Ahead of the IMO sulphur cap deadline,almost 60% of the current ships are gearing up for the scrubbers switch. In order to cater to this high demand of scrubbers installation, the global marine consultancy Viswa Group is developing its own scrubber technology and expanding its fuel testing operations worldwide, said Ram Vis, founder and CEO of Viswa Group, reports Platts.
Uptake of scrubbers is likely to see a dramatic rise in the future, with at least 60% of the current ships expected to opt for scrubbers by 2022, Vis told S&P Global Platts in an interview Thursday.
The Dramatic Rise
His comments came at a time when many owners have opposed scrubbers, citing energy inefficiency and high maintenance costs as impediments to their widespread adoption to comply with the IMO 2020 rule.
The IMO will cap sulfur in marine fuels at 0.5% globally from January 1, 2020, from 3.5% currently. This applies outside of designated emission control areas where the limit is already 0.1%. According to many sources, distillates seem to be a main fuel choice come 2020.
Challenge of Using Scrubbers
“The main challenge [for using scrubbers] is fear of new technology, hesitation due to inertia. As more and more scrubbers enter the market, the acceptance level will be much higher,” Vis said.
Pricing economics of installing scrubbers is also favorable, he said.
The spread between low sulfur marine gasoil and high sulfur fuel oil prices, currently at around $200/mt, could widen to as high as $500/mt closer to 2020 as demand for the latter picks up, he said.
For a big-size container vessel of about 20,000 TEU using 250 mt/day of bunker fuel and assuming a price spread of about $200/mt between LSMGO and HSFO, the additional cost of using LSMGO over HSFO is $50,000/day, he said.
And assuming the vessel sails for 300 days, the vessel will pay an additional $15 million each year for using LSMGO , he said.
Scrubbers for a vessel of such size cost about $6 million including installation. This translates into a return on investment of only about five to six months should a shipowner opt for scrubbers, he added.
“Since the ROI is one year or less depending on the size of the vessel and there are a lot of financing agencies ready to help, we are very positive about scrubbers,” Vis said, adding that “if the vessel is owned and operated by the same party, fitting a scrubber is a no-brainer.”
The Scrubbers Market
“Currently the scrubber market is a buyer’s market. We feel it will soon turn into a seller’s market. All those who were hesitating to buy the scrubber are likely to line up and pay more in a seller’s market,” he said.
Up For The Challenge
The company is well poised for this opportunity by having already launched the Viswa horizontal H-scrubber, he said.
In comparison with available vertical scrubbers, the H-scrubber has a smaller footprint, is lighter and has a lower initial and life time cost, he said.
The engine mobilization time for installation is just a few days and the H-scrubbers also allows for quick installation, Vis said.
“We have several inquiries at the final stage and we do see the number of inquiries rising dramatically,” he said, adding that Viswa was also providing service contracts for the maintenance of the scrubbers.
“We feel we can play in a big role in the post 2020 scenario,” Vis said.
The new fuel blends entering the market to meet the 0.5% sulfur limit will be very different from those that are available today. This means their quality parameters will need careful monitoring and amplify instances of fuel testing.
The uptick in business for most fuel testing firms will likely be starker in the first six months to one year post 2020, he said.
“After this, most of the issues will settle down and the ‘tick’ will return to normal. Even uptick conditions will at the most give 10% to 15% more samples,” Vis said.
For its part, Viswa Lab is planning to grow by establishing more labs in the future, Vis said.
“We have five labs in Houston, New Orleans, UK, Fujairah and Singapore. We are planning to open a lab in China,” Vis said.
In addition, the company is targeting more in-depth services and lateral growth by testing other associated substances such as potable water, ballast water, lubes and the like, he said.
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