Euronav fires broadside against IMO 2020 scrubber drive

Euronav has not come out openly against scrubbers but says that it has three areas of concern regarding their use in its own fleet. Credit: Southern Cross Media
Euronav has not come out openly against scrubbers but says that it has three areas of concern regarding their use in its own fleet. Credit: Southern Cross Media

Leading international tanker operator Euronav has fired a major broadside against the use of scrubbers to comply with the IMO 2020 marine fuel sulphur cap, claiming that they risk facilitating non-compliance with the new 0.5% sulphur limit.

The Antwerp-based group, whose chief executive Paddy Rodgers branded the sulphur cap as the worst legislation last month, insists that it is totally in favour of the cap, saying that it wants to adopt it “properly, universally and without delay”, but argues that refiners and oil producers have made it increasingly clear that compliant low-sulphur fuel will be available in sufficient quantities to meet the needs of the market.

“Scrubbers are therefore a loop hole which makes enforcement of the sulphur ban extremely complex, difficult to enforce and likely to facilitate non-compliance,” it says.

Euronav does not come out openly against scrubbers but says that it has three areas of concern regarding their use in its own fleet, which it says it is continuing to investigate despite the shortage of time available before the cap comes into force on January 1 2020.

Its first concern is financial. It argues that the installation of scrubbers would cost it USD5 million per vessel with no certainty that there would be any return on investment, given that some refiners, including notably Sinochem, were already saying that they could produce compliant fuel at a price likely to be half the difference between heavy fuel oil and marine gas oil.

“So, the investment now has half the returns being promoted and it is still 14 months before implementation and nothing suggests this price gap will not further narrow in that time,” the group said as part of its third quarter financial results announcement.

Its second concern relates to the operating issues and pollution risks posed by scrubbers, particularly the open loop variety, which it said basically involved transferring pollution from the air to the sea.

“Open-loop scrubbers use seawater brought on board to remove sulphur from exhaust gases, but the wastewater produced contains a toxic cocktail of sulphuric acid constituents, polycyclic aromatic hydrocarbons and heavy metals which are pumped into the open ocean, essentially transferring pollution from air to sea,” it said.

On the operational front, it said that scrubber technology was unproven in a large tanker environment and presented a known risk of corrosion. Little was known either about the safety and operational risks it presented.

In addition, Euronav said, scrubbers presented future regulatory risks for shipowners. The “court of public opinion” had yet to be fully tested with regard to open loop scrubbers, raising the possibility of future action against them by port or flag states and of them falling foul of demands for higher corporate social responsibility standards from investors and fuel producers.

“Promoters of this technology argue that the open oceans dilute waste water, rendering it harmless,” it said. “But the solution to pollution is not dilution. Like plastic contamination over the years, we don’t know what the cumulative effect of this waste water will be or how it will inter-act with existing seaborne pollutants, particularly in congested sea-lanes like the English Channel, Malacca Straits or Baltic Sea.”

The tanker group’s final concern is that flag states may find it difficult to enforce the new cap. It argues that they are already finding it hard to enforce compliance in existing environmental control areas.

“Installing a scrubber enables regulatory compliance with the continued use of non-compliant high sulphur fuel,” it said. “But weak regulatory oversight means non-compliance in the open sea, whether through breakdown or malfeasance, cannot be effectively controlled.”

As it grapples with these concerns, Euronav says it is continuing to work closely with suppliers and producers on alternative mechanisms with which to take advantage of the volatility in the prices and differentials between heavy fuel oil and low sulphur fuel oil, assuring that it has the balance sheet strength and flexibility to address all the challenges presented by the implementation of IMO 2020.

Access the IHS Markit topic page on IMO 2020