The BWM Convention was originally due to come into force on 8 September 2017, but this date has been deferred until 8 September 2019. The requirement of existing vessels to fit a BWM system at their next special survey after the convention came into force had been seen a potential driver for the scrapping of older tonnage given the costs of fitting a ballast water system.
“We believe that the recent deferral of the required implementation of installing new ballast water treatment systems on all large crude tankers from September 2017 until 2019 will have a negligible impact,” Euronav said in its Q2 results.
“Many operators had already de-harmonised their surveying cycle arrangements in anticipation of this legislation so that the original implementation date of 8 September 2017 would, in our view, not have been a specific catalyst for scrapping.”
However the tanker owner also noted that a “significant portion” of the VLCC and suezmax fleet would pass the 20 years of age mark between end 2017 and end 2020 when both the BWM convention and global low sulphur fuel regulations come into force. It said this “regulatory window” between 2018 and 2020 would drive charterers away from vessels aged 15 years and older.
Euronav reported a second quarter loss of $24.2m compared to a $34.3m profit in the first quarter of 2017. While the company was still able to generate a positive result for the first half of 2017 of $10.1m this sharply down $153.8m in the same period in 2016.
Looking ahead Euronav warned of the likelihood of interim losses. “In the near future the tanker freight market may indeed be more challenging than in the last ten quarters and as a result the company may not generate semi-annual positive results,” it stated.