TO THE MEMBERS

Dear Sirs,

THE INTERNATIONAL TANKER OWNERS POLLUTION FEDERATION LIMITED ("ITOPF")

ITOPF was established as a non-profit-making organisation in 1968, primarily to administer the TOVALOP oil spill compensation agreement. The main focus of ITOPF's activities for more than 25 years has been, and continues to be, the provision of a broad range of technical services in the field of oil pollution to shipowners, their P&I Clubs and other groups such as the International Oil Pollution Compensation Funds.

At the request of its Board ITOPF has recently undertaken a comprehensive review of its services, the major element of which is its response to marine oil spills. Although the majority of the 400 incidents attended on site by ITOPF staff since the mid-1970s have involved tankers, the Clubs have often called upon ITOPF to assist in cases of bunker spills from non-tankers. Whereas tanker owners who are Members of ITOPF pay dues and receive technical assistance following a spill on an expenses only basis, non-tanker owners have been charged a daily fee for such assistance. Over the last ten years about 25 per cent of all oil spills attended by ITOPF have been bunker spills from non-tankers, although only about 3 per cent of ITOPF's total income has derived from such activities. While the work of ITOPF has therefore been a considerable benefit to the shipowning community in general, it is evident that the cost of maintaining the organisation's expertise and technical services has been unevenly distributed between tanker owners and non-tanker owners.

In November 1998 at its Annual General Meeting the ITOPF membership voted to amend the organisation's constitution to permit non-tanker owners to become Associates of ITOPF with effect from 20th February 1999. The Board of this Association, along with the Boards of all the other Clubs in the International Group, has agreed to give its support to enrolling non-tanker owners as Associates of ITOPF and, subject to any owner deciding to exercise his right not to become either a member or an associate, as appropriate, the entry procedures for the 1999 policy year will be as follows:

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1. The Club will continue to arrange for the entry of tanker owners as Members of ITOPF and pay the dues on their behalf out of the general funds of the Association. The Club will enrol its non-tanker owners as Associates of ITOPF and pay the dues on their behalf out of the general funds of the Association. Tanker owners cannot become Associates.

2. The rate of dues for tanker owner Members for the year commencing 20th February 1999 will be 0.85 of a UK penny per gross tonne (reduced from the current rate of 0.9). The rate for Associates will be 0.23 of a UK penny per gross tonne.

3. The rights and obligations of Associates are set out in the Terms and Conditions of Associate Status, approved by the Board of ITOPF, and annexed to this circular. The Terms and Conditions of ITOPF membership are provided each year to Members on the reverse side of their membership record forms and in the ITOPF membership handbook.

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Associates, unlike Members, will have no voting rights in ITOPF but will have access to ITOPF's spill response services (without fees) and the right to request free publications and advice. For administrative convenience, information issued by ITOPF for the benefit of Associates will normally be disseminated via the Association.

Although a number of existing Directors of ITOPF represent owners operating both tankers and other types of vessel, it is proposed that two additional Directors will be appointed to the ITOPF Board to represent Associates.

Although the ITOPF membership procedures for tanker owners are not changing, ITOPF's definition of "tanker" has been extended to include "any ship (whether or not self propelled) designed, constructed or adapted for the carriage by water in bulk of crude petroleum, hyrdocarbon products and any other liquid substance". This wider definition, which is designed to be consistent with that followed by all associations within the International Group, will allow the owners of LPG and LNG carriers, as well as all other types of "tanker" not previously eligible for entry in ITOPF, to become full Members with effect from 20th February 1999. Recognising that this broader definition could require some owners to enter tankers in ITOPF against their wishes, a further amendment has been made to the organisation's Articles to remove the obligation on ITOPF Members to enter all their tankers in the organisation. However, if a non-entered tanker subsequently suffers a spill and the member or his P&I Club requires ITOPF's technical services, these will only be available if ITOPF has sufficient capability and a significant daily fee will be charged.

We recommend that all owners who have not already done so should take advantage of this opportunity to become Members or Associates of ITOPF, as appropriate. We will accordingly enrol all Club Members in the appropriate category, save only those Members from whom we receive instructions to the contrary.

Yours faithfully

THOS R. MILLER & SON (BERMUDA)

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