1 CHARTERING OF TANKERS. 2 Tanker Trade - History Crude-produced commercially in USA in 1859 1861 Elisabeth Watts carried 900 wooden barrels to London

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1 CHARTERING OF TANKERS Slide 2 2 Tanker Trade - History Crude-produced commercially in USA in 1859 1861 Elisabeth Watts carried 900 wooden barrels to London 1866 German vsl. Glukauf 8 tanks, steam engine 1913 first middle east refinery at Abadan started Tankers were owned by Oil cos like Shell,trading trading between London Europe, USA & Russia 1920-1940 tankers of 10000 12000 tons size were built. Slide 3 3 1940 large oil finds in Saudi Arabia. 1950 tkr size increased to 40000 tons. 1960 VLCC over 2 lac DWT mostly ordered by Shell. 1979 largest tkr. / ship 564843 tons ULCC mt Seawise Giant (currently trading as mt Jehre Viking) was built. ULCCs are committed to major producers/refiners Tanker Trade History Slide 4 4 Demand for tankers is measured in ton/mile. Political/economical factor like closure of suez, source etc. influences no. /size of tankers required. 1939 to 1969 six fold increase in oil demand 10 to 64 million Bbls/day. Tanker trade got serious setback in 1973 due OPEC price increase Four fold increase From $ 2.75 to $10.84/bbls in Jan 1974. 1982 increased to $ 34 which dropped below $10 in July 86 - due Iraq/Kuwait war? Tanker Trade History Slide 5 5 What is the Current price of crude per Bbls? Indian/ OMC basket? Where to look up for daily update ? 1974-84 depression in tkr mkt due OPEC price increase lead to vsl proceeding to lay up from new building yard - increased scrapping. Oil & Tanker market operates within a framework formed by the crude oil reserves (Producing countries) vis-a-vis major consumers like USA, Europe, Japan, China, Korea & India. Tanker Trade - History Slide 6 6 TYPE OF CHARTER VOYAGE CHARTER FOR ONE VOYAGE 1 OR 2 LOAD PORT/ DISPORTS FREIGHT, DEMURRAGE DEAD FREIGHT BUNKER PORT CHARGES ON SHIP OWNERS A/C. CARGO RELATED CHARGES ON CHARTERERS A/C. TIME CHARTER FOR TIME/PERIOD. VESSEL AT CHARTERERS DISPOSAL. MONTHLY CHARTER HIRE IN ADVANCE. BUNKER & PORT CHARGES ON CHARTERERS ACCOUNT CARGO RELATED CHARGES ON CHARTERERS A/C. Slide 7 7 Slide 8 8 Slide 9 9 Slide 10 10 Slide 11 11 Slide 12 12 VOYAGE CHARTER : CRUDE : VOYAGE RASTANURA TO VIZAG SMAX (140000 MT) $ 28.23 / MT LS FREIGHT $ 3.95 MILLION RS. 15.80 CRORES AT WS 335 LPG : VOYAGE RASTANURA TO VIZAG VLGC (39000 MT) $ 50.00 / MT LS FREIGHT $ 1.95 MILLION RS. 7.80 CRORES Slide 13 13 Tanker Voyage Charter Parties Bare Boat chartering Lease the hull and machinery of the ship for a long period of time Charterers act as if he was the Owners of the ship. Time chartering enables the operator to cover their shipping requirements at a stable price other than bunker cost. Charter hire fixed for a particular period of chartering. Voyage chartering Freight rate as per prevailing market rate. used for spot requirements. Ship management totally in the hands of owners. Consecutive Voyages and COA cover for a period of time but leaves the ship operations to the owners, as under voyage charter. Slide 14 14 OWNER (Revenue) CHARTERER (Transport) THE CHARTER PARTY (A contract) BAREBOAT TIME VOYAGE Trip Time Charter Consecutive voyage Contract of Affreightment Slide 15 15 Tanker Voyage Charter Parties zVoyage Charter Parties ASBATANKVOY Association of Ship Brokers & Agents (USA) Inc. BP Voy 4 Exxon Mobil Voy 2005 Shellvoy 6 Slide 16 16 ASBATANKVOY zWell known and often used which may have a number of additional or rider side clauses which were added by Charterers. zRider clauses re-states the main clause in the charter party. zUnless rider clauses are carefully drafted and related to each other and to the clauses in the printed form there is scope for error, duplication, inconsistency and subsequent litigation. Slide 17 17 ASBATANKVOY Charter Party zPart I zDescription and position of vessel zLaydays/Cancelling zVoyage zCargo zDescription of cargo zRate/Billing zLaytime zDemurrage zCommission zGeneral Average/Arbitration Slide 18 18 ASBATANKVOY Charter Party zPart II zWarranty zFreight and Deadfreight zBerthing, Pumping and Mooring zDues and other charges zIce zCleaning/Grades zAdvances zBills of Lading Slide 19 19 ASBATANKVOY Charter Party zPROTECTIVE CLAUSES zClause Paramount zJason Clause and General Average Clause zBoth o Blame zWar Clauses zLien zAgents zAssignment/sub-let zClean Seas zArbitration Slide 20 20 Rider Clause Conoco Weather Clause Delays in berthing for loading or discharging and any delays after berthing which are due to weather conditions shall count as half laytime or, if on demurrage, half demurrage Slide 21 21 Rider Clause Cargo Retention Clause In the event that any cargo remains onboard upon completion of discharge, Charterer shall have the right to deduct from freight an amount equal to FOB port of loading value of such cargo plus freight due with respect thereto provided that the volume of cargo remaining onboard is pumpable and determined by an independent surveyor. Any action or lack of action in accordance with their provision shall be without prejudice to any rights or obligations of the parties. Slide 22 22 Rider Clause Over Age Insurance (Cargo Insurance) Any additional premium which might be placed on the cargo insurance by reason of the vessels age and/or condition shall be for Owners account, and Charterers shall be entitled to deduct the cost of any such additional premium from the freight Slide 23 23 Rider Clause In Transit Loss Clause In addition to any other rights which Charterer may have, Owner will be responsible for the full amount of any in transit loss if in transit loss exceeds 0.3% and Charterer shall have the right to deduct from the freight an amount equal to the FOB port of loading cost or such missing cargo plus its pro rata cost of freight and insurance. In trasit loss is defined as the difference between gross standard vessel volumes after loading at the loading port and before unloading of the discharge port Slide 24 24 Rider Clause Notice of Readiness zIt the vessel tenders notice of readiness during its acceptance date range, laytime shall begin, subject to all other provisions of this agreement, upon the expiration of 6 hours after the tendering of NOR or on commencement of loading, whichever occurs first. If the vessel tenders NOR before its acceptance date range the NOR shall not be effective until 0001 hour on the first day of such range, and laytime shall begin on commencement of loading or 6 hours after the effecitve tender of NOR whichever occurs first. If the vessel misses cancelling date and in the event of charterers not exercising option to cancel the fixture time will commence to count when loading commences. Slide 25 25 Tanker Time Charters Introduction Shipboard Personnel and Duties Laws and Disputes Liens and Sub Freight Slide 26 26 Introduction : Types of Time Charter : 1.Trip Time Charter - Short period, flexibility to charterers, commonly practiced veg.oil, chemicals,dry bulk cargo. 2.Time Charter - Voyage expenses, pumping at loadport and disport on charterers account. Tanker Time Charters Slide 27 27 Shipboard Personnel and Duties Duty to maintain- Due diligence by owners to maintain and restore the vsl to required condition, charterers right to putoff the vsl. Limits of trading period- Charterers option. Final voyage-Redelivery, where & when. Trading limits-WIWL Tanker Time Charters Slide 28 28 Shipboard Personnel and Duties Laydays/Canceling-Charterers option. Owners to provide-All provisions, wages, Ins.etc Charterers to provide-Generally for dry cargo. Rate & Payment of Hire-Delay in payment, tanker withdrawal clauses and etc. Instructions and Logs-Performance monitoring. Directions and conduct of vessels personnel Tanker Time Charters Slide 29 29 Shipboard Personnel and Duties Bunkers-Supply of quality bunkers. Supernumeraries-Representative on Board. Sub-letting-Liabilities from mal-performance. Loss of vessel-Total loss or Constructive loss. Off-Hire Shelf time form specifies the time. Periodical dry docking-Area of dry docking. Tanker Time Charters Slide 30 30 Shipboard Personnel and Duties Performance clause-Speed, bunker consumption and port stay. Salvage-Apportionment of expense Lien Each partys rights of lien. Exception Unplanned repairs & breakdown. Injurious cargoes Explosives. Tanker Time Charters Slide 31 31 Shipboard Personnel and Duties Laying up Charterers and Owners to consult. Requisition by Govt. Protective clauses Both to blame collision clause, New Jason clause, Clause Paramount. TOVALOP & ITOPF P&I Club Insurance. Law and Litigation English law. Tanker Time Charters Slide 32 32 The Law & Dispute : Withdrawal (a)Frustration. (b)Repudiatory Breach. (c)Exercising a right. Set-off Holding deduction against hire. Speed and Consumption-Tolerance clause. Off-hire-Loss of money, deduction of money. Tanker Time Charters Slide 33 33 Lien for sub freight : Prepayment of freight due to risk of shortages,delays etc that may affect delivery. Lien on the cargo, freight and subfreight in the bill of lading Lien is regarded as the floating charge against the assests of the head charterer. Tanker Time Charters Slide 34 34 CHARTERING Post fixture. Port Operation COMMERCIAL MANAGEMENT Chartering. Fixture Negotiation Slide 35 35 CHARTER PARTY C / PARTY CLAUSES NEGOTIATI ON FINALISATION OF C / PARTY SIGNING OF C / PARTY. Slide 36 36 CHARTERING VOYAGE CHARTER ONE/TWO LOADPORT/ DISPORT TIME PERIOD CHARTER COA TOTAL QTY/TKR (OWN/ CHARTER) TOOLS MKT. TREND FREIGHT DEMURRAGE C/HIREFREIGHT DEMURRAGE LAST FIXTURE Slide 37 37 FIXTURE NEGOTIATION ENQUIRYOFFERS COUNTERCONCLUSION VOYAGE CARGO PARCEL SIZE LOADPORT DISPORT LAYDAYS LAYCAN TIME CHARTERING TYPE OF SHIP DURATION TRADING AREA CARGO SPL.REQUIREMENTS VOYAGE DESCRIPTION-SHIP PARCEL SIZE FREIGHT DEMURRAGE C / PARTY. TIME CHARTER DESCRIPTION T / C PARTICULARS SPEED/CONSUM. PERIOD RATE EXCEPTIONS -CP Slide 38 38 CO- ORDINATION WITH CHARTERER CO- ORDINATION WITH SHIP AGENCY ARRAN