Securing slots in the retrofit queues

Malcolm Latarche
Malcolm Latarche

27 July 2018


As 2018 begins to slip away into the past and with the 2020 deadline for deciding a strategy for sulphur reductions and the amended deadline for ballast treatment retrofits drawing closer, shipowners seem to be committing, and in some cases going the extra mile to secure a place in the queues.

Retrofit Slots

In June tanker operator Frontline announced it was taking a 20% stake in scrubber supplier Feen marine and this week ballast treatment system maker Ecochlor announced that as well as ordering 55 treatment systems for retrofit on its fleet of product tankers, Scorpio Tankers was also taking a minority stake in the company. Whether any of the other major orders of late have been similarly linked to taking a stake in the suppliers has not been revealed but with two public announcements of the type it may be something that other owners may consider.

Clearly the pace of retrofits needs to accelerate to meet the impending deadlines and that brings the danger of some owners struggling to find systems and contractors able to meet their own target installation dates. That is something that suppliers have been warning about for some time but which many owners seem to have chosen to ignore – perhaps feeling that the suppliers were being unnecessarily alarmist.

With ballast treatment owners have limited options. If there are no same risk area exemptions allowed or if the vessel is not intended for scrapping, then a system is an essential. Some ports and terminals may assist by establishing a shore-based treatment system but that will leave vessels with no option to trade elsewhere until a system is fitted.

For meeting the sulphur cap there is of course the option of burning MGO or a low sulphur fuel and many owners have declared this as their favourite option in any case. In July EGCSA said that after a survey of its members it could confirm that 983 scrubber installations were in place or on order.

Since Feen Marine, the system maker linked with Frontline, is not listed as a member of EGCSA it is not clear whether Frontline’s orders are include and perhaps the figure should actually be over 1,000 installations.

Scrubber makers upbeat

EGCSA also said that it expected owners to invest more in scrubbers making for a $20Bn market over the next five years. Since the cost of the largest scrubber is probably around $8m with smaller versions being less than half of that, it would appear that EGCSA expects the total number of new scrubbers to be between 2,500 and 5,000 which will be on top of the 1,000 or so already accounted for.

Certainly scrubber makers are more upbeat about the potential than for a long time. Announcing its first half profits in July, Wärtsilä attributed its 3% increase in the marine sector to scrubber sales. Just a week earlier the company has revealed a huge $170m order for scrubbers by a ‘major container operator’ believed to be MSC.

When talking of the market potential for scrubbers, EGCSA hinted that there is still time – but only just – for owners to ensure they have a system in place for 2020. Not every owner has the pockets or credit rating of Frontline or Scorpio to buy into a system maker but securing a place in the queue for scrubbers or ballast is something that they need to do sooner rather than later.

With particular regard to ballast treatment systems they should also take into account that those approved to the older IMO G8 process are now time limited and cannot be fitted after 2020.