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Ballast water convention to send more old tankers to the scrap yard

Ballast water convention to send more old tankers to the scrap yard
The coming into force of the Ballast Water Management (BWM) Convention on 8 September next year could see some tanker owners deciding to scrap vessels rather than shell out for expensive Ballast Water Treatment System (BWTS) retrofits.

In its weekly report brokers Poten noted that the IMO was yet to complete work on reviewing the G-8 guidelines to approved systems meaning that while there are more than 50 approved systems on the market at present, not all might be granted final approval. Add to that the US Coast Guard (USCG) has its own more stringent regulations for which there are currently no approved systems.

“This uncertainty will give shipowners pause, especially since these ballast water treatment systems can be very costly,” Poten said.

In terms of cost the broker said costs based on talking to tanker owners ranged from $1m to fit a system to an MR product tanker to $2.25m for a VLCC, including installation.

Assuming that concerns over type approvals are addressed Poten asked if the sheer cost of the system might be enough to make owners of older tonnage decide to scrap vessels than take them through another special survey.

“That may happen in certain individual cases. A scrapping decision depends on many factors, including the state and outlook for the market, scrap prices and the general state of maintenance of the vessel,” it said.

“The cost of a BWTS could tip the scale toward scrapping, but will not be the driving force.”

Meanwhile brokers Gibson's also said the legislation would have an impact on older ships not considered viable for retrofit. In terms of scrapping the impact could be compounded by the possibility that 0.5% low sulphur fuel cap will be come into force in 2020 rather than 2025 as many had expected.

"We believe that the impact of both directorates will enhance the prospects for increased scrapping. Once again legislation will have a huge impact of fleet numbers going forward, similar to the impact of the introduction of double hulls in the 1990’s," it stated.

Once the BWM Convention comes into force next year and estimated 60,000 – 70,000 vessels will require to be fitted with BWTS between 2017 and 2022.