According to Clarksons Research the number of vessels either fitted or with scrubbers on order has reached 1,262 vessels, some 3.9% of the fleet 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.
Read more: Scrubbers ordered or fitted for close to 1,000 vessels: EGCSA
There has been particularly strong uptake in the ro-ro freight and VLCC sectors with newbuildings ordered with scrubbers accounting for 73% and 59% of the orderbook respectively. By fitting scrubbers owners will be able to continue using cheaper high sulphur heavy fuel oil rather than switching to more expensive 0.5% or less low sulphur fuels from 1 January 2020.
A strong proponent of fitting scrubbers has been tanker owner Navig8 Asia, and speaking at Marine Money Asia on Tuesday, managing director Andrew Hoare, and he said not only could they say scrubbers worked they exceed performance from their perspective so far. “We recognised that the IMO sulphur regulations are the most disruptive event 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,” he stated.
However, despite positive experience if 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.
Read more: Scrubbers shown a little bit of love for large sized vessels
“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 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.”
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. This was echoed by Tim Wilkins, regional manager Asia – Pacific and environment director, for Intertanko who said that what their members had been having was 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.
Read more: Owners warned of operational and regulatory challenges with scrubbers
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.”
Parrot from BNP Paribas said for scrubber retrofits financing was a real challenge as it really possible to have a mortgage on a scrubber so innovative financing methods were required.
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