The number of ships fitting scrubbers to meet 2020 sulphur cap continues to grow rapidly. Still, it is not an option available or suitable for all.
Scrubbers opted for compliance
According to a research, the number of vessels either fitted or with scrubbers on order has reached 1,262 vessels, some 3.9% of the existing fleet in tonnage terms, and 27.3% of the newbuilding orderbook. This compares to 983 vessels as reported by Exhaust Gas Cleaning System Association at the end of May this year.
There has been particularly strong uptake in the ro-ro freight and VLCC newbuilds order fitted with scrubbers accounting for 73% and 59% of the orderbook respectively. By fitting scrubbers owners can continue using cheaper high sulphur heavy fuel oil rather than switching to an expensive 0.5% or less low sulphur fuels from 1 January 2020.
The managing director Andrew Hoare of Navig8 Asia, a strong proponent of fitting scrubbers, speaking at Marine Money Asia said, “We recognised that the IMO sulphur regulations are the most disruptive event in our industry for over 20 years. You can see clearly to date the price differentials and there are going to be opportunities. But there will also be a huge number of disruptions around the supply chain”.
Other option in line
However, despite positive experience of owners such as Navig8 Asia and the surge in scrubber orders, challenges remain around the option of choosing exhaust gas cleaning to comply with the 0.5% sulphur cap from 1 January 2020 not least the availability in terms of manufacturing of the equipment and shipyard capacity for installation.
“Even if all decide to go for scrubbers it’s impossible,” Sadan Kaptanoglu, president designate of Bimco and director of HI Kaptanoglu Shipping told the conference.
Scrubbers not for all
Scrubbers also come with their own operational challenges, even if the business economics make sense in terms of potential cost savings on fuel post 2020 on the price spread between high sulphur fuel oil and low sulphur for some vessels.
Leading shipowner, Andreas Sohmen-Pao, chairman of BW Group said: “On scrubbers specifically its horses for courses. It depends on what size of ship you have, what the payback is, what assumptions you have on the long term price differential, whether you have capital to invest, and a whole host of factors. So I don’t believe there is a single right or wrong answer.”
Commercial versus Technical
Nicolas Parrot, head of transportation sector – investment banking APAC for BNP Paribas noted that it was very easy to look at a spreadsheet and make a decision, but there was also the factor of operations on the ship. He said, for scrubber retrofits financing was a real challenge as it is really possible to have a mortgage on a scrubber so an innovative financing methods were required.
Tim Wilkins, regional manager Asia – Pacific and environment director, for Intertanko said, their members are having a commercial versus technical discussion.
On the operational side Mario Moretti, senior director – marine & energy for RINA, highlighted that it was a “highly corrosive environment” and was not an easy solution.
Ang Chin Eng, secretary general of the Asian Shipowners’ Association commented, “At the end of the day its business decision whether to invest in scrubbers, low sulphur fuel or LNG.”
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Source: Seatrade Maritime
