removed 2008 – 2010

  26. Tanker deliveries, phase-out, demolition, 53,000 dwt - 79,999 dwt Number • Fleet – 27.3 m dwt, 399 tankers • Phase-out – 6.1 m dwt, 95 tankers • Orderbook – 8.4 m dwt, 166 tankers • Only handful on order 53,000 dwt – 73,000 dwt

  27. Tanker deliveries, max. phase -out, demolition and 5,000 - 79,999 dwt Number • Fleet – 111.8 m dwt, 3,914 tankers • Phase-out – 22.3 m dwt, 957 tankers • Orderbook – 38.7 m dwt, 1,131 tankers

  28. Tanker deliveries, min. phase-out, demolition and 5,000 - 79,999 dwt M dwt • Fleet – 111.8 m dwt, 3,914 tankers • Phase-out – 22.3 m dwt, 957 tankers • Orderbook – 38.7 m dwt, 1,131 tankers

  29. Position of administrations

  30. SH trading beyond 2010? • Flag/Port States positions Trading until the age of 25 years • Australia No • China No • EU No • Mexico No • Romania No • Bahamas Yes • Barbados Yes • Liberia Yes • Marshall Isl. Yes • Panama Flag Yes • Japan Yes • Singapore Yes • India Yes • Hong Kong * Yes *20 years • United States N/A

  31. Hulls

  32. Tankers 5,000 - 79,999 dwt by hull

  33. Tankers 5,000 - 79,999 dwt phase-out - orders - fleet m dwt of which overdue 3.7 m dwt

  34. Conclusion

  35. Conclusion • Structural changes in the product tanker market • Phase-outon schedule with no major problems • Phase-outminor market impact • 2010situation still unclear

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