Oil pollution facility for 1999 policy year (January 1999)

Circular No. 15/98

January 1999

TO THE MEMBERS

Dear Sirs,

OIL POLLUTION FACILITY - 1999 POLICY YEAR

USD 200 MILLION EXCESS OF USD 500 MILLION

USD 250 MILLION EXCESS OF USD 500 MILLION, CALIFORNIA REQUIREMENTS

We refer to our Circular of February 1998 with respect to excess oil pollution cover of USD 200 million for the current insurance year. We have been advised that facilities offered by London and US market underwriters are also available for the 1999 insurance year for a USD 200 million tranche of protection in excess of the limit for oil pollution cover provided by the Association. The limit of cover provided by the Association for the 1999 policy year will remain at USD 500 million.

The Association, acting as intermediary only, is prepared to assist Members wishing to take out the above excess cover for the 1999 year. This facility is not a club cover, but a direct insurance between market insurers and Members. The Club, through the Group, has again been involved in negotiating the terms of the cover together with ICS and Intertanko.

Compared with the current year there is an overall reduction of 21% for the 1999 renewal.

As in previous years, this has not been applied uniformly, but there is a:

i) 15 per cent reduction in rates for voyages to the USA (including California).

ii) 27.5 per cent reduction for dry cargo and clean tankers trading world-wide.

iii) Range of reductions in respect of basic premium for dirty tankers (ex USA) from 31 per cent to 34 per cent depending upon age band.

iv) 15 per cent reduction for vessels 3,000 GT and under continuously trading in USA and a new section for vessels between 3,001 GT and 3,999 GT continuously trading in USA with a premium of USD 7,750.

Terms have also been agreed in respect of vessels trading to California when the limit of liability is increased by USD 50,000,000 to USD 250,000,000 and the rates have also been reduced by 15 per cent for next year.

12 Months at Noon GMT 20 February 1999

EXCESS OIL POLLUTION LIABILITY USD 200,000,000 excess USD 500,000,000

Conditions/rates are as follows (all rates gross):

1) Dry cargo vessels, gas carriers (not carrying oil as cargo) and passenger vessels.

USD 0.020 per GT per annum for world-wide trading, minimum 3,000 GT.

1. Clean tankers (defined as carrying other than persistent oil as cargo). USD 0.040 per GT per annum for world-wide trading, minimum 3,000 GT.

2. Dirty tankers (defined as carrying persistent oil as cargo), other than 4) below:

Basic premium per GT per annum excluding cargo voyages to the USA as underlying Club entry, minimum 3,000 GT.

PLUS Voyages to the USA at an additional premium of USD 0.085 per GT per voyage, minimum 3,000 GT.

All features of the underlying Club premium calculation apply to this additional voyage premium, including the 20 voyage maximum and 50 percent tonnage for LOOP and transhipment.

1. Dirty tankers 3,000 GT and under continuously trading in the USA will pay a flat premium of USD 6,500 in full and those between 3,001 GT ? 3,999 GT will pay a flat premium of USD 7,750 in full.

Adjustments in premium may be made as follows:I) Regardless of short periods, all declarations will be charged at the full annual rate, except for the following:a)Vessels for which the underlying Certificate of Entry is cancelled or endorsed to cancel, may be deleted from cover at pro rata return premium.b) Vessels for which a new underlying Certificate of Entry is issued or a current Certificate of Entry is endorsed to add, may be added from date request for cover is made to the Association, at pro rata premium from date of attachment with the Association.

II) OBOs declared as basis (1) -dry or tankers declared as basis (2) -clean.If at any time during any quarter the ship trades with dirty products, then the full dirty tanker (basis 3) rate applies for that quarter only, and the vessel will become liable for USA voyage AP?s.

The applicable quarters are 20/02 - 20/05, 20/05 - 20/08, 20/08 - 20/11 and 20/11 - 20/02.

III) No cover is available under this facility for charterers other than bareboat charterers and charterers named as co-assured on the underlying Owners? entry.Cover is always subject to the limits any one vessel arising out of any one event.

IV) All premium developed under 1), 2), 3) basic premium and 4) above is payable at inception. Voyage additional premiums under 3) are payable quarterly.

V) No laid-up returns.

VI) It is further noted and agreed that the O.P.A. Non-Certification Clause reads as follows:Notwithstanding any other provision of this policy or of any underlying insurance, this policy of insurance is not evidence of financial responsibility under the Oil Pollution Act of 1990 or any similar federal or state laws. Any showing or offering of this policy by the Assured as evidence of insurance shall not be taken as any indication that the Underwriters consent to act as guarantor or to be sued directly in any jurisdiction whatsoever. The Underwriters do not consent to be guarantors or to be sued directly.

VII) In respect of the US voyage surcharge for parcel tankers to follow the underlying club entry and charge as follows:a) parcel tankers carrying 5,000 MT or less of persistent oil as cargo:-USD 0.085 per GT per voyage calculated on 3,000 GT

b) parcel tankers carrying 5,001 MT - 10,000 MT of persistent oil as cargo:-USD 0.085 per GT per voyage calculated on 7,500 GT

c) parcel tankers carrying 10,001 MT and over of persistent oil as cargo:-USD 0.085 per GT per voyage calculated on actual GT of the vessel

Information: A parcel tanker is defined as a ship constructed or adapted primarily to carry cargoes of noxious liquid substances in bulk, and capable of carrying at least 10 grades simultaneously, having been issued with an international certificate of fitness for the carriage of dangerous chemicals in bulk.

I) Above premiums are gross rates and will be subject to a discount of 17,5 per cent.II) It is agreed to allow a 12.5 percent discount from the above rates in respect of tankers equipped with segregated ballast tanks in accordance with the requirements of Regulation 13 of Annex 1 to MARPOL 73/78.

It is hereby understood and agreed to increase the limit of liability for tankers by USD 50 million to USD 250 million arising out of any one event whilst in Californian waters only.

Subject to a further additional premium of:

1. USD 0.02125 per GT per voyage in respect of dirty tankers.

2. USD 0.00425 per GT per voyage in respect of clean tankers.

3. Dirty tankers 3,999 GT and under, continuously trading in Californian waters will pay a flat additional premium of USD 1,615.00 in full.

All other terms and conditions and features of the underlying premium calculations to apply. All other terms and conditions remain unaltered.Cover will not attach unless the Association, acting as an intermediary, has received clear written instructions to effect cover prior to 20 February 1999.

Attached is a declaration form which Members who wish to effect the excess oil pollution cover should complete and return to the Association prior to 20 February 1999.

If you have further inquiries, please contact the Underwriting Department.

Yours faithfully,ASSURANCEFORENINGEN GARD-gjensidig-

John G. BernanderManaging Director

AttachmentDECLARATION FORMEXCESS OIL POLLUTION COVERUSD 200 MILL. EXCESS OF USD 500 MILL.USD 250 MILL. EXCESS OF USD 500 MILL., Californian requirements 20 FEBRUARY 1999 - 20 FEBRUARY 2000Kindly effect on our behalf excess oil pollution cover for 12 months effective 20 February 1999.

Vessel: _____________________________________ GT: ____________

Year built (shown as completed in Lloyd's Register of Shipping): ___________

Vessel to be covered in accordance with definitions, premiums and terms set out in Circular No. 15/98 of January 1999.

r Dry cargo (including gas carriers not carrying oil as cargo and passenger vessels)r Clean tankerr Dirty tanker (additional premium for call to USA)r Dirty tanker 3,999 GT and under, continuously trading in the USAr Vessel (tankers only) requires a coverage of USD 250 mill. excess of USD 500 mill. for Californian waters

Specification of tankers:r Parcel tanker.r SBT tanker, in accordance with the requirements of Regulation 13 of Annex 1 to MARPOL 73/78 (MARPOL Tanker).

This form, or summary for a fleet, should be returned not later than 20 February 1999.