Former critic of exhaust gas cleaning systems, very large crude carrier company (VLCC) Euronav is making a U-turn on its previous position by escalating efforts to retrofit a section of its fleet with scrubbers.
Brian Gallagher, head of investor relations, Euronav, speaking at Clarksons Platou Securities tanker seminar in New York in January, admitted that the company was initially reluctant to commit to a USD3-5 million investment per vessel to retrofit them. This was due to a lack of visibility on the return of investment and the related fuel costs of very low sulphur fuel oils (VLSFO).
Since the implementation of IMO 2020 on 1 January 2020, the spreads of costs between high sulphur fuel oils and compliant fuels has exceeded predictions of USD200-USD250 per tonne. With the global average bunker price of VLSFO currently at USD620 compared to USD397 per tonne for heavy fuel oil, according to Ship & Bunker a marine fuels intelligence platform. This, teamed with the shortages of bunker barges, and, in turn, compliant fuels around the world’s most prominent ports, has added to the attractiveness of scrubber investments.
This is in spite of heavy investment in 2019 on by Euronav for compliant fuel. The company bought 420,000 tonnes of 0.5% sulphur fuel at USD400 per tonne and USD566 of marine gas oil per tonne, making a saving of USD200 per tonne of the current market price for compliant fuel. The fuels purchased are being used to bunker Euronav’s fleet, consisting of 42 VLCCs, 27 suezmaxes, two floating storage and offloading units and two ultra large crude carriers.
“However, that’s a finite advantage. It’s not going to last forever. It will be something between six to eight months worth of fuel,” warned Brian Gallagher, head of investor relations, Euronav. Gallagher also noted that during 2020 the company has 12 scheduled vessel dry dockings, which could tie in with scrubber retrofits.