Analysis from UK consultants Drewry claims VLCC owners who have managed to get scrubbers on their ships by 2020 will enjoy a healthy first-mover advantage.
Drewry expects the premium for low sulphur fuel oil (LSFO) to gradually decline from 2020 as supply increases. According to Drewry’s projections the premium will decline from around $300 per tonne in 2020 to $87 per tonne by 2023, and accordingly, the savings on bunker cost for a modern eco-VLCC will decrease from $5.7m to $1.6m.
“This suggests,” Drewry stated in a report, “that owners opting for scrubber-fitted vessels in 2020 would recover their cost in the first year alone. However, for those who choose to retrofit a scrubber (or take the delivery of a scrubber-fitted vessel) later, the payback period will be longer.”
For VLCCs, Drewry estimates cost of fitting an open loop scrubber in a newbuild ship is around $2.5m to $3.0m, whereas the cost of retrofitting a scrubber on an existing VLCC will be $4m to $4.5m.
In recent months many of the largest VLCC owners in the world have moved to get scrubbers installed on their fleets ahead of the January 1, 2020 global sulphur cap.
Analysis from brokers Gibson in early July showed that more than 30% of the current VLCC orderbook includes scrubbers, while another 9% is scrubber ready. However, the actual number of vessels being fitted with scrubbers could be even higher as some deals have been concluded privately.
“[C]harterers are showing strong interest to time charter tonnage fitted with the technology,” Gibson reported, adding: “Recently, there have been several T/C deals with all oil majors, where a notable premium has been paid for tonnage fitted with scrubbers compared to tankers without the technology on board.”