Scrubbers not the best solution for sulphur emissions

While a panel on the tanker and gas markets, as well as the container shipping session, at the Asian Logistics and Maritime Conference in Hong Kong almost unanimously agreed that scrubbers are not the solution to the emissions control issue, there was one contrarian view that they are needed for the industry to remain competitive.

"It's an opportunity for shipping and a huge problem for the refining business because at the end of the day residual fuel oil is going to be produced," said Navig8 Group coo Andrew Hoare.

He noted in particular that while while demand for fuel oil for bunkers has gone up steadily, the requirement for the same energy source for power stations has declined. As a result there will be a surplus of fuel oil because its use is declining elsewhere.

"The refining sector is going to have to sell this fuel oil and no better place to sell it than to the biggest customer they have already," Hoare reiterated. He added that with the cost of scrubbers coming down the argument for its use will remain strong.

From the owning and operating side, Valles Steamship executive director Wellington Koo said: "I think for us as shipowners, I would say no to scrubbers for the meantime." He maintained that the refiners should be held to their pledge to provide sufficient required cleaner fuel and the additional cost of this would be written into new contracts with charterers.

Speaking in the containers session in the afternoon Jeremy Nixon, ceo of Ocean Network Express (ONE), was in an agreement from an owners’ perspective saying that scrubbers took up a lot of space and were expensive to retrofit. While Alan Murphy, ceo and partner in SeaIntel Maritime Analysis said container lines are taking a “wait and see approach” and “almost no-one was investing scrubbers”.

Meanwhile back in the tanker panel Clarkson Research president Martin Stopford suggested that the refining industry would react quickly to the challenge of providing low sulphur fuel oil and that the competitive advantage of using scrubbers might not last long.

And closing out the argument from the financing perspective, DVB Bank Asia-Pacific and  Middle East shipping finance senior vp Domenik Nizet commented that apart from the banks not being keen to finance the fitting of scrubbers, the fundamental issue was whether they were needed in the first place.

Posted 23 November 2017

© Copyright 2019 Seatrade (UBM (UK) Ltd). Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Seatrade.

Vincent Wee and Marcus Hand

Vincent Wee and Marcus Hand

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