Anti-Trust/Competition Law Compliance Statement

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Anti-Trust/Competition Law Compliance Statement

• INTERTANKOs policy is to be firmly committed to
  maintaining a fair and competitive environment in
  the world tanker trade, and to adhering to all
  applicable laws which regulate INTERTANKOs and
  its members activities in these markets. These
  laws include the anti-trust/competition laws
  which the United States, the European Union and
  many nations of the world have adopted to
  preserve the free enterprise system, promote
  competition and protect the public from
  monopolistic and other restrictive trade
  practices. INTERTANKOs activities will be
  conducted in compliance with its
  Anti-trust/Competition Law Guidelines.

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UPDATE ON TECHNICAL COMMITTEE ISSUES

• INTERTANKO
• North American Panel
• April 2010

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ISSUES

• 1. Mercury in cargoes
• 2. Verification of damage stability on tankers
• 3. MSDS (developing a guide)
• 4. Condition of class
• 5. Inert gas on small tankers
• 7. Lifeboat safety
• 8. Recovery systems
• 9. Bunker Sub-Committee issues

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MERCURY IN CARGOES

• Some crude oils contain mercury (Hg)
• Amounts at parts per billion (ppb) levels but
  still significant
• OCIMF has developed an awareness guide
• The scope of it is to raise awareness and provide
  information and guidance on
• mercury as a natural element, its toxicity and
  hazards
• what would be a hazard threshold value of mercury
  content in liquid
• methods to detect and measure mercury content
• how to handle the cargo and measures of personal
  protection
• safety guidance for COT cleaning handling the
  wash water/sludge
• procedures for COT decontamination

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MERCURY IN CARGOES

• Apparently oil companies have own information on
  crude oils with Hg
• Tankers, not aware of the Hg content on previous
  cargoes, may lose contracts
• Cost of decontamination on 1 mill level
• Singapore MPA accepts hot work on their port only
  for Hg decontamination of COT
• OCIMF Guide might not contain a list of crude
  oils experiences with high Hg

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MERCURY IN CARGOESINTERTANKO Requests

• Include Hg content for each cargo in the MSDS
• Information to be provided well in advance of
  loading
• Release an indicative list of crude oils
  indentified as having (possible) high Hg content,
  or
• Release an indicative list of fields/wells with
  crude oils having Hg content
• List updated as soon as information on a new
  crude oil or a new well with high content of
  mercury is detected
• Measures for Hg decontamination of COT indicated
  by charterers

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DAMAGE STABILITY IN TANKERS

• Onboard stability booklet not a sufficient tool
  for checking compliance
• IMO agreed to develop guidelines for both
• verification of compliance with the requirements
  for damage stability at the design stage of the
  vessel
• verification at the various operational stages
• The completion estimated in two years
• UK MCA, INTERTANKO, OCIMF and ICS to work on the
  operational guidelines

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DAMAGE STABILITY IN TANKERS

• Paris MoU Concentrated Inspection Campaign (CIC)
  in September 2010
• Verification questionnaire ready in May 2010
• Means to prove compliance
• being loaded in a condition as per stability
  booklet
• long-handed calculations
• class-approved software onboard
• another method
• INTERTANKO to comment on the Paris MoU
  questionnaire

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MSDS(Material Safety Data Sheets)

• MSDS for
• oil/fuel oil as cargo and
• bunkers
• SOLAS VI/5-1 into force on Jan 1, 2011
• MSC 288(86) IMO Guidelines for MSDS format and
  content
• INTERTANKO to suggest guidance for tankers in
  case MSDS is
• not provided
• provided but data not sufficient/in accordance
  with the IMO guidelines or generic and not
  specific to the cargo
• Adding a new criterion in the TVD for reports on
  MSDS
• C/P clause to cover issues linked to the supply
  of MSDS and the accuracy of the information
  provided

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CONDITION OF CLASS (CoC)

• Some oil companies do not accept tankers with
  CoCs on the hull condition
• No matter where, no matter the extent
• Maybe an overkill type of reputation risk
  management protection policy
• Penalty on transparency integrity in reporting
• Removes good practice of pre-drydock survey
• Pre-drydock surveys CoC to be corrected at
  dry-docking but . . .
• Tankers risk losing business before that!
• Regrettable hindrance of a good industry practice!

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VIQ 2.15 - Is the vessel free of CoC or
significant recommendations, memoranda or
notations?

• Record any CoC or significant recommendations,
  memoranda or notations of any nature, including
  due dates as an Observation.
• Where class records address structural issues of
  concern, including bottom pitting, areas of
  substantial corrosion, cracks, buckling or
  serious indents, record the details as to the
  extent and the measures taken to arrest further
  development.
• Where a CoC has been postponed, the details
  including the CoC, original date and the new date
  for completion should be recorded as an
  Observation.

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CONDITION OF CLASS (CoC)Actions

• Class alternative wording for the Notes to the
  VIQ 2.15
• IACS invited to the OCIMF General Purpose
  Committee to explain or demonstrate that VIQ 2.15
  can cause more safety problems
• OCIMF statistics from SIRE 2009 reports
• Out of 18,586 inspections (not vessels!) in SIRE
  database
• 2,470 (13) contain negative comments linked to
  CoC
• 15,997 (86) contain no CoC related issues
• 119 - not applicable or not decided
• OCIMF to re-run as these statistics are not
  representative
• INTERTANKO to substantiate the new text of VIQ
  2.15 has triggered an increase on CoC related
  observations
• Class review the standardisation of the language
  and terms used on CoC
• Call for a workshop

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AMENDED VIQ MORE OBSERVATIONS
New VIQ wording triggers more observations The
rate of Observations issued under the new VIQ
2.15 increased significantly.
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INERT GAS ON SMALL TANKERS

• Draft amendments to SOLAS regulation II-2/4.5.5
• IG plant for 5000 DWT ltall new tankers lt 20,000
  DWT carrying liquid cargoes having flashpoint lt
  60C
• For Chemical Tankers, application of inert gas
  may take place after the tank has been loaded but
• before the ship leaves the berth of loading or
  in the event of loading at anchorage arrival at
  the discharge port prior to commencing of
  discharge, before the ship leaves the anchorage
  position (alt.1)
• before commencement of discharge and must
  continue to be applied until that cargo tank is
  next gas free (kept inerted during discharge,
  during tank cleaning)(alt.2)
• For chemical tankers, nitrogren as inerting
  medium
• INTERTANKO policy
• all tankers to have an IG plant
• study to consider feasibility of IG plant on
  smaller tankers

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LIFBOAT SAFETY

• IMO develops guidelines for evaluating existing
  hooks against the new hook design criteria
• when the hook is fully reset in the closed
  position, the weight of the lifeboat does not
  cause any force to be transmitted to the
  operating mechanism, which could cause the
  inadvertent release of the lifeboat
• locking devices cannot turn to open position due
  to forces from the hook load and
• if a hydrostatic interlock is provided, it shall
  automatically reset upon lifting the boat from
  the water
• Design review by administrations and take into
  account wear and tear of the critical parts (no
  criteria given though)

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LIFEBOAT SAFETY

• IMO develops guidelines to include a hook
  stability test
• The hooks should remain closed throughout the
  hook stability test while under load
• If any hook opens during the test, all other
  hooks of the same type should be tested in the
  case of cargo ships
• If the hooks do not remain closed throughout the
  test while under load, the hooks should be
  replaced at the earliest available opportunity
  and no later than the next scheduled dry-docking.
  Until the hooks are replaced, additional safety
  measures must be taken, including use of fall
  preventer devices
• ISTEC responsibility for testing evaluating
  existing hooks not with manufacturers but with
  Flag/RO
• Hook replacement should be a transparent,
  achievable and practical evaluation process

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RECOVERY SYSTEMS

• IMO develops performance standards on recovery
  systems
• Suggestions that all ships have systems "capable
  to recover unconscious persons from the sea with
  significant wave heights of at least 3 metres,
  with a rate of 10 persons per hour ".
• Performance standards are unrealistic
• Pragmatic approach for procedures in using
  existing equipment rather than introducing new
  equipment
• Urge Coastal States to improve their respective
  SAR responsibilities and capabilities rather than
  imposing unrealistic and cumbersome equipment
  onboard merchant ships

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REGULATIONS ON BUNKERS

• ANNEX VI TO MARPOL CONVENTION
• limits the sulphur content in marine fuels
• different sulphur limits in open sea and in ECAs
• requires quality criteria for the marine fuels
• EU SULPHUR DIRECTIVE
• additional provision use of 0.10 sulphur
  content fuel when ships at berth (1 January
  2010)
• MGO/MDO on the EU market should have lt 0.1 S
  content (1 January 2010)
• CALIFORNIA AIR RESOURCE BOARD (CARB)
• use marine distillates within 24nm of the shore
• sulphur content in the marine distillates
• before 1 January 2012 MDO lt 0.50 MGO lt1.50
• after 1 January 2012 - MDO/MGOlt 0.10

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APPLICATION DATES CAPs
HFO
MGO
LSFO
MDO/MGO
MDO
MGO
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CHALLENGES FOR SHIPS

• Switching between at least 3 grades of fuel
• Calling at EU ports, ships need to use
• Deep sea fuel (HFO)
• ECA fuel (LSFO)
• EU - at berth/at anchor fuel (MGO)
• Onboard storage segregation capacity
• Increase risk of fuel incompatibility
• Increases the risks of boiler incidents
• Safety requires upgrading/modifications
• Viscosity, lubricity, flash point temp.

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OPTIONS FOR SHIP OWNERS

• CARB/EU regulations (2009/2010)
• use of MGO
• alternative technology not available
• shore power little supply safety legal
  liability issues for tankers
• fuel supply so far no problems reported
• IMO/ECA (1 Jan. 2015)
• will have a greater impact
• MGO increase demand
• alternative technologies? existing ships?
• alternative fuels if any, for local trade only

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OPTIONS FOR SHIP OWNERS

• IMO Global (1 Jan. 2020/2025)
• complete change to marine distillates (?)
• expected demand in range of 500 mill. t/year
• gradual phase-in due to ECAs
• Scrubbers dilemma
• availability Coastal States policies on
  scrubbers
• use HFO but more cleaning installations and more
  hazardous waste to dispose or
• use MGO but remove cleaning installations and
  minimise onboard generated waste less incidents
•  Alternative fuels
• natural gas possible but not yet for long
  voyages
• bio fuels not recommended for shipping

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NORTH AMERICAN ECA
Entry into force 1 August 2012

• Challenges
• Extent
• Fuel availability
• Ship bunker capacity

200 nm
200 nm
Caribs?
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N AMERICAN ECA - COST IMPACT

• Extra costs of a VLCC (2 m bbls) for a round trip
  of 400 nm 40k to 100k (premiums for MGO of
  200/t and 500/t respectively)
• 0.8 to 2.0 increase in transportation costs for
  a 2 m bbls VLCC from Persian Gulf to US Gulf
• Apparently US and Canada will have minimal
  problems to ensure supply

Poten Fuel Oil Monthly Opinion, 6 April 2010
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GLOBAL BUNKERING
Marine distillates on EU market lt 0.10 sulphur
content
Source Poten Partners
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FUEL OIL QUALITY - REGULATION 18

• blend of HC derived from petroleum refining
• free from inorganic acid
• should not include any substance or chemical
  waste which
• jeopardise ship safety and adversely affects
  machinery
• is harmful to personnel
• contributes to overall addition to the air
  emissions
• Annex VI Regulation 18 does not define
  parameters for a fuel oil standard
• Annex VI Regulation 18 requires MARPOL sample
  BDN guaranteeing fuel compliance

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FUEL OIL QUALITY - REGULATION 18

• Ship owners buy a product (i.e. bunker)
• Bunkers cannot be used as bought and need onboard
  treatment
• Ship owners still do not know what they receive
  and test the product they buy against a very
  short specification
• Ship engines only engines in transportation
  being damaged by the fuel used!

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TANKER ENGINE INCIDENTS
Year lt10 years 10-24 years gt25 years TOTAL Average age
2002 4 15 3 22 17.5
2003 3 8 3 14 18.4
2004 2 7 3 12 18.8
2005 9 20 5 34 17.6
2006 12 17 3 32 14.3
2007 20 25 3 48 13.2
2008 25 24 10 59 15.6
2009 18 13 22 53 16.4
2010 5 4 5 14 17.5
TOTAL 82 126 30 238 15.5
Based on data from LMIU, others
102 days
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COMPLIANCE - BDN INFORMATION

• Name and IMO Number of receiving ship
• Port
• Date of commencement of delivery
• Name, address, tel. number of marine fuel oil
  supplier
• Product name(s)
• Quantity in metric tons
• Density at 15C, kg/m3
• Sulphur content (m/m)
• A declaration signed and certified by the fuel
  oil suppliers representative that the fuel oil
  supplied is in conformity with the applicable
  subparagraph of regulation 14.1 or 14.4 and
  regulation 18.3 of this Annex.
• HOW IS THIS ASCERTAINED?
• ACTUAL or TYPICAL VALUES?

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CONTROL OF FUEL OIL

• Port Authority obligations
• take measures to promote availability
• require suppliers to provide BDN and sample
• maintain a register of local suppliers
• supplier certifies fuels meet Reg. 14 18
• BUT
• No official authority involved in control and
  monitoring prior to fuel delivery
• Control by commercial fuel tests only
• Responsibility for quality compliance and control
  should not be left with ships
• Quality/type of fuel has become very relevant
• Bio-contamination, catfines ignition quality

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INTERTANKO SUGGESTS

• MARPOL Annex VI includes relevant safety
  parameters from ISO 8217
• Registers of local suppliers with IMO
• Control of bunkers before supply
• No onboard blending during delivery
• Monitoring reports from Administrations on
  non-compliant fuel deliveries
• Keep updated list of these reports on the web
• Set up a web page where INTERTANKO Members can
  record their experiences with suppliers

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CONCLUDING REMARKS

• European refining has to catch up on efficiency
• Switch to MGO most probable and possible
• Marine distillates will be provided if required
• Alternative fuels long term solution
• Technologies long term solutions
• Onboard sulphur cleaning is not the real solution
  to environmental challenges
• Business will stay but will change significantly
  in terms of
• quality control
• type of products

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• THANK YOU
• For more information please visit
  www.intertanko.com
• dragos.rauta_at_intertanko.com