Oil Shipping Today Peter M Swift January 2005 Propeller Club, London.

Oil Shipping Today

Peter M SwiftJanuary 2005

Propeller Club, London

Global primary energy consumption by fuelmillion tonnes oil equivalents

24%

25%

6% 6%

39%

Oil: 3563

Gas: 2286

Coal: 2412

Nuclear: 611

Hydro: 593

Source: BP

World oil supply 1900-2005mbd

01020

30405060

708090

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

ROW

Middle East

Western Europe

USA

Crude oil seaborne trade

Oil consumption per capita (Litres/day - 2003)

02468

1012

US

Korea

Norway

Japa

n

OECD

Italy

Franc

e UK MEW

orldFSU

L Am

er

China

Africa In

dia

Litre

The world needs tankers

Tanker Fleet Ownership

0

10

20

30

40

50

60

70

80

90

100

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

pe

rce

nta

ge

Independent Owner Company (End User)

Source: SSY Consultancy & Research Ltd

AS AN INDUSTRY WE MAY NOT BE LOVED BUT WE ARE NEEDED

• World Oil World Oil Consumption 3.6 Consumption 3.6 billion tsbillion ts

• Transported by sea Transported by sea 2.2 2.2 billion tsbillion ts

• 6060% transported by sea.% transported by sea.

Regular supply critical

Daily VLCC spot rates

0

10

20

30

40

50

60

70

80

90

100

J ul-9

9

Oct-9

9

J an-

00

Apr-0

0

J ul-0

0

Oct-0

0

J an-

01

Apr-0

1

J ul-0

1

Oct-0

1

J an-

02

Apr-0

2

J ul-0

2

Oct-0

2

J an-

03

Apr-0

3

J ul-0

3

Oct-0

3

J an-

04

Apr-0

4

'000 U

SD

/day

Source: INTERTANKO

Tanker spot market - average monthly freight ratesJ an 2000 - Nov 2004

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

J an-

00

Apr-0

0

J ul-0

0

Oct-0

0

J an-

01

Apr-0

1

J ul-0

1

Oct-0

1

J an-

02

Apr-0

2

J ul-0

2

Oct-0

2

J an-

03

Apr-0

3

J ul-0

3

Oct-0

3

J an-

04

Apr-0

4

J ul-0

4

Oct-0

4

$/d

ay

VLCC: AG - J apan 250' dwt

Suezm: WAFR - USAC 130' dwt

Afram: N Sea - Cont 80' dwt

Clean: Caribs - USAC 30' dwt

Clean: Cont - USAC 33' dwt

Oil price and tanker freight rate 1970-2004

0

10

20

30

40

50

60

70

80

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02

Max

04

US

D p

er b

arre

l

Nominal price Arabian Light

Real Price Arabian Light

Nominal freight rates PG-West

Deflated freight Rates PG-West

Deflated by Consumer Price Index (USD)

THE TANKER ROLLER COASTER 1945 - 2001

0

100

200

300

400

500

600

Sc

ale

- In

ters

ca

le -

Wo

rld

sc

ale

<30 000 Dwt 30-40,000 Dwt 90-100,000 Dwt VLCC

War in Palestine

Korean WarSuez Canal Zone

Conflict

Suez Canal Closure

1973 Oil Crisis

Suez canal reopens

Market Doldrums

Kuwait 1990-1

Asian Financial

Crisis

¥

Source: E.A. Gibson Shipbrokers

5254

5658

6062

6466

6870

7274

7678

8082

8486

8890

9294

9596

9799

20012002

2004

Years

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

$6.00Freight cost ($/bbl)

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

$60Crude oil price ($/bbl)

Freight Oil Price

Freight and Oil Price Movement - 1950-2004

Suez Crisis

'67 M E war

'73 M E war

OPEC price

power

Kuwaitoccupation

After Erika

Gasoline price at the pump

0.0

0.3

0.5

0.8

1.0

1.3

1.5

USA Japan Germany UK

Long haul freight,$3/bbl

Marketing etc

Oil price (FOB)OPEC basket Jan2003 IEA table 8Tax

Cost elements making the: gasoline price:

$ per litre

INTERTANKO

Oil pollution into the seaMaritime sources

4%

67%

4%

2%

3%

2%0%

18%Shipping general

Accidents tankers+barges

Tank washing/VOC

Exploration and Production

Coastal Refineries

War related accidents

Leisure Craft

Natural seeps/others

Tanker/barges: 5%Shippping:9% of which tanker/barge accidents 2.8%

Torrey Canyon

- Resulting in IOPFC

Torrey Canyon

Built 1959 in the USA.60,000 dwt, , Li. FlaggedLater jumboised to 120,000 dwt Owned by Union OilLeft Kuwait 19 February 1967 Cargo 120,000 ts of BP oil for Milford HavenPassed Scilly Isles 18 March 08.15 am Discovered plotting error at 08.40 amRe-plotted position 2.8 nm from the Seven Stones reefCourse was changed too lateHits Pollard's Rock in the Seven Stones reef at 17 knots Rips open 6 tanks. 31,000,000 gallons of oil leaked Oil spread along the sea between England and France

Amoco Cadiz - 1978

- Resulting in Marpol PL/SBT, etc.

The 1974 built Amoco Cadiz carrying 227,000 tonnes of crude oil ran aground off the small port of Portsall off the coast of Brittany, France at 10:00 p.m. on March 16, 1978. The whole cargo spilled out as the breakers spilt the vessel in two, progressively polluting 360 km of shoreline from Brest to Saint Brieuc.At the time this was the largest oil spill by tanker ever registered. The French Government along with damaged villages prosecuted the Amoco company in the United States. After 14 years of difficult proceedingsthey obtained 1,257 m Francs (190 m Euros), half the claimed amount.

Exxon Valdez - 1989

- Resulting in OPA 90Left the Alyeska Pipeline Terminal at 9:12 p.m. on March 23,1989.Loaded with 1.264 m barrels of North Slope crude oil bound for Long BeachNorth Slope crude oil had safely transited Prince William Sound 8,700 times in the 12 years At 12:04 a.m on March 24, 1989 Exxon Valdez grounded on Bligh ReefPrince William Sound and 11 cargo tanks were punctured..Some11 million gallons or 257,000 barrels or 38,800 metric tones was spilt.200 miles of shore line were heavily or moderately oiled 1,100 miles were lightly/very lightly oiled. Exxon spent about $2.1 billion on the cleanup effort.

Nakhodka -1997- Resulting in proposals to IMO, class and IOPFC

* Built 1970, Ru. Flagged* Cargo of 19,000 ts of heavy oil

* En-route from Shanghai, China to Petropavlovsk, Russia. * Stranded on the coast of Antou,

Mikuni town, Fukui prefecture, Japan • A total of 25.14 billion yen in compensation

was paid to about 6,000 claimants

Erika – 1999Erika – 1999- Resulting in - Resulting in

Marpol revisions Marpol revisions and accelerated and accelerated

phase-outphase-outand first of the and first of the EU measuresEU measures

Prestige – 2001 - Resulting in action by EU and later IMO on phase-out and more

New Carissa

Grounded Coos Bay,

Oregon in 1999 After several salvage attempts the ship’s bow broke away from the stern and was eventually sunk by naval gunfire and a torpedo. .

A COURT SETTLEMENT was reached June 2004 in the New Carissa grounding case. The 44,527dwt wood chip carrier ran aground north of Coos Bay, Oregon state on 4 February 1999, spilling more than 200 ts of fuel oil. US District Judge Garr King ruled on Wednesday that the US government must pay the ship’s owner Green Atlas Shipping of Panama and its Japanese subsidiary Taiheiyo Kaiun, $4M because it was negligent in not making available the latest navigation guides for the area. In return, Green Atlas must pay $4M to cover environmental clean-up costs and $6.5M in respect of costs incurred during the US Coast Guard’s attempts to remove the vessel.

Selendang Ayu

Grounded and broke in two outside the

IslandUnalaska Dec 2004

The container On December 7, the crew of the M/V Selendang Ayu reported that they had lost power and were adrift off Unalaska Island. Efforts to tow the vessel failed and it went aground and broke apart between Skan Bay and Spray Cape at approximately 6pm, December 8. The Selendang Ayu carried approximately 424,000 gallons of Intermediate Fuel Oil (IFO 380) and 18,000 gallons of Marine Diesel (PDF).

Principal Challenges for Oil Shipping Industry Today

1. Meeting society’s expectations

- our licence to trade

- regulation versus self-regulation

The world expects us to have 0 accidents.

Even though 99.9997% of oil is delivered safely

It takes only one accident to change the industry

The image ?

OWNER CHARTERER CLASS

IMAGE PROBLEM !

The Rogues of the Tanker Industry


2. Governance structure for the industry- International versus national/regional legislation

CHALLENGES TO INDUSTRY GOVERNANCE

International vs. local, national and regional

• Liability – EU Penal Sanctions vs. International Conventions

• Safety & Environment – EU (Post Erika & Prestige) vs. IMO/Marpol & SOLAS

• Sulphur Levels / Air Emissions – EU, USA vs. IMO

• Security – MTSA vs. ISPS

• Ballast Water Management – US et al vs. IMO



- Role of Flag States

Tanker Fleet by Flag

0

10

20

30

40

50

60

70

80

90

100

1946 1950 1960 1970 1980 1990 2000

pe

rce

nta

ge

USA UK Norway Panama Greece Japan Liberia Bahamas Other

Source: SSY Consultancy & Research Ltd

The good, the bad and … all legitimate

http://www.crwflags.com/fotw/images/p/pa-var.gif

http://www.crwflags.com/fotw/images/l/lr.gif

Flag State Guidelines- industry advice




- Role of Classification Societies

Tripartite Dialogue on Newbuilding Standards

IACS

Joint Tanker Project

Common Structural Rules 2005




- Role of Classification Societies

- Role of Coastal States


3. Challenges to international Liability regimes, and

the Increasing Criminalisation of Seafarers


4. Environmental challenges:- inadequate reception facilities- ballast water management- air emissions (engine and cargo)- environmentally-sound recycling- and many more

Oil Shipping Today

Tanker incidents: 1978-03

0

200

400

600

800

1000

78 80 82 84 86 88 90 92 94 96 98 00 02

Grounded

War

Misc

Hull&Machinery

Fire/Expl

Collision

Source: LMIS, Informa, press, INTERTANKO

Number

Development of tanker oil spills

Source: ITOPF. Number of spills above 700 tonnes.

Accidental oil pollution from tankers and tanker trade

0.0

0.7

1.4

2.1

2.8

3.5

1970s 1980s 1990s PR00s

0

22

44

66

88

110

132

m ts spilt

'0000 bntonne-miles

Source: ITOPF, Fearnleys

1000 bn tmm ts spilt

Port State ControlPercentage of inspected ships detained

0%

2%

4%

6%

8%

10%

12%

14%

200410m

2003200220012000199919981997

0%

2%

4%

6%

8%

10%

12%

14%

of which tankers

All ships

2004 10 months: Paris and Tokyo MoU only

Fleet by hullpercentage

622

6074

83

9478

4940

2617

49

0

20

40

60

80

100

1991 1997 End 02 End 03 End 05 End 10

SH* share (%)

DH share (%)

End 05, all tankers

built 1982 and earlier goneEnd 10, all tankers built 1987 and earlier gonetrading beyond 2010 subject to administrations

“Oil should travel first class”- that is the aim of the oil shipping industry

Thank you www.intertanko.com

www.shippingfacts.com

http://www.intertanko.com/

Oil Shipping Today Peter M Swift January 2005 Propeller Club, London.

Documents

Transcript of Oil Shipping Today Peter M Swift January 2005 Propeller Club, London.