Torm takes 27.5% stake in scrubber venture with GSI and Danish scrubber maker

The marine scrubber market could be worth USD1.9 billion by 2023. Credit: Wartsila
The marine scrubber market could be worth USD1.9 billion by 2023. Credit: Wartsila

Danish tanker owner Torm has become the latest shipowner to invest in marine scrubbers after taking a 27.5% stake in a scrubber joint venture with China’s Guangzhou Shipyard International (GSI) and Danish scrubber maker ME Production.

The venture, ME Production China, will manufacture and install scrubbers in China and deliver them to a range of maritime industry customers for both newbuildings and retrofitted vessels.

Torm has ordered a total of 16 scrubbers at ME Production China and signed a letter of intent with the venture for an another 18 systems.

Torm joins Frontline in investing in scrubber companies. The Norwegian tanker owner agreed a memorandum of understanding in June to take a 20% state in Feen Marine Scrubbers. Frontline has placed orders for around 20 exhaust gas systems with Feen.

That comes as a research report estimated the marine scrubber market could be worth USD1.9 billion by 2023 as ship owners opt to install for scrubbers to comply with the International Maritime Organisation’s 2020 sulphur regulations rather than use alternatives like low sulphur fuel.

The Organisation of the Petroleum Exporting Countries (OPEC) estimated 2,000 merchant ships will have scrubbers installed by 2020, increasing to 5,000 ships by 2023.

Scorpio, Norden, Star Bulk Carriers, Eagle Bulk Shipping, Safe Bulkers, DHT Holdings, MSC, Maersk and International Seaways are among the owners that have bought or agreed to fit scrubbers in their vessels.

But while shipowners fitting scrubbers to their ships hope to benefit from being able to continue using cheaper high sulphur fuel public concern about scrubbers, particularly open loop systems which wash pollutants into the sea, is growing.

Britain’s Guardian newspaper recently called scrubbers“emissions-cheat” systems that pump pollutants into the ocean to beat IMO rules banning dirty fuel.

Torm said its orders at ME Production China meant it has committed to install scrubbers on 21 vessels and potentially up to 39 vessels or roughly half of TORM’s fleet. The company said the average cost of the scrubbers is under USD2 million including installation costs.

Commenting on the tie-up with GSI and MB Production, Torm executive director Jacob Meldgaard said: “Our long-standing relationships with GSI and ME Production helped to facilitate this unique joint venture at a time when demand for scrubbers is expected to increase significantly. This strategic move provides us with a substantial economic interest in a venture that has the potential to be a large-scale international scrubber manufacturer. It will also result in Torm obtaining attractive prices for the scrubber investments that already have a short payback time.”