Filippo Cameli (1st Vice Chairman), Jrgen Jahre (Chairman 73-76), Jan Hudig (1st Chairman 70-73), Erling

Dekke Naess (Chairman 76-79)

Carl Rentz-Petersen (Chairman 82-84) James Rand (Chairman 84-87)

Seawise Giant/Jahre Viking biggest tanker ever (564,000 dwt) jumboised in the 1980s Rdhusgatan 25

Miles Kulukundis (Chairman 94-96)

Andreas Ugland (Chairman 92-94), Tormod Rafgrd (MD 70-95), Basil Ph. Papachristidis (Chairman 87-89), Seigo Suzuki (Chairman 89-92)

INTERTANKO GENESIS

GENESIS
INTERTANKO came into being in 1970 out of a dramatic series of events in the late 1960s which changed the world of oil tanker transportation for ever.

he Six Day War (Israel/Egypt) and the first Arab oil embargo, the closure of the Suez Canal and the wreck of the Torrey Canyon were dramatic events in 1967 with huge significance for the world and for tanker shipping. They brought about a massive size increase in tankers; they changed tanker shipping regulation; they changed some of the tanker operating fundamentals. But they all in different ways emphasised the need for stronger and more effective international cooperation between tanker owners as well as between tanker industry players; for a body that would provide a forum for the exchange of views; for an association that would take active steps towards the promotion and protection of the interests of independent tanker owners. Three years later, in 1970, INTERTANKO, the International Association of Independent Tanker Owners, was established in Oslo, as the 35 year-old, London-based International Tanker Owners Association closed its doors. Its first Chairman was Jan Hudig. Its first Vice Chairmen were Jrgen Jahre and Filippo Cameli. The rest of its first Executive Committee were Erling Dekke Naess, John Kulukundis and Maersk Mc-Kinney Mller.

1970-1990
INTERTANKOs first 20 years started with its establishment as a two-man operation in Oslos Rdhusgatan 25, setting out to provide safe transport, cleaner seas and free competition. It grew incredibly fast, rising to maturity and to the status of a non-governmental organisation (NGO) at the IMO. It steadily built up its membership and gained recognition as the authority and spokesman for the tanker industry.

1990-2010
Its second 20 years started with the Exxon Valdez casualty, which became a significant tanker industry watershed between one era and the next. The tanker industry rethought its priorities as it stepped out from a decade and a half of depression into a period of growth and generally increasing though not steady profitability. These two decades saw a complete and massive rethink of the Associations priorities too. It became truly international, setting up offices in London, Washington DC, Singapore and Brussels. It has developed into a very proactive, open, dynamic and responsive association. It is today one of the few NGOs at the IMO which is proactively proposing rule changes to improve safety and environmental protection. INTERTANKO has become a well-respected representative and spokesman for the oil tanker owners. It has gained in confidence over the years enough to see its Council unanimously embrace the ambitious goals of zero pollution, zero deaths and zero detentions.

INTERTANKO 40 Years Leading the way

INTERTANKO THROUGH THE YEARS

THROUGH THE YEARS

Four decades of INTERTANKO and the oil tanker industry huge changes in the way the industry is structured, how it goes about its business, how it thinks, how it performs.
1. Tanker seaborne crude oil trade over four decades
bn tonne-miles
90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

3. Crude oil seaborne trade 1973

Boom and bust

Lay up and demolition

Growth and structural changes

China, the emerging markets and profitability

1970s

1980s

1990s

2000s
Source: Fearnleys

Source: INTERTANKO, based on data from Fearnleys

2. Oil consumption & production in the 1970s and 2000s

US Europe
(inc Eurasia)

4. Crude oil seaborne trade 2002

Japan

Other Asia

Middle East

China

Others

100% 90% 80% 70% 60% 50% 40% 30% 20%

17.0mbd 20.0mbd 10.9mbd 16.8mbd 20.0mbd 10.5mbd 7.2mbd 7.2mbd 22.3mbd 6.1mbd 3.0mbd 4.7mbd 12.1mbd 12.7mbd 6.6mbd 5.4mbd 20.0mbd 11.7mbd 20.0mbd 5.3mbd 24.2mbd 22.7mbd

10% 0

Oil consumption Oil consumption Oil production 1970s 2000s 1970s

Oil production 2000s

Source: BP
Source: Fearnleys

INTERTANKO 40 Years Leading the way

INTERTANKO THROUGH THE YEARS

1970s
BOOM AND BUST
1970s Boom and bust
G G

Suez Canal closure in 1967 saw tanker freight rates rocket and the beginning of a tanker building boom of larger and larger tankers built to trade round the Cape of Good Hope. 1973 saw orders for 105m dwt of new tankers, representing 55% of the existing fleet. Torrey Canyon wrecked off the UK in 1967 120,000 tonnes of crude oil lost. This incident brought about: Civil Liability Convention of 1969 (CLC) and Fund Convention; introduction of Tovalop and Cristal spill compensation funding system as an industry voluntary interim move pending universal ratification of CLC; International Convention for the Prevention of Pollution from Ships of 1973 (which became MARPOL and brought in segregated ballast (SBT)). SOLAS Convention of 1974 brought in inert gas systems (IGS) to prevent tank explosions. Arab-Israel war 1973 and Arab oil embargo 1973/4 cut oil exports and hiked oil prices. Tanker demand collapsed.
G G

Main tanker trades were between Middle East and Europe/U.S. which together represented 70% of world oil demand. Today less than 50% of world oil production is consumed by U.S. and EU. (See graphs 2, 3 and 4 opposite) Suez Canal reopened in 1975, decimating tanker tonne-miles and leaving a large, modern tanker fleet, which increased by 250% during the 1970s, locked into chronic oversupply and floundering even before oil production started to decline in 1979. Nevertheless despite the poor rewards, the VLCC moved to centre stage and by 1977 roughly 60% of crude oil was carried by VLCCs. Amoco Cadiz lost off France in 1978 223,000 tonnes of crude oil lost. The incident hastened the amendments to, and the ratification of, MARPOL 73/78 which brought in Crude Oil Washing (COW) and protectively-located ballast (SBT-PL). Tankers contributed to 28% of oil pollution at sea (compared to 7-10% in 2000s and still declining) exceeded only by sump oil (poured down town drains) contributing 29.4%. A 1970s-built steam turbine powered VLCC burned 180 tonnes of heavy fuel a day (compared to 65 tonnes of intermediate fuel today).

Oil price increased from $2/bbl in the early 1970s to $30/bbl by the end of the decade after the 1979 oil price shock. With the oil and tanker shipping worlds in turmoil, INTERTANKO was a steadying hand as it looked at issues from currency instability to uses for idle tankers, from flag discrimination to clean ballast tanks, from the casualty record to slow steaming. Oil majors lost the control of large chunks of the worlds oil nationalisation of oil production in Latin America, North Africa and the Middle East. In the 1970s the Middle East was supplying more than one third of world oil production. Today it is just under one third (see graph 2 opposite).

The first ever VLCC Idemitsu Maru 206,106 dwt, built in 1966

INTERTANKO 40 Years Leading the way

INTERTANKO THROUGH THE YEARS

1980s
LAY-UP AND DEMOLITION
1980s Lay-up and demolition
G G

In 1985 30m dwt of tanker tonnage was sold for demolition. Iraq / Iran wars through the early 1980s. 1984 Iraq attacked the aframax Filkon L loaded with Kuwaiti crude oil. The tanker war became a key strategic element. Over the four years, INTERTANKO recorded 324 attacks on tankers. In 1987, 144 tankers were attacked and 64 seafarers killed. Twelve 500 pound parachute bombs extensively damaged the worlds largest tanker, the 564,000 dwt Seawise Giant. This decade saw INTERTANKO becoming involved in port state control, oil pollution compensation and disputes over open registries; dealing with lay-up, scrapping, and the dangers of low building prices with tempting finance packages; taking a fresh look at tanker quality, and also pushing for fair port dues for SBT tankers. Fundamental changes in the ownership patterns of oil, of oil refineries and of oil tankers started in the 1970s, accelerated in the 1980s and continued through the 1990s. In the 1970s about 80% of oil production was in the hands of the oil companies. Today that share has fallen to about 25% of oil production and about 15% of oil reserves. In 1988 it was noted that state companies had taken over the lead position in controlling oil production and reserves with companies such as Aramco, KPC, NIOC, PDV, Pemex, Petrobras, Sonatrach holding the reins. This period also saw the growth of the independent tanker owner as oil companies and state companies reduced their tanker ownership. INTERTANKOs prompt reactions to the growing importance of independent ownership helped boost its membership in the 1980s and 1990s. Exxon Valdez grounded in Alaska in 1989 37,000 tonnes of crude oil lost. This watershed incident changed the tanker world as it brought in OPA 90 and double-hull legislation.

Oil prices now up to $32/bbl.

G

In 1981, 41 VLCCs went for demolition including 15 oil company vessels. In 1982/3 another 126 VLCCs were scrapped. 1982 alone saw an 18% drop in tanker tonne-miles. VLCC rates hit a WS14 low point. A 10 year-old VLCC was worth $3m. 71.4m dwt of tankers were laid up in 1982 20% of the fleet. By 1985 half the VLCC fleet was surplus tonnage over 130 were laid up. Even oil company tankers were laid up.

Tonne-mile trade figures declined by 155% from the peak in 1976 to a low in 1985, according to Fearnleys. Overall tonne-mile demand was down by 38% this decade compared to the 70s. Main tanker trades still Middle East/West but eastbound shipments growing and trade diversification accelerating. INTERTANKO developed on the world political stage, gaining inter alia a consultative seat at IMCO in 1982. In the same year IMCO was reborn as the IMO.
G

INTERTANKO 40 Years Leading the way

INTERTANKO THROUGH THE YEARS

1990s
GROWTH AND STRUCTURAL CHANGES
1990s Growth and structural changes
G G

Tonne-mile demand increased by 36% in the 90s compared to the 80s. Periods with good freight rates, but strong volatility in the market due to incidents such as the 1990-1991 Iraq-Kuwait war, strongly increasing Middle East oil production (1992 highest level in more than a decade), unrest in Nigeria. Increasing talk of an ageing tanker fleet saw INTERTANKO rediscussing the definition of substandard ships, and stressing that proper maintenance was a bigger safety factor than age. INTERTANKO was the first shipping association to introduce quality criteria for membership. Exxon Valdez, Oil Pollution Act of 1990 (OPA 90) and the IMOs adoption of the double hull in March 1992 meant that as from mid 1996 all new tankers were double hulled. INTERTANKO called OPA 90 a hundred pages of uncertainty as Congress removed charterer liability from the Act, and as this Act brought in compensation for damage to natural resources along with contingent valuation methodology. INTERTANKO involved itself increasingly in criminal liability issues, unlimited liability, drug and alcohol abuse measures, charterer responsibility for quality, pressing for tougher class surveys. The 1992 Protocols to CLC and Fund Conventions (eif 1996) broadened the scope of these Conventions and raised financial limits of liability. INTERTANKO and its Members found themselves looking at the cost to them of the poor image of the tanker industry, and at the same time starting to reach out to the environmental groups.
G

OCIMFs Ship Inspection Reports Programme (Sire) started in 1994. INTERTANKO had suggested the concept and assisted in its development. INTERTANKO started to call for support from industry partners to improve the industrys infrastructure and thereby increase safety, calling it Prevention through Partnership. Through the 1990s the idea took root and grew that responsibility for safe and sound shipping is shared between all those elements which are involved in its execution. This gave rise to the concept of the chain of responsibility, which emphasises joint responsibility as well as the fact that a chain is only as strong as its weakest link. Erika broke up off France in December 1999 20,000 tonnes of heavy fuel oil lost. This incident brought in IMOs amendments to Marpol 73/78 with a tougher single-hull phase-out timetable and brought the EU into the regulatory front line. It also signalled the start of the two-tier tanker market.

INTERTANKO 40 Years Leading the way

INTERTANKO THROUGH THE YEARS

CHINA, THE EMERGING MARKETS, AND PROFITABILITY

2000s China, the emerging markets, and profitability
G G

2000s
The tanker trades have become diversified, with getting on for twice as much oil now going Middle East/East as goes Middle East/West. U.S. and EU now consume less than 50% of world oil production (was over 70% in 1970). Chinas oil consumption increased by 77% over the decade, pushing its oil imports up 250% and becoming one of the main drivers of the tanker market. Tankers contributed to less than 10% of global oil pollution at sea (less than 2% in the U.S.) down from 28% in 1970s.
G G

The decade started with the global dot.com crisis and ended with the global financial crisis. 2000 saw INTERTANKOs landmark legal victory in Washington when five years of fighting through the U.S. courts resulted in INTERTANKO winning its argument that individual U.S. states had no constitutional right to regulate matters of vessel design, construction, maintenance, operation, equipping and manning. Tanker trade growth lower than the 90s, but the decade started with relatively tight market balance and a limited shipbuilding capacity, which helped boost earnings. For a large part of the 2000s shipping experienced a super boom, with all shipping sectors enjoying unprecedented simultaneous profitability for a time. With closer supply/demand balance and increased employment came greater market volatility, with VLCC spot rates swinging from $10,000 to $100,000 a day in six months, then from $15,000 to a peak of close to $250,000 a day in another 6-12 months. Prestige broke up off Spain in 2002 70,000 tonnes of fuel oil lost. This incident brought in EU phase-out regulation and a further tightening of the international phase-out regime. INTERTANKOs role this decade has become increasingly political, with an emphasis on regulation at the IMO, in Washington and in Brussels, as well as emphasis on the environment, and on the industrys image. With the industry cooperating to produce a compensation regime that balances the interests of all stakeholders, the limits of liability under the 1992 CLC/Fund regime were raised by 50% in 2000, and in 2003 the Supplementary Fund provided a third tier of compensation up to $1.2bn.
G

Reducing tanker spills through 80s, 90s and into 00s

000 tonnes
600 500 400 300 200 100 0
50,000

Average age
Figures show average size of tanker (dwt)

16 14 12 10

99,000 82,000

8 6 4

1970

1979

1989

1999

2009

Source: INTERTANKO, based on data from ITOPF

As top quality officers and crew become harder to recruit and retain, and as accident statistics point to high human causative factors, INTERTANKO has been focusing on the human element in much of what it does. A modern motor powered VLCC consumes about 65 tonnes of intermediate fuel a day. It uses 1 litre of fuel to move 1 tonne of cargo 2,500 km more than twice as far as the steam turbine powered VLCCs in the 1970s. I

INTERTANKO 40 Years Leading the way

INTERTANKO THROUGH THE YEARS

INTERTANKO 40 Years Leading the way

Conny Wickberg

FORTY YEAR OVERVIEW

FORTY YEAR OVERVIEW

Oil prices and tanker freight rates, mixed with stock markets and tonne-mile demand, and also with tanker fleet and productivity, make an interesting juxtaposition of 40-year graphs.
3500

FTSE All Share Price Index 1970-January 2010 and Average VLCC Spot Rate
3000 2500 2000 1500 1000 500 0 100 80 60 40 20 0 275 250 225 200 175 150 125 100 75 50 25
19 70 19 71 19 72 19 73 19 74 19 75 19 76 19 77 19 78 19 79 19 80 19 81 19 82 19 83 19 84 19 85

FTSE All share price index

Oil price and freight rates 1970-2009

$ per barrel

Real price Arab Light

Real freight rate AG-West

Main crude oil tanker indices fleet, trade and productivity

Fleet

Tonne miles

Tonnes

Average distance

Productivity t-m/dwt

19

86

19

87

19

88

19

89

INTERTANKO 40 Years Leading the way

FORTY YEAR OVERVIEW

TT 265,000 dwt mid 70s

MT 300,000 dwt 1990s

90 WS 80 70 60 50 40 30 20 10
Source: Thompson Datastream VLCC Spot rate source: R S Platou Shipbrokers

Source: INTERTANKO, based on data from Fearnleys

Source: INTERTANKO, based on data from Fearnleys

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

INTERTANKO 40 Years Leading the way

INTERTANKO MEMBERS

INTERTANKO MEMBERS
Supporting the publishing of this booklet commemorating the Associations 40th anniversary

CMM

INTERTANKO 40 Years Leading the way

INTERTANKO MEMBERS

OLYMPIC SHIPPING AND MANAGEMENT S.A. ONASSIS GROUP

INTERTANKO 40 Years Leading the way

INTERTANKO ASSOCIATE MEMBERS

INTERTANKO ASSOCIATE MEMBERS

Supporting the publishing of this booklet commemorating the Associations 40th anniversary

Bu l k

92-21) 32851406-7 Tel: +( 2-21) 32851400 Fax: +(9 lk@super.net.pk Email: bu

Shippin

g & Trading (Pv t) Ltd

Kara chi Pakistan

INTERTANKO 40 Years Leading the way

INTERTANKO ASSOCIATE MEMBERS

INTERTANKO 40 Years Leading the way

YEARS OF CHANGE

YEARS OF CHANGE
The last 40 years have brought about changes in how tanker business is done in terms of safety as well as in terms of tanker usage.
Tanker safety
There have been tremendous improvements in tanker safety over the last four decades. For the first time since 1970 when ITOPF started to record oil spills, there was a year with no major oil spill (major = above 700 tonnes) in 2009. Nor was this a one-off. Already accidental oil spills from tankers had hit a record low in 2008.

Tanker productivity capacity utilisation

The productivity of the fleet measured in tonne-miles per dwt was the lowest in 2009 since 1989 when the tanker industry was emerging from the depressed 1980s. Taking 1970 as the starting point at 100 on the productivity index, the high point was in 1973/4 at 114 and the low point was 1983 at 35. 2009 in comparison stands at 57.5. More time spent in port, many tankers used for storage, and reduced speed all took a great deal of capacity out of the market in 2009. The general belief is that storage will continue to tighten the tanker market in 2010, albeit in reduced volumes, at least until interest rates begin to rise.
1000 ts spilled m ts transported

Accidental oil spills from tankers and tanker trade

m ts spilled
5

m ts transported

Main crude oil tanker indices fleet and productivity

Fleet Productivity t-m/dwt 275

-63%

-3%

250 225 -82% 200 175

1970s

1980s

1990s

2000s

150 125 100

Source: INTERTANKO, based on data from ITOPF

This forms part of a trend whereby oil pollution from tankers was 85% lower in the 2000s than it was in the 1980s, while over the same period the volume of oil transported by tankers increased by over 50%. Accidental spills over the whole 40 year period reduced in the 2000s to just 6% of what they were in the 1970s.

75 50 25
19 70 19 75 19 80 19 85 19 90 19 95 20 00 20 05 20 09

Source: INTERTANKO, based on data from Fearnleys

INTERTANKO 40 Years Leading the way

YEARS OF CHANGE

Tanker employment
The way that tankers are employed has changed out of all recognition since the 1970s.
G

Tanker employment 1974-2010

%
100 90 Spot Independent contracts Oil/state owned

Then, more than one third (36%) of tanker tonnage was oil company- or state-owned; today it is less than one seventh (14%). Then, more than half (52%) of tankers were employed under period contracts; today it is just over one quarter (27%). Then, only just over one tenth (12%) of tankers were trading on the spot market; today it is getting on for two thirds (59%). I

80 70 60 50 40 30

20 10 0

1974

1980

1984

1990

1994

2000

2002

2010

Source: Based on data from Gibsons and others

Capt Panagiotis Tsakos bidding farewell to one of the Tsakos Group newbuildings in Korea in April 2009. Capt Panagiotis founded Tsakos Shipping & Trading in 1970, the same year as INTERTANKO was established. 40 years on he is still actively involved in the family shipping operation which is now headed up by his son Nikos, who is an INTERTANKO Executive Committee Member.

INTERTANKO 40 Years Leading the way

THE WAY FORWARD

THE WAY FORWARD

The value of an international shipping association is in its engagement in the different facets of operation and regulation around the world, giving its members a strong voice. This requires the cooperation of, and the development of, coalitions among like-minded partners in order to strengthen the industrys influence.
INTERTANKO has become something of a bridge builder within the industry, helping into existence a significant number of cooperative industry relationships:
G

the Round Table of international shipping associations (BIMCO, ICS-ISF, INTERCARGO and INTERTANKO); the Tripartite discussions between ship owners, shipbuilders and class; a healthy, active and productive oil company/tanker owner relationship between OCIMF (also established in 1970) and INTERTANKO on a number of fronts; good cooperation between the ITF (International Transport Workers Federation) and INTERTANKO, and between IMPA (International Maritime Pilots Association) and INTERTANKO, has resulted in MoUs between the parties; there is an active and successful formal partnership agreement with the U.S. Coast Guard; relationships with the International Association of Classification Societies (IACS), the International Group of P&I Clubs (IG) and the Worldscale Association have never been closer and are extremely constructive; links with the Paris MoU, while informal, nevertheless involve a closeness and trust that benefits both parties.

INTERTANKO will continue to pursue the continuous improvement and human awareness principles of Poseidon Challenge and the zero goals embraced unanimously by its Council in a landmark decision to try to raise the quality bar even further zero deaths, zero pollution, zero detentions. The Associations Strategic Objectives are:

to develop and promote best practices, to be a positive and proactive influence, to profile and promote the tanker industry, to provide key services to Members.

These will form the basis of the Associations work in the future as it pursues its Mission... to provide leadership to the tanker industry in serving the world with safe, environmentally sound and efficient seaborne transportation of oil, gas and chemical products and its Vision for the tanker industry... as a responsible, sustainable, respected tanker industry, committed to continuous improvement and constructively influencing its future. INTERTANKO is up front in the tanker sector as well as in the shipping industry as a whole, leading the way with clear vision and objectives, and making a real difference in the daily business of our Members and of the industry as a whole. But it is the ability to forge relationships and work together with others to the benefit of our Members and of the industry, that lays the real foundations for the future. Together as an association of tanker owners, and together as an industry, we will be stronger, more respected, and more clearly heard. I

The shipping industry is best represented when it is united and delivering a unified message. Its effectiveness comes from being proactive, from working with partners to build coalitions, from engaging globally, and from being prepared to lead and not just take a lead, but to lead by example and actually walk the talk. By doing that it really can make a difference.

INTERTANKO 40 Years Leading the way

Sir Yue-Kong Pao (Chairman 79-82) with Margaret Thatcher

Gange-Rolvs gate 5

Westye Hoegh (Chairman 99-01) Stephen Van Dyck (Chairman 04-07)

Lars Carlsson (Chairman 01-04)

Dagfinn Lunde (MD 95-01)

Richard du Moulin (Chairman 96-99)

Nicholas Fistes (Chairman 07-09), Peter Swift (MD 2001 to date), Graham Westgarth (Chairman 2009 to date)

Design: design@theclubb.co.uk

INTERTANKO London
St Clare House 30-33 Minories London EC3N 1DD United Kingdom Tel: +44 20 7977 7010 Fax: +44 20 7977 7011 london@intertanko.com

INTERTANKO Oslo
Nedre Vollgate 4 5th floor PO Box 761 Sentrum N-0106 Oslo Norway Tel: +47 22 12 26 40 Fax: +47 22 12 26 41 oslo@intertanko.com

INTERTANKO Asia
5 Temasek Boulevard, #12-07 Suntec City Tower 5 Singapore 038985 Tel: +65 6333 4007 Fax: +65 6333 5004 singapore@intertanko.com

INTERTANKO North America

801 North Quincy Street Suite 200 Arlington, VA 22203 USA Tel: +1 703 373 2269 Fax: +1 703 841 0389 washington@intertanko.com

INTERTANKO Brussels
Rue du Congrs 37-41 B-1000 Brussels Belgium Tel: +32 2 609 54 40 Fax: +32 2 609 54 49 brussels@intertanko.com

www.intertanko.com