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INTERTANKO International Association of Independent Tanker Owners. Hellenic Mediterranean Panel Athens 29 th March 2012 Overview: Association Finance Priorities + Strategic Plan Air + GHG Emissions Katharina Stanzel Deputy Managing Director INTERTANKO. MEMBERSHIP. 230 + Members - PowerPoint PPT Presentation
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Leading the way; Making a difference
INTERTANKOInternational Association of Independent
Tanker Owners
Hellenic Mediterranean Panel
Athens 29th March 2012
Overview:Association Finance
Priorities + Strategic PlanAir + GHG Emissions
Katharina StanzelDeputy Managing Director
INTERTANKO
Leading the way; Making a difference
MEMBERSHIP
230+ Members3,200+ Tankers
280+ Million DWTMembers in 40+ countries
> 75% of Global Independent Tanker Fleet320 Associate Members
Leading the way; Making a difference
MEMBERSHIP
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
0
57
114
171
228
285
0
680
1,360
2,040
2,720
3,400
No. members
m dwt
No. ships
Million dwt / number of members Number of ships
Fleet Composition and Fee Structure
-10% -5%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
USD/ship 1,415 1,415 1,415 1,486 1,635 1,800 2,000 1,800 1,800 1,800 1,710
USD/dwt 0.0080 0.0080 0.0080 0.0084 0.0092 0.0101 0.0101 0.0090 0.0090 0.0090 0.0086
Min US 5,000 5,000 5,000 5,250 5,250 6,350 7,000 6,300 6,300 6,500 6,175
Max US 52,000 52,000 52,000 54,600 65,000 80,000 85,000 76,500 76,500 76,500 72,675
Type dwt #crude 205,248,439 1,317
product 36,607,690 664 chem/oil 24,147,166 729 chemical 10,013,343 418
gas 4,947,552 143 special 4,916,022 77
285,880,212 3,348
Leading the way; Making a difference
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
8
9
10
11
12
13
14
15
16
Average Age Membership Fleet
Leading the way; Making a difference
BUDGET
2010 membership fees reduced by 10%
No change in 2011 membership fees
2012 membership fees reduced by 5%
Leading the way; Making a difference
BUDGET (US$)
2011 2011 2012 (Actual) (Budget) (Budget)
Operating Income 7,753,228 7,572,650 7,401,925
Operating Expenses -6,886,593 -7,217,450 -7,373,997
Operating Result 866,635 355,200 27,928
Non-operating Income/expenses 87,303 -25,000 -25,000
Result for Year 953,938 330,200 2,928
Leading the way; Making a difference
Key Focus AreasSafety/Technical Seafarers Environment Marine
OperationsRegulatory /
Legal Information
Top priorities for 2012
Damage stability Inert gas
Shipyard standards Class standards
Fuel quality Mercury in crude
Criminalization Crew competence
Shore access Fair treatment of
Seafarers
GHG emissions Ballast water
Reception facilities Air emissions
Piracy Vetting
Port State Control Chemical
operations
Sanctions Limits of liability
insurance Oil spill
compensation
Tanker market Panel meetings
IO web page
Other work plan issuesTanker design
Structural Integrity Machinery/equipment
Fuel switching Safe tank entry Gas detection
Biofuels Cargo properties
Crew visas Seafarer ID docsAccommodation
sp. Cadet berthing
Ship recycling Anti-Fouling
Waste management
Noise pollution Response mgmt. Hull biofouling
Ship striking mammals
Loadlines off SA Lifesaving app
PilotagePort & TerminalsNavigation issues
Offshore operations
Ship/Ship transfer ISPS Code
Security OfficersShip sec alert sys
Accident investigations
Conflict in lawUNCLOS
LegislationCharter parties
FDIPDemurrageIntellectual
propertyWorldscale
Anti-corruption
Weekly NewsAnnual review/
reportPublications
PresentationsTanker statisticsIncident analysis
WorkshopsSeminarsBulletins
Global political/ economic
environment
Macro-environment
Political
Global Economic Shift of Powers -China/ India/
Brazil- Europe failing
Free market distortions- Regional
Protectionism
Regulatory Environment politicised - Regional regulation
- Sanctions etc.
Security Issues (Piracy)
Economic
Market Dynamics
(Fleets, Cargos, Finance)
Tonne mile demand
Fuel availability/ cost
Growing national
protectionism
Growth of national fleets/
interests
Environmental
Globalised Concerns, e.g. Ballast WaterNox, Sox, PM,
GHG
Technological
Compliance options through
technology
Availability of abatement/
treatment tec.
Availability of FuelsLNG
Distillates
Socio- cultural
Human Resources:
- Availability/ Recruitment
- Competency- Training
Expectations from
Legislators Politicians
Public
Overregulation
Political decision making
Need for Cooperation with other
associations/ orgs
ANNUAL TANKER EVENT• Venue: Conrad Hotel Singapore • May 9 – Council dinner
• May 10 – Council meeting
• May 11 – Tanker Seminar- Tanker market
- Piracy
- Technical session
Leading the way; Making a difference
Emissions to Air
Air Emissions• SOx
• NOx • Particulate
Matter
Greenhouse Gas Emissions• Carbon Dioxide• Methane etc.
Marpol Annex VI
• Compliance through S content• Equivalent Measures accepted • Addresses Marine Fuel Oil
Quality
Leading the way; Making a difference
MARPOL Annex VI Reg. 18.3
Fuel Oil Availability and Quality
Fuel oil . . shall meet the following requirements:• blend of HC derived from petroleum refining• free from inorganic acid• should not include any substance or chemical waste
which:• jeopardize ship safety and adversely affects machinery• is harmful to personnel• contributes to overall addition to air emissions
Þ Quality and Safety standards
Leading the way; Making a difference
HFO Quality – Recent developments
Blending to meet required sulphur limits can result in:
• Increased average density• Increased average catfines levels (Al+Si)• Increase in sludging problems• Reduced ignition and combustion quality• Increased problems with chemical contamination of fuel
13
Leading the way; Making a difference
Fuel Quality Issues
Leading the way; Making a difference
Leading the way; Making a difference
Quality Control of Bunkers• Need to clarify responsibility for ensuring bunkers delivered to
ships meet relevant criteria set in ISO 8217:2010 and MARPOL Annex VI & ensure stricter enforcement of Reg. 18 and involve local authorities in quality control of fuels
• Require bunker suppliers to have quality control system for fuels they sell & take corrective actions when off spec bunkers are delivered
BUT currently• No official authority involved in control and monitoring prior to
fuel delivery• Control by commercial fuel tests/owners only • Responsibility for quality compliance and control should not be
left with ships• Quality/type of fuel has become very relevant
Leading the way; Making a difference
Leading the way; making a difference
Proliferation of Regulations
• complicated application requirements • safety challenges (e.g. fuel switching)• lack of predictability of available alternatives
− global availability of different bunker types ?− abatement technologies still adapting to ship use
Danger of increasingly regionalised not harmonized regimescausing:
Leading the way; Making a difference
Leading the way; Making a difference
Emission Control Areas - ECAs
NORTH SEA & BALTIC SEA
NORTH AMERICA
Leading the way; Making a difference
2015 Compliance Options: Fuel
Liquid Natural Gas (LNG) as main fuel• High costs for retrofit & new building • Supply network to be built• Methane slip
Low Sulphur fuel (0.10% MGO)• Rel. easy but expensive• Additional/converted storage capacity for MGO ?• total segregation between MGO and HFO fuel systems• High price premium (currently ~US$ 350/t) • potential availability issues
Leading the way; Making a difference
Compliance Options: Scrubbers
Exhaust Gas Cleaning Systems
• Maturity• Availability• Performance reliability
One scrubber for each main engine or up to 3 auxiliary engines
Time needed for retrofit:2-3 weeks planning installation7-10 days off hire2 weeks testing for certification
Leading the way; Making a difference
Leading the way; Making a difference
Cost Assessment
Voyage MGO premium/year
Price Scrubber Payback periodvs MGO usage
AG – LOOP US$ 1.4 m US$ 10 m 13 yrs
US$ 8 m 10 yrs
US$ 6 m 8 yrs
AG - Rotterdam US$ 1.3 m US$ 10 m 14 yrs
US$ 8 m 11 yrs
US$ 6 m 8 yrs
Suezmax shuttle North Sea
US$ 5.25 m US$ 8 m 2.7 yrs
US$ 6 m 2 yrs
Aframax shuttle North Sea
US$ 3.5 m US$ 6 m 3 yrs
US$ 5 m 2.5 yrs
Leading the way; Making a difference
Scrubbers: Issues to Consider
Test results Is technology proven for application at sea ? Does it work with SCRs
Dimensions / physical footprint / weightCAPEX OPEX energy consumption
sludge treatment / disposalProve compliance usage + water wash discharge
monitoringPerformance monitoring & documentationRedundancyManufacturer capacityCrew issues: training and qualification
Leading the way; Making a difference
ECA 2015 Strategy
Cost efficiency is related to time spent in ECAs
ALTERNATIVE CAPEX OPEX
LNG > US$20 m/ship up to 20% fuel saving
MGO low premium US$ 350/tbut up to 4% fuel saving
SCRUBBERS US$5 m or more/ ship
2-3% fuel penalty in useincreased CO2 emissions
Leading the way; Making a difference
Greenhouse Gas Emission Reductions
• Technical & Operational Measures• Ship Energy Efficiency
Management Plans (SEEMP)
• Energy Efficiency Design Index (EEDI)
• Market Based Measures (MBMs)
Leading the way; Making a difference
GREENHOUSE GASES
Policy on implementation of IMO Energy Efficiency Design Index (EEDI) requirements
- 4 year waiver- method of compliance
Policy on Market Based Measures (MBM)
Better acceptance of “Virtual Arrival” project with charterers
Leading the way; Making a difference
Ship Energy Efficiency Management Plans
Best practice guidance – TEEMP
In co-operation between members and other stakeholders
• Company & Shipmanagement Plans• Voyage optimisation• Propulsion resistance management• Machinery optimisation • Cargo handling optimisation• Energy Conservation Awareness Plan
Leading the way; Making a difference
INTERTANKO POSITION
1. Welcome adoption of amendments to MARPOL Annex IV, mandating energy efficiency measures (EEDI/SEEMP regs)
2. Advocate: a) “level playing field”: implementation of EEDI to all new
build ships from the same dateb) Compliance with EEDI focussed on improved hull design,
propulsion efficiency & energy optimisation, not predominantly reduced speed designs
c) Measures taken to comply with EEDI not to jeopardise or have adverse effect on safety of the ship
3. Emphasise that EEDI measure for new ships only
Leading the way; Making a difference
MARKET BEASED MEASURES - MBMs
Governments do not believe that ships can meet GHG reduction targets without MBMs
EEDI & SEEMPs ‘unlikely to be sufficient’ but: no reduction targets have been set!
Number of proposals discussed at IMO:Mandatory CO2 reduction targets, Efficiency Incentive Schemes, Emissions Trading Schemes , GHG Funds
Impact Study to assess suggested proposals
Leading the way; Making a difference
INTERTANKO POSITION
Market Based Measures not justified at this time (Industry is already incentivised by high fuel prices)
Should MBMs be required, they should:• be implemented through an international regime• be simple to enforce and to monitor• drive the right behaviour• Provide transparency to maintain current level playing field• not place disproportionate financial and operational
burden on the industry
Leading the way; Making a difference
Leading the way; Making a difference
SUSTAINABILITY
Deep concern that the current tanker market rates are consistently below ship owners’ operating costs.
INTERTANKO’s Chairman, Capt Graham Westgarth
“If these rate levels continue for a long period, this could lead to a situation where sustainability of the oil transportation industry is threatened.”
“Our Members operate tankers to the highest standards and will continue to do so. Operating for a prolonged period in an environment where tanker owners are not even covering their operating costs is obviously not a situation that can be maintained.”