- Around 70% of VLCCs under construction and a fourth of global fleet likely to have scrubbers
- 2400 scrubbers at the beginning of 2020 and 3500 by the end of 2020
- Experts says its effective in reducing 99% SO2, 94% particulate matter and 60% black carbon
- Price spread remains key criteria to opt for scrubbers
- Irrespective of complicated installment process scrubbers still remains a good investment
- Despite ban, owners keep favouring scrubbers as manufacturers pitch high
According to a Platts article, Scrubbers will be vital to ensure compliance to the International Maritime Organization’s low sulfur mandate despite facing skepticism from some quarters about their limitations, delegates said at an industry event this week.
Global Scrubber Market
By January, 1, 2020, when the IMO 2020 rule is implemented, S&P Global Platts Analytics predicts around 2,400 scrubbers to be operational worldwide. This figure is expected to ramp up to over 3,500 by the end of 2020, with more upside potential post 2020, Platts Analytics said.
Close to 70% of the VLCCs under construction and around a fourth of the overall global fleet of this category are expected to have scrubbers, according to shipping industry estimates.
Exhaust gas cleaning systems, or scrubbers, are an alternative method of compliance and ever since MARPOL Annex VI came out in 1997, regulation 4 has allowed alternative methods of compliance, Ian Adams, executive director Clean Shipping Alliance (CSA) 2020 said Wednesday at the 35th annual Asia Pacific Petroleum Conference in Singapore.
How effective are scrubbers?
“We’ve (the industry) been using scrubbers since 2006 … so, we’ve got a lot of knowledge,” Adams said.
Scrubbers can help remove up to 99% sulfur dioxides, up to 94% of particulate matter, up to 60% of black carbon, and significant amounts of polyaromatic hydrocarbons, or PAH.
A recent study by Norway’s SINTEF, one of Europe’s largest independent research organizations, showed that the continued use of residual fuels with a scrubber can help towards global CO2 reduction.
The science behind EGCS is “absolutely sound,” Adams said.
No one solution in sight
Danish refined oil products tanker group Torm is set to use scrubbers as part of its IMO 2020 compliance strategy.
“In Torm, we don’t believe in a one-solution-fits-all approach,” Jesper Jensen, head of the technical division at the company, said, adding that Torm aims to retrofit 34 ships with scrubbers while about 48 ships will use compliant fuels.
Despite Complications Scrubber Good Investment?
Retrofit installations are usually more complicated than installing scrubbers on newbuildings while installation costs are creeping up at the shipyard as their capacity runs out, he said.
“Still, in my opinion it is quite an attractive solution to install scrubbers by retrofits on ships of certain types,” Jensen said.
Torm, for its part, has already inked a joint venture with ME Production, a leading scrubber manufacturer, and Guangzhou Shipyard International, part of the China State Shipbuilding Corporation Group, to provide it the flexibility to make timely decisions on retrofit installations.
Maersk Scrubbers Strategy
Maersk, too, sees scrubbers as a part of its IMO 2020 strategy.
“We as Maersk have been pretty clear for [about] two years now on our view that the industrial logic for the best place to remove sulfur is onshore a refinery, and not onboard a ship,” Savvas Manousos, global head of trading at Maersk Oil Trading, said Monday.
“Having said that, we have installed a number [of scrubbers] on our own ships, partly as a following tactic to our competitors because others have chosen [them] and therefore we were obliged to follow to an extent,” he said.
Ultimately, some shipowners are going to take a wait-and-see approach and see what happens to the price spread, he said.
Singapore Owners Still on Scrubbers
“As for owners, from our discussion, most of them are still installing open loop scrubbers on their ships based on the economics of fuel consumption at sea, and also on the price differential,” Goh Chung Hun, director (shipping), Maritime and Port Authority of Singapore said Monday.
This is despite Singapore’s announcement last year to ban the use of wash water discharge from open loop scrubbers from January 1, 2020, in its port waters.
Preference for Scrubbers As Manufacturers Pitch High
“There is a marked preference for installing scrubbers in new rather than existing ships, and in bigger instead of smaller ships,” an executive said.
While the scrubber manufacturers are making a very strong pitch to highlight their benefits, not all shipowners are convinced or opting for them.
Are All Convinced?
There are several tankers’ owners such as Ardmore Shipping and Euronav which have stayed away from installations, at least for the time being.
Euronav in early September said it had purchased VLSFO at a premium of only $47/mt to the bunker price for heavy fuel oil 3.5% sulfur content over the same procurement period, making VLSFO economics viable.
Still, Euronav said it did not dismiss scrubbers completely and continued to assess the potential retrofitting of part of its fleet with them.
“Owners do not want to put all their eggs in one basket as none is sure about the differential between low and high sulfur marine fuels” early next year, said an executive with another tankers company.
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Source: S&P Global
