Foreship: Scrubbers could be 25% of the fleet by 2025

Flue-gas scrubber tower. Credit: PPG

Naval architect Foreship is reporting a dramatic increase in the number of shipowner enquiries relating to scrubbers, evidence of a shift in opinion towards the continued bunkering and burning of high-sulphur fuel oil (HSFO).

“The realities of IMO 2020 have caught many off guard, with some in the market quickly shifting from contemplating whether a switch to scrubbers was advantageous to considering how soon they can practically do so,” said Foreship EGCS project lead Olli Somerkallio. “Uncertainty surrounding low-sulphur fuel oils is causing owners to reconsider whether they made the right choice on scrubbers, with fresh enquiries on equipment evaluation and installation arriving almost daily.”

The development runs counter to oil majors’ indications that the availability of HSFO would be tapered off in various ports, which would have pushed up the price of heavy fuels in contradiction of the main business case for scrubbers. Majors last year argued that there would be little business case for maintaining supply of these fuels if only some 5% of the world fleet – those installed with scrubbers – could use them.

However, new figures from consultancy CRU show that some 3,756 vessels have exhaust gas scrubbers either installed or on order, and suggest that as many as 15% of the maritime segment will have scrubbers fitted by the end of this year. This is anticipated to increase 20% by 2025.

At the end of the first month of the sulphur cap, at the beginning of February, Svend Mølholt, Group COO at Danish bunker supplier Monjasa, told SAS that high-sulphur fuel would make up 10% of demand. However, he said, there would still be upcoming price dynamics to take into account. “We need to clean the tanks,” he said, so the price of high-sulphur fuel will go up. “When we get into Q2, markets will be a bit more stable.”

On the other hand, Mølholt added: “We think that during Q2 the supply chain will be calibrated; the cost of low-sulphur is going to come down.”

Foreship, which employs a team of 15 scrubber specialists, argues that the payback time for a scrubber can be brought down to 12 months in some cases, with pre-outfitted modules placed onboard for riding crews, so that work could be completed while minimising off-hire time.

“We understand that this is a difficult moment for ship operators who have followed the rules only to find themselves at a competitive disadvantage,” Somerkallio said. “While VLSFOs [very-low sulphur fuel oils] may well be costing more day-to-day, the scrubber is still a multi-million-dollar item whose evaluation, selection, and installation will benefit from advice that is independent of the supplier and the shipyard.”