Frontline has entered into a Memorandum of Agreement to buy 20% stake in FSMI with which Frontline and companies affiliated to Fredriksen's Heman Holdings have agreed to buy scrubber systems for 14 vessels and a further 22 systems at fixed prices.
Frontline becomes the latest large vessel owner to opt for scrubbers, which are seen as offering a good economic option for ships such as very large crude carriers (VLCCs) in terms of the payback period for the system due expected price spread in the coming years between high sulphur heavy fuel oil and low sulphur fuel. By fitting scrubbers owners will be able to continue to burn cheaper high sulphur even after the 0.5% global sulphur cap kicks in on 1 January 2020.
Read more: Scrubbers shown a little bit of love for large sized vessels
Robert Hvide Macleod, ceo of Frontline Management said: "The economic case to install scrubbers is very compelling, particularly for larger vessels. Scrubbers installed on existing vessels provide the same benefit as those delivered from the yard on newbuildings and our solution comes at a much cheaper cost.”
While scrubbers are being seen as an increasingly attractive option for large vessels the number that can be fitted on the global fleet over the next two years is limited to an estimated 1,500 to 2,000 due to limited production capacity.
“Additionally, this transaction allows Frontline to secure the capacity to source a large volume of scrubbers, which we believe will present a challenge to many owners as the deadline for sulphur emissions compliance approaches,” Macleod said.
Frontline joins major names such as Star Bulk Carriers, Maran Tankers and Songa Shipmanagement to opt to install scrubbers to meet the requirements of the sulphur cap.
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