Scrubbers: Singapore adds to reasons for shipowner headaches

DECEMBER 3, 2018 — In his last public speech before stepping down as Chief Executive of the Singapore Maritime and Port Authority at the end of this year, Andrew Tan gave shipowners contemplating scrubber retrofits fresh reasons to reach for the headache pills as they reach for the check book.

“To protect the marine environment and ensure that the port waters are clean, the discharge of wash water from open-loop exhaust gas scrubbers in Singapore port waters will be prohibited,” Tan told the Singapore Registry of Ships (SRS) Forum on November 30.

“Ships fitted with hybrid scrubbers will be required to switch to the closed-loop mode of operation,” he said, adding that Singapore will be providing facilities for the collection of residue generated from the operation of scrubbers.

Some shipowners, notably Euronav (see earlier story) have already cited seawater pollution from open loop scrubbers as a reason for concern when assessing the viability of scrubber installations as an answer to the IMO 2020 sulfur cap.

MORE OWNERS RELEASE SCRUBBER PLANS

Meanwhile, more shipowners are releasing details of their plans to fit scrubbers. And, following the news from Singapore, they are also starting to give a few more details of what types of scrubber they are opting for.

Thus, today, both Scorpio Tankers Inc. (NYSE:STNG) and Scorpio Bulkers Inc. (NYSE:SALT) gave updates on their previously announced programs to install exhaust gas cleaning systems across their fleets while the co-CEOs of DHT Holdings, Inc. (NYSE:DHT) sent a letter to shareholders on the subject.

SCORPIOS SAY THEIR SCRUBBERS WILL BE “HYBRID-READY”

Scorpio Tankers reported that it has entered into an agreement with third parties to purchase exhaust gas cleanings systems for 42 of its vessels in 2019 and for 10 of its vessels in 2020. The total value of these agreements is estimated to be $79.6 million.

Scorpio Tankers noted that it also has an option to purchase exhaust gas cleaning systems for up to 28 additional vessels in 2020.

Scorpio Bulkers said it had entered an agreement with third parties to purchase exhaust gas cleanings systems for 18 of its vessels in 2019 and for 10 of its vessels in 2020. The total value of the Scorpio Bulkers agreements is estimated to be $42.4 million. As part of the above-mentioned agreement, Scorpio Bulkers also has an option to purchase exhaust gas cleaning systems for up to 18 additional vessels in 2020.

Both Scorpio companies said the systems being fitted are of “hybrid ready” design, which allows them to be upgraded to a “closed loop” configuration at a future date.

DHT HOLDINGS 

Meantime the co-CEOs of DHT Holdings, Inc. (NYSE:DHT) issued this shareholder letter

Dear Shareholder,

Thank you for your continued interest and support in DHT.

We have announced during this year that we will fit exhaust gas cleaning systems, commonly referred to as scrubbers, on two thirds of our VLCC fleet. The retrofit program encompass 16 ships built between 2004 and 2012, representing the ships within our fleet that stands to gain the greatest economic benefits. Additionally, the two newbuildings delivered from Hyundai Heavy Industries this year had scrubbers installed, taking the total to 18 out of 27 ships with scrubbers.

As we have stated, we are neither for nor against scrubbers, but deem it our responsibility to position DHT as best as we can ahead of the implementation of the new regulations. We believe scrubbers to be an economical way to comply with the new regulations and want with this communication to share some important details in our scrubber program. Fifteen of the scrubbers that we will install will be able to clean the sulfur content in the exhaust gas down to 0.1%, enabling these ships to operate with scrubbers within emission control areas (ECA) and ports, where permitted. Secondly, we configured our fuel tank lay-out allowing us to carry various grades of fuels facilitating the flexibility to consume compliant fuels with 0.5% or less sulfur content when in emission control areas and in ports that does not permit scrubbers. We have elected this configuration in anticipation of countries implementing stricter rules related to use of scrubbers when ships operate in their respective near seas and ports.

Looking beyond scrubbers, you should continue to expect consistency in our strategy, transparency in our communications and for us to do what we have said we are going to do. We like our current position. With the last newbuilding delivered in October in time for the current market upturn, we now have all ships in the water earning money. Following our financing efforts this year, we have no significant debt maturities until 3Q 2021. We are focused and we work hard to create value to your shareholding by pursuing what we expect to be a rewarding business plan.

With best regards,

Trygve P. Munthe

Svein Moxnes Harfjeld