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Century Tanker Operations Tanker Operator Conference Athens 2014

Martin L Shaw MBA C Eng C Mar Eng FI Mar EST AFNI Managing Director Marine Operations and Assurance Management Ltd © Marine Operations and Assurance Management Solutions Ltd

Outline • How we got here-5 phases • Where we are now-Tanker Market • The customers-who are they? • Vetting

• Complexity • 21st Century Tanker Operations – HOW and WHY not WHAT – Direction

– People – Resilience – Strategy

• Summary © Marine Operations and Assurance Management Solutions Ltd

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Complexity

General Management

Oil Tanker Ops/Systems

Change Management

LNG Ops/Systems Shuttle Tanker Ops/Systems

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Experience

Skills

Operations Management Project Management

Offshore Ops/Systems

Consulting Skills

Ship Purchase Assurance

Vetting

© Marine Operations and Assurance Management Solutions Ltd

40 Years ..Five Phases Phase 1

Phase 2

Phase 3

Phase 4

Phase 5

Intertanko statistics

© Marine Operations and Assurance Management Solutions Ltd

The tanker market 2014

Sanctions Cabotage and national fleets

© Marine Operations and Assurance Management Solutions Ltd

The Customers 2013 0

2

millions of barrels oil equivalent per day 4 6 8 10 12

14

Saudi Aramco

Gazprom NIOC Exxon Mobil Rosneft Shell Petrochina Pemex Chevtex

Kuwait BP Total Petrobras

Source of data Forbes

Qatar ADNOC Lukoil Iraq Sonatrach PDVSA Statoil

© Marine Operations and Assurance Management Solutions Ltd

Vetting and Vetting Decisions Internal

Indicators

•Own inspections •Own owner audits •Questionnaires

of good or bad performance

Performance

Policies •Age •Single Hull •IG •OCIMF Standards

•Reports from terminals •Reports from charterers and ship operators

External •VPQ/Q88 •SIRE and CDI inspection reports •EHS/CAPS •TMSA database •Change of owner, flag, class, manager, manning

Regular and generally predictable processes that produce data for vetting decision

•Incidents •Casualty Reports •Press reports •IHS Fairplay data

Can make acceptable ship unacceptable at short notice © Marine Operations and Assurance Management Solutions Ltd

Its about Good Operations!

` The diagram shows WHAT the tanker operator has to deliver WHY, his motivation, is critical to how the company operations HOW he does it is his decision and makes him different from everyone else © Marine Operations and Assurance Management Solutions Ltd

Sophistication Cost

Risk

Earnings

Simplicity

Sophistication

Complex © Marine Operations and Assurance Management Solutions Ltd

21TO--Direction Directing Developing Strategy Building the Organisation Outward Focus

Directing WHAT? and WHY?

Leading

HOW?

Managing Managing

Leading Motivating Individual Teams Tasks

Based on the Art of Action by Stephen Bungay

Resourcing Organising Controlling Performance

© Marine Operations and Assurance Management Solutions Ltd

21TO--People Train them •Professional •Human Element •Management

Motivate them •Communicate direction •Involve them/listen •Sensible reward •Just culture

Retain them •Long term contracts •Fair pay •Living conditions •Respect

Believe in them •Trust •Delegation •Decisions © Marine Operations and Assurance Management Solutions Ltd

What you don’t want them to feel International Legislators/Politicians Regional/Local Legislators/Authorities Industry Bodies Company

KISS

Ops Mgmt

Keep it simple for sailors

© Marine Operations and Assurance Management Solutions Ltd

The Human Contribution

‘Compass’ from UK MCA publication ‘The Human Element’

But...is this not also what you want to deliver commercial performance? © Marine Operations and Assurance Management Solutions Ltd

21TO Resilience Resilient

Normal

Abnormal

Emergency

Resilient organisation will adapt from normal operation to abnormal operation and recover. In emergency will be able to adapt further to avoid catastrophe

Brittle

Normal

Abnormal

Emergency

Brittle organisation will need all its resources to maintain normal operation leaving limited capacity to deal with the abnormal. Rule based mentality will be unable to cope with the unexpected and will fail. © Marine Operations and Assurance Management Solutions Ltd

21st Century Tanker Operator Owner WHAT and WHY Downward Resilience

Knowledge and Learning

Direction/Downward Resilience •What the Owner Wants oStrategy oValues and philosophies oGoals and Goal Conflict •How the owner wants it to work oCulture oMotivation •How the owner is seen oLeadership oCommunication

People/Upward Resilience •The Human Contribution and Motivation oNot human error !! •Choosing the right people oSelection oRetention •Learning and Training oTechnical Skills oNon technical skills ( the human element) oDecision making oOn board training/learning

Operations Management HOW Upward Resilience

Customer Requirements (WHAT)

Resilient Operation

Regulators Requirements (WHAT)

Operations Management •Learning and Knowledge •Change Management •Procurement and technical backup •Budgets and targets •Managing Complexity •Creating simple and useable process •Reinforcing owners goals •Compliance

© Marine Operations and Assurance Management Solutions Ltd

Strategy Reduce complexity

Provide Direction Increase non technical (and technical) skills ‘Compass’ graphic courtesy of UK MCA The Human Element publication © Marine Operations and Assurance Management Solutions Ltd

What to do? The successful 21st century tanker operator will:• Understand the history of the industry • Recognise they are trading in a complex environment and be resilient in trading and operations. • Understand their customer and always remember the customer has choices. • Always remember that the basic task is to run a good operation. • Recognise that WHAT the organisation needs to achieve is a product of their own direction and external requirements. • WHY it needs to be achieved needs to be understood and communicated • HOW it is achieved is the critical differentiator between companies • Understand that a Resilient organisation is built on a clear Direction and quality People • Recognise that complexity can increase risk and cost and reduce profitability and hold simplicity as a value. KISS

Questions Please ? © Marine Operations and Assurance Management Solutions Ltd

US oil production-the answer

Source Overthinkingit.com

© Marine Operations and Assurance Management Solutions Ltd

Top 30 Tanker Companies 0 MOL NITC NYK Teekay Euronav Frontline Sovcomflot Vela AET Dynacom COSCO CSDC OSG Maran Maersk Ocean Tanker Nanjing SK Oman Shipping Minerva Genmar SCI Torm AMC Tsakos BW Formosa Thenamaris BP Shipping Navios

2

4

6

Deadweight Tonnage 8 10

12

14

16

18

Source Tanker Operator Magazine

© Marine Operations and Assurance Management Solutions Ltd