Euronav breaks into scrubber market amid COVID-19 price dip

Daewoo Shipbuilding & Marine Engineering Co. shipyard. Credit: Dietmar Hasenpusch

Crude oil tanker company and vocal sceptic of scrubbers has purchased three eco-type very large crude carriers (VLCC) fitted with scrubbers for USD280.5 million. The company CEO maintains that the move is not a U-turn on policy but due to price.

“When you look at the price, its not like we were presented with the opportunity of buying non-scrubber ships at USD91 million and scrubber-ships at USD93.5 million … All of the ships today that either have been delivered very recently or are on order have scrubbers. That has become a standard feature,” clarified Hugo De Stoop, CEO, Euronav, in a statement.

Euronav is taking advantage of the dip in prices and disruption to the markets brought on by the outbreak of coronavirus in Asia. The spread of the virus has impacted shipyards  especially, with one of China’s largest shipyards in Jingjang near Shanghai remaining closed due to the quarantine rules.

There are currently 145 ships in total sitting idle in Chinese shipyards awaiting scrubber retrofitting, according to numbers provided by Clarksons Research, due to the coronavirus outbreak. This in turn has brought down the resale value of vessels, which spurred on Euronav’s most recent VLCC purchase.

“A strong rebound in the resale market for VLCC is more difficult to forecast but clearly we have moved pro-actively in acquiring three modern vessels believing there is longer term value at the price we have paid,” said Brian Gallagher Euronav’s head of investor relations to SAS.

Further, Gallagher maintained that the company would be open to buying more scrubber-fitted vessels in the future, “Scrubber technology on ships being ordered or currently being constructed is now standard. It is far cheaper than a retrofit, no loss of earnings for a retrofit period for instance, and possessing a scrubber on 3 VLCCs going forward is an option for us.”

On whether Euronav will be open to retrofitting their current fleet with scrubber technology, Gallagher, speaking to SAS, upheld that the company will continue to monitor closely developments in the scrubber market, retrofit capacity and fuel spreads, “I see today in Rotterdam the spread between low sulphur fuel oil and high sulphur fuel oil is USD121 per ton making scrubber economics challenging,” he concluded.

The three VLCCs are resales from Sinokar Merchant Marine and are currently under construction by DSME at a shipyard in South Korea. The scrubber fitted ships are expected to be delivered in Q4 2020 and in January and February 2021.