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Tanker Shipping & Trade

Tanker Shipping & Trade

Options remain ahead of the 2020 fuel switch

Mon 08 Apr 2019 by Craig Jallal, tankers and markets editor

Options remain ahead of the 2020 fuel switch
Inventor Chemical Tankers has purchased CleanSOx Compact scrubbers from Clean Marine; its seven 19,000-gt chemical tankers qualify for export credit because they are deployed in foreign trade

The size of the scrubber-equipped fleet is growing, and some operators are finding export guarantee agencies will fund the installation

Scrubbers have now been installed or ordered on over 10% of the global fleet by tonnage capacity, according to an update from Clarkson Research. The number of scrubbers installed and ordered has grown six-fold since January last year, reaching more than 2,500 vessels. Scrubbers have been ordered for 31% of vessels on the global orderbook by tonnage capacity.

“We estimate that by 2020 up to 10% of the world fleet by capacity will be scrubber fitted, increasing to 15% by the end of 2020,” said Clarkson Research managing director Stephen Gordan. “These estimates increase by 22% to 35% for the VLCC fleet,” he added.

The cruise sector has the biggest uptake, at around 61% by tonnage, followed by tankers (14%), container ships (11%) and bulkers (7%). Of tankers on order, 53% will have a scrubber fitted, compared with 41% of container ships and 25% of bulk carrier tonnage.

Clarkson’s figures by tonnage capacity paint a different picture to figures by total number of vessels. According to DNV GL’s Alternative Fuels Insight portal, around 2,700 vessels will have scrubbers installed or on order by 2020. That represents just under 5% of the global, IMO-regulated fleet based on Equasis fleet statistics.

DNV GL has set up the Alternative Fuels Insight portal specifically to aid owners and operators in assessing the availability of fuels. The portal employs maps and interactive data visualisation techniques to graphically illustrate where infrastructure is already available, being developed or under discussion and to show where ships using alternative fuels and technologies are already operating.

DNV GL’s new Alternative Fuels Insight portal tracks data on scrubber installation

Access is free, and users can drill down into the raw data and conduct deeper trend analysis with the aid of statistical tools, filtering and analysing by fuel type, technology, region and other key parameters.

In addition, users may contribute additional information on the status of existing projects or notify DNV GL about newly proposed projects which they are aware of.

Still time to fit scrubbers

It is still possible to order scrubbers and install them before the global sulphur cap is introduced on 1 January 2020, according CR Ocean Engineering. The company recently reported an order from a US shipping company that will see a total of 35 scrubbers – including some ordered several months ago – installed over 2019.

As Avantis Marine founder Barry Bednar explained, suppliers can still be found who will deliver scrubbers within eight months. Neither supply nor installation should prevent shipowners from having scrubbers in place before the rule change.

“Suppliers can still be found who will deliver scrubbers within eight months”

“When it comes to installing, you don’t necessarily need a yard,” he said. “If you need a bigger inlet or outlet than your current sea chest, you can have it cut by a diver. You will need to get to a yard at some stage, but you can put a scrubber in place without drydocking.”

Meanwhile, one Bergen-based tanker owner is to install scrubbers on its entire fleet using financing from Norway’s export credit agency.

Inventor Chemical Tankers’ seven 19,000-gt chemical tankers qualify for export credit because they are deployed in foreign trade. Export Credit Norway and its guarantee agency GIEK will provide around US$10M in seven tranches, mirroring the retrofit equipment deliveries to take place over 2019.

Financing is available for 85% of the contract value and will be integrated into Inventor Chemical Tankers’ existing loan facility with banks that financed the building of its fleet between 2015 and 2017. The company bought CleanSOx Compact scrubber systems from Lysaker-based Clean Marine, meaning that the Norwegian component of the contract was higher than the 30% needed to qualify for export credit.

“Clean Marine was very proactive in securing the sale agreement with Inventor Chemical Tankers, which liked our financing solution,” said Export Credit Norway senior vice president Laila Johnsen. “We offered the company a loan at a fixed rate set by the OECD. Since then, US interest rates have skyrocketed, and it is precisely when interest rates are rising that a fixed-rate loan is favourable.”

Clean Marine CEO Nils Høy-Petersen added: “Securing financing for scrubber retrofits has proven difficult, given the relatively large investment required in terms of both equipment and installation. We plan to continue using export financing as a sales tool going forward.”

Mr Høy-Petersen notes that the system’s ‘Allstream’ capability allows it to treat exhaust from all sources onboard vessels with no back pressure in the exhaust system, while its compact design means it delivers significant size and weight advantages against market alternatives.

After an exhaustive review of competing EGCS suppliers, Inventor Chemical Tankers has partnered with Clean Marine and Technical Manager Diamond Shipmanagement, to manage the installation and commissioning of the systems aboard seven vessels, built between 2015 and 2017. All vessels were ECO designed and built by the Japanese-based Fukuoka Shipyard.

Inventor Chemical Tankers chief operating officer Torfin Eide explained the decision to choose the ‘compact’ solution. “Together with our technical management team, we compared performance, size, weight, price and operating costs of similar products developed by other companies before choosing Clean Marine,” he said.

“Considering parameters such as Allstream, size, weight, design, hybrid technology, and the total associated cost to have it installed and commissioned onboard, we believe we have found the optimal EGCS solution for our chemical tankers,” he said, adding, “Clean Marine’s compact size for this scrubber means that we can avoid a major retrofit — a significant contributing factor in our decision.”

Not all contracts of this type achieve such a successful outcome. Speaking at Riviera Maritime Media's US Sulphur Cap 2020 Conference in Houston in February 2019, Avantis Marine’s chief executive Barry Bednar said that local content requirements were one of the biggest constraints to this form of finance.

"There is a scrubber manufacturer based in France that is trying to work with the French government and banks on this," Mr Bednar said. "But we've had a lot of road blocks and haven't been able to put it together.”

Shipping companies can also apply for a framework credit agreement to finance retrofits of ballast water treatment systems.

In January 2019, ING and the European Investment Bank signed a €110M (US$125M) loan agreement to finance the retrofitting of 42 Spliethoff vessels with scrubbers and ballast water management systems.

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