Intertanko

1
Intertanko Preparing for the Unpredictable Ro
bert P. Curt ExxonMobil Marine Transportation
2
Points to be Covered

• What makes the tanker market move?
• What causes oil spill legislation?
• ExxonMobils efforts to reduce these causes
• ExxonMobils oil spill record
• ExxonMobils demurrage claims initiative
• Positioning for the next event

3
Tanker market responds to critical events
generally short-term rates go up
4
Pre-Gulf War escalating peaks are a sign of
improved balance between supply demand
5
Dealing of Wild Cards becoming more frequent
6

• The late 2002/early 2003 rate jump
• Weather
• Prestige sinking
• Venezuelan strike
• War
• New/increased long haul VLCC cargoes

• Carib crude to Far East
• European/American fuel to Singapore
• Black Sea crude to Far East USWC

7
Certain oil spills result in changes in
legislation, even if they are not the largest
Source ITOPF
8
ExxonMobil Focus on Flawless Operations

• Rigorous vetting reduces unpredictable events
• Focus on improvements that can benefit both
  charterer and owner
• Flexible chartering coverage strategy based on
  mix of term and spot that provides ability to
  cope with unpredictable events

9
ExxonMobil Vetting Requests Have Significantly
Increased
More owners meet criteria today with far less
failing vetting
10
ExxonMobil Has Significantly Improved Oil
Spill Performance of Owned and Chartered Vessels

• Our vetting affiliate works closely with owners
  to assist them in
• meeting improved standards
• Development of Marine Environmental Safety
  Criteria
• Term Business with High Quality Owners
• Oil to Water incidence rate has dropped from 1
  per 100
• port calls in 1984 to .02 per 100 port calls in
  2002

11
Recent ExxonMobil Oil Spill History
Continuous improvement in operated fleet
performance In 2002, operated and time chartered
fleets spilled a total of 2 barrels - Or
2.3 teaspoons spilled / 1 million gallons
transported
12
ExxonMobil Claims Processing Improvement
Problem No standard was in place for
submitting demurrage claims

• No administrative guidance
• Extensive recycling of documents
• Required great personnel effort
• Excessive delay before settlement

13
ExxonMobil Claims Processing Improvement

• Shipowners and charterers working together to
  improve efficiency
• New clause implemented to improve claims
  processing
• Initial reluctance from industry
• Why change?
• This cant be good for owners!

14
ExxonMobil Initiative For Efficient Demurrage
Claim Processing

• Supporting Documentation Needed
• Completed ExxonMobil Port Log
• Notice of Readiness Messages at all
  ports/berths
• Bills of lading for co-loads and parcels
  tankers
• Notes of protest given or received by vessel
• Pumping logs
• Crude Oil Washing logs (if applicable)
• Statement of facts/Port logs/ Terminal time
  sheets
• Agents time sheets

15
Claims Processing Improvement Initiative

• Following the administrative procedure will
  speed
• up claims processing
• Average claims processing time has been reduced
• in half after implementation of the clause
• Although initial industry reluctance to accept
• change, results have been favorable to owners
• Charterers administrative efforts reduced
• Owner gets paid sooner
• Broker gets commission sooner
• Win - Win - Win

16
Continuous Improvement

• Electronic submissions of ExxonMobil Port Log
• Electronic submission of all time logs to
  further reduce complications
• These initiatives will allow the analysts to
  spend their time reviewing claims instead of
  reentering data
• Goal Get demurrage to be as standard as freight

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Where do we go from here?

• Maintain rigorous vetting programs that reward
  quality vessels, owners and operators
• Operate flawlessly
• Generate contingency plans for possible economic,
  market, and operational risks
• Maintain operational/chartering flexibility to
  meet unforeseeable contingencies
• The next unpredictable event will the industry
  be ready?