Vetting. Vetting and liaison with OCIMF 12 December Ajay Gour INTERTANKO. Leading the way; making a difference

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1 Vetting Vetting and liaison with OCIMF 12 December 2015 Ajay Gour INTERTANKO

2 - Vetting - Marine Assurance and Quality shipping

3 - Vetting - Ticket to Trade

4 Percentage Representation of Vetting Committee by location of member India, 1, 3% Chile, 1, 3% Russia, 1, 3% China, 1, 3% Cyprus, 2, 7% China Cyprus Belgium, 1, 3% UAE, 1, 3% Denmark, 2, 7% Denmark Greece UK, 2, 7% Hong Kong Italy Monaco Germany, 2, 7% Greece, 5, 17% Netherland s Norway Singapore USA, 1, 3% Singapore, 2, 7% Hong Kong, 1, 3% USA Germany UK Norway, 2, 7% Netherlands, 1, 3% Monaco, 1, 3% Italy, 2, 7% Belgium UAE Chile India

5 The challenges Inspections Numbers/Costs Inspector Stds VIQ - Guidance Inspector Availability Policies Transparency Off. Matrix Terminal Insp ns Maiden Voyages Incident Reports

6 - Examples of difficult vetting clauses which are biased towards the charterer and not balanced: 1. Owners warrant that for the duration of this charter the vessel will be kept in a standard acceptable to all major oil producers and all major chemical companies 2. Owner warrants that the vessel is approved by the following companies and will remain so throughout the duration of this charter party 3. Owner will endeavour to maintain all necessary oil company approvals during the course of this charter 4. Owners warrant that within 2 months from delivery vessel to obtain at least 2 oil major approvals from oil majors listed below

7 50% Discount* 50% Discount* 50% discount for members - order your copy through * Members Only

8 Thank You!

9 NNPC Visit to INTERTANKO London 11th December 2015 Michele White General Counsel, INTERTANKO Leading the way; Making a difference

10 Overview 1. INTERTANKO Legal and Documentary Committee 1. NNPC Nigeria Tanker Ban 2. Commercial Issues - Sustainability and INTERTANKO Payment Performance System

11 Legal and Documentary Services to Members INTERTANKO Documentary Committee 42 years 50 INTERTANKO model clauses INTERTANKO publications Freight and Demurrage Information Pool Legal and Documentary: Charterparty issues Case law summaries Charterparty forms General advice and assistance INTERTANKO clauses and guidance on their use Chartering Seminars Charterparty Advisory Service Weekly News Legal Issues

12 INTERTANKO Recent Model Clauses 50 Clauses Ebola Clause Bunker Adjustment Clauses for ECA areas Nigeria Trade Clause and Nigeria Trade Letter of Comfort Open access early 2016

13 NIGERIA TANKER BAN Letter from NNPC dated 15 July stating that 113 vessels have been prohibited from engaging in Crude Oil/Gas loading activities LEADING THE WAY, MAKING A DIFFERENCE

14 Excerpt from table of 113 banned tankers LEADING THE WAY, MAKING A DIFFERENCE

15 INTERTANKO Nigeria Trade Clause NIGERIA TANKER BAN Chronology and INTERTANKO Response 15 th July NNPC informs terminal operators that President Buhari has issued ban on 113 tankers entering Nigerian Waters. Crackdown on corruption. INTERTANKO publishes the tanker ban and full list; investigates Nigeria calls for INTERTANKO Member ships. 22 nd July and responds with INTERTANKO letters of protest to NNPC/Nigerian Authorities. Charterers begin to ask for clauses in c/ps including warranties from tanker owners that they are able to trade Nigeria. Work begins on INTERTANKO Nigeria Trade Clause Rumours Nigerian authorities will seek information on Nigeria calls and will henceforth increase documentary requirements worked into clause. 29 th July INTERTANKO Documentary Committee issues INTERTANKO Nigeria Trade Clause with advice for vessels that are blacklisted; vessels not blacklisted and future fixtures. Practical advice for calling Nigeria issued to address rumours ban relates to cargo theft. 10 th September further INTERTANKO letter to NNPC; INTERTANKO Press release

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17 INTERTANKO Nigeria Letter of Comfort Freight rates rise. 8 th September NNPC retreats lifts ban but requires a Letter of Comfort that no illegal activity will take place. 16 th September NNPC issues LOC Template including wording that results in damages payable without proof of loss. Charterers endeavour to pass this requirement on to Owners to give to NNPC. INTERTANKO Documentary Committee draft INTERTANKO Letter of Comfort for Nigeria Trade 1 st October - Further INTERTANKO letter to NNPC 5 th October NNPC issues revised LOC requirement Answers? INTERTANKO remains unaware of: 1. Grounds for the ban 2. What an owner/operator needs to do to remove his ship from the list

18 Commercial Issues - Sustainability Project Why a Sustainability Project? Charter/freight rates not covering basic vessel operating costs Earnings not supporting forward investment Charter party terms which are not balanced and at times ignored Leading the way; Making a difference

19 Sustainability Project AIM Needs to work in good and bad market To help bring about changes in behaviour which make the tanker business function better for all involved To change ingrained bad habits 1. Code of Conduct 2 concepts: 2. Payment Performance Database Leading the way; Making a difference

20 INTERTANKO Code of Conduct In order to support the fundamental objective of the industry, namely the safe and efficient seaborne transportation and delivery of the world's oil and petrochemical resources, we as signatories of the Code of Conduct undertake to: 1. Conduct ourselves at all times in accordance with the concept of 'good faith'. 2. Uphold the principles of fair and legal dealing with all stakeholders. 3. Comply with the high standards of integrity and respect for others. 4. Conduct business as responsible corporate members of society. 5. Understand the needs of stakeholders. 6. Listen and respond to all business partners in a prompt, professional and respectful manner. 7. Behave in ways that earn the trust of others. 8. Uphold these principles regardless of how we are treated by others. Leading the way; Making a difference

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22 Payment Performance System Focus: late payment of freight and demurrage Need for database of specific payment information from members Why? To be able to prove trends which back up our arguments on late payments Pilot Study - Contractual Obligations NOT MET data points Freight - c/p says payable on completion of discharge Pilot study: Typical 5-10 days Demurrage - c/p says payable on receipt owner s invoice Pilot study: Typical > 90 days Database satisfies anti-trust criteria Leading the way; Making a difference

23 PPS: Output and Deliverables Comparison of owner s own data with INTERTANKO average Comparison between charterers (in compliance with anti trust/competition rules) Comparison between different tanker types Cost of late payments Comparison of payment performance over time Top 20 best payment performers

24 PPS This data enables INTERTANKO to raise its head above the parapet on behalf of its Members and challenge charterers with their poor performance Leading the way; Making a difference

25 Payment Performance System Video Demo

26 PPS findings so far Average freight payment 9-10 days (6-7 for chems) Average demurrage settlement days (no demurrage data yet for chems) Cost to members of late freight & demurrage payments$2.37m Best 3 freight payers 1,2 and 3 days Best 3 demurrage payers 24, 29 and 35 days Leading the way; Making a difference

27 Thank you Leading the way; Making a difference

28 INTERTANKO Introduction: Technical Issues 11 December 2015 Ian Harrison Senior Technical Manager INTERTANKO

29 Technical Issues

30 International Association of Classification Societies (IACS) Classification Societies set standards for Ships Hulls and Essential Machinery Also act as Recognised Organisations on behalf of Flag States INTERTANKO works with IACS and its individual member's on technical issues at all levels: IACS Council General Policy Group Working Groups Contribute to (and initiate): Rules Survey Regulations (ESP) Interpretations to Rules and Statutory Instruments

31 Common Structural Rules (CSR) INTERTANKO Position Paper on IACS and Classification Societies (April 2000) Intensive meetings between OCIMF/INTERTANKO and some leading Class Societies certifying tankers LAN takes initiative for CSR on Oil Tankers 2001 IACS agrees to develop CRS for Oil Tankers and Bulk Carriers July 2006 CSR enter into force Significantly raises standards for tankers (and bulk carriers)

32 Air Emissions: Emission Control Areas (ECAs) European Union Directive Follows IMO except: After Jan 1, % in EU waters California After Jan 1, % (24 miles)

33 HAZID to avoid mechanical failure & power loss INTERTANKO/OCIMF Recommendations on Fuel Change Over Procedures API Technical Considerations for Fuel Switching CIMAC Guideline for Operation of Marine Engines on Low Sulphur Diesel

34 2010: Bunker Quality Norway and INTERTANKO collected data from two fuel testing laboratories which together had more that 50% of all bunker deliveries worldwide Out of over 100,000 bunker samples, the receiving vessels have reported that on 1,468 occasions they have had machinery problems as a result of using the fuels as supplied. These were events resulting in machinery damage and black out events

35 Bunker Quality MEPC 68 Correspondence Group (2015): develop draft guidance for assuring the quality of fuel oil delivered for use on board ships consider the adequacy of the current legal framework in MARPOL Annex VI Round one complete: Following best practice approach Includes guidance for supplier, users and Member States For fuel delivered to ships

36 2020 (2025?) and Bunker Quality (0.5% S) More novel fuel solutions (Hybrids) Compatibility Handling and storage Safety Back to blending problems (as with 1% S limit)? More efficient, cleaner engines - technical solutions needing cleaner fuel

37 THANK YOU!

38 INTERTANKO Overview Dr Phillip Belcher Marine Director

39 INTERTANKO International Association of Independent Tanker Owners Non-governmental org est in Oslo Strict membership criteria 440 Members in 42 countries Champion - Advisor - Forum Observer Status at IMO, IOPC, UNFCCC, OECD, UNCTAD Oslo - London - Washington Singapore - Brussels

40 2015 Membership 1, Number of Tankers No tankers No members Number of members 0 50 and above Below 5 0

41 Membership criteria Not all can join Broad range of criteria Barriers to membership Quality entry requirements Represent 2/3 of independent tankers

42 Governance

43 Our committees

44 Our Goal Zero fatalities Zero pollution Zero detentions

45 Strategic Plan Safety Seafarers Environment Operations Commercial sustainability

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47 2016 ANNUAL TANKER EVENT Venue Sentosa, Singapore Dates May 24 27, 2016 Events: Executive Committee Meeting Council Dinner and Meeting Annual General Meeting Gala Dinner Tanker Seminar Workshop

48 Security Issues Dr Phillip Belcher Marine Director

49 GoA GoG SOMS Cyber security Structure of talk

50 2015

51 2015

52 2010

53 Effective combating Somalian Piracy Naval Forces Development ashore Best Management Practices (Self-Protection measures)

54 Costs- Oceans Beyond Piracy

55 2015

56 2014

57 Guards Somalia, well established routine Armed guards widely available GoG, Only unarmed PMSCs Armed guards only from coastal State Somalia, international naval involvement GoG, reliance on local navies

58 Avoiding the problem Tender NoR early Consider waiting 200 off or use another coastal states waters Utilise the best self protection measures Work only with known contacts Keep flag informed of movements Consider additional hidden tracking devices Use security if needed

59 Next steps Industry guidelines issued Continue to work with regional partners Regional cooperation Yaoundé process Get MTISC in that process Global BMP

60 SE Asia

61 SOMS

62 Singapore Strait

63 Piracy global comparison

64 Cyber security

65 Cyber security incidents Ballast on FPSO Software shut down on another Virus from tanker back to shore office AIS tracking by pirates Cyber safety integrated systems Concern- nav system shutdown in SOMS

66 Industry guidelines To be published end 2015 Feeds into IMO Demonstrate that industry is taking action BIMCO, ICS, INTERCARGO, CLIA

67 Risk based approach Identify Protect Detect Respond Recover

68 Physical barriers Stop the virus/malware getting through Disconnect the network Stand alone non-networked computers Close USB ports and CD Drives Minimum connectivity between ship systems and the World

69 Virtual barriers Stop or contain the virus/malware Anti virus software USB and CD virus checkers

70 Human barriers Educating the user Training ship staff Getting them to think before opening/installing Understand the vulnerabilities Monitor

71 Thank you