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					           Intertanko
“Preparing for the Unpredictable”


        Robert P. Curt
ExxonMobil Marine Transportation
           INTERTANKO APRIL 2003    1
   Points to be Covered

• What makes the tanker market move?

• What causes oil spill legislation?

• ExxonMobil’s efforts to reduce these causes

• ExxonMobil’s oil spill record

• ExxonMobil’s demurrage claims initiative

• Positioning for the next event




           INTERTANKO APRIL 2003                2
                                   Tanker Market History
                                        Key Events
           250
                          1973
                           Oil
                          Crisis
           200



           150
WS Rates




                                                                  Era of High Oil
                                                                 Price s e nds whe n
                                                                   Saudi Arabia
           100                                                     ope ns the oil
                                    Sue z Canal
                                re ope ne d in 1975         Iran      spigots
                               afte r closure in 1967   Re v olution

           50



            0
            1971   1973    1975        1977    1979     1981       1983      1985

Tanker market responds to critical events – generally short-term rates go up

                               INTERTANKO APRIL 2003                                   3
                                     Tanker Market History
                                          Key Events
                  140

                                 First Gulf War
                  120
                                                  Ne arly 100 VLCCs Take n
                                                      Out of Se rv ice for
                                                      Floating Storage
                  100
       WS Rates




                  80
                                                     Start of De liv e ry of 100
                                                      VLCC Ne wbuildings
                                                    Orde re d During Gulf War
                  60


                  40

                                                                   Asian Economic
                                                                       M iracle
                  20
                   1986   1988        1990        1992          1994          1996

Pre-Gulf War escalating peaks are a sign of improved balance between supply & demand

                                   INTERTANKO APRIL 2003                             4
                                     Tanker Market History
                                          Key Events
          180


          150                                                          Ne w
                                               Erica                 Economy
                                               Effe ct                Bubble
                                                                      Bursts
          120
                  Asian          Asian                                   Hurricane s
                Economie s    Economie s                                  Pre stige
WS Rate




                 Booming      in a Re tre at                             Ve ne zue la
          90
                                                                            Iraq
                                                                          Nige ria

          60
                                                      Asian & U.S.
                                                      Economie s
                                                       Expanding
          30


           0
           1997        1998     1999           2000         2001        2002       2003


                       Dealing of Wild Cards becoming more frequent
                                 INTERTANKO APRIL 2003                                    5
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




              INTERTANKO APRIL 2003          6
                                                          Major Oil Spills

    Atlantic Expre ss       1979 - Tobago, We st Indie s (large st oil spill)



       Amoco Cadiz          1978 - Brittany, France


     Torre y Canyon         1967 - Scilly Isle s, UK


           Pre stige                               2002 - 130 mile s off Galicia, Spain



      Exxon Valde z                   1989 - Prince William Sound, Alaska


                Erika          1999 - Bre st, Fr

                        0             50           100         150           200          250   300
                                                             000 Tons
Certain oil spills result in changes in legislation, even if they are not the largest
Source: ITOPF
                                            INTERTANKO APRIL 2003                                7
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

                 INTERTANKO APRIL 2003             8
         ExxonMobil Vetting Requests Have
              Significantly Increased

              Category              1984           2002
          Number of Vessel
                                    2,000         80,000
            Screenings

             Passing %               75             90

          Vessel Inspection
                                     35            6,000
              Reports
          Terminal Reports          1,000         10,000



** More owners meet criteria today with far less failing vetting


                         INTERTANKO APRIL 2003                     9
 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



                       INTERTANKO APRIL 2003                10
                      Recent ExxonMobil Oil Spill History
                                     Marine Spills (Operated Fleets)

                           25


                           20
        Number of Spills




                           15


                           10


                           5


                           0
                                96     97        98       99     00        01    02

                                         Greater than 1 bbl    Less than 1 bbl



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
                                            INTERTANKO APRIL 2003                     11
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

                    INTERTANKO APRIL 2003      12
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 can’t be good for owners!”

                  INTERTANKO APRIL 2003          13
                  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
                      INTERTANKO APRIL 2003              14
 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

* Charterer’s administrative efforts reduced
* Owner gets paid sooner
* Broker gets commission sooner

               Win - Win - Win
                INTERTANKO APRIL 2003                 15
         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



                    INTERTANKO APRIL 2003                    16
            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?

                       INTERTANKO APRIL 2003               17

				
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