Euronav Shocked By Lack Of Tanker Recycling

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The lack of ship recycling in the tanker market has given the prevailing headwinds and low freight rates. low tanker rates induce owners to send their older tonnage to the scrapyard. low freight rates (below $ 25,000 per day), reports Offshore Energy.

Dual-fuel liquefied natural gas (LNG) engines

“Many analysts believe that older tonnage has instead been used for “illicit trade” that has developed around Iranian and Venezuelan sanctioned cargoes. The vessels undertaking this trade have been almost exclusively older tonnage (DNB estimates the average age of 20 years for such VLCCs),” Euronav said.

The impact has been substantial with potentially 66 VLCCs (54 Iran, 12 Venezuela) and 29 Suezmaxes (20 Iran, 9 Venezuela) involved Gibs

The interest in alternative fuels is rapidly growing because of the energy security concern all over the world. Among the candidates of alternative fuel, biofuels, liquefied petroleum gas (LPG) and liquefied natural gas (LNG) are the potential ones.

Reducing emissions

Euronav believes that the increased focus on dual-fuel vessels and growing focus on cutting emissions will give the final push to the market to offload higher emission tonnage.

”We remain confident that the market will recover in the medium-term and that is why we took advantage of available low asset prices to make counter-cyclical investments in both the VLCC and Suezmax segments during Q1. Alongside the excellent relationships that Euronav maintains with shipyards, our new eco-ships will form a key part of our energy transition strategy to lower our fleet emissions,” Hugo De Stoop, CEO of Euronav said. 

This resulted in the selling of VLCC tankers privately to the operators. According to Gibson Shipbrokers, 83 elderly VLCCs were sold since 2019, which facilitated by less efficient policing over the recent period. The impact has been substantial with potentially 66 VLCCs (54 Iran, 12 Venezuela) and 29 Suezmaxes (20 Iran, 9 Venezuela) involved, Gibson said. The effect has been to reduce recycling to 11 VLCCs (1.3% of the fleet) and 5 Suezmaxes (1%).

VLCCs book now dual fuel denominated.

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Source: Offshore Energy

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