Essar Shipping to install scrubbers and switch to low-sulphur fuels

December 19, 2019: For International Maritime Organisation 2020 compliance on sulphur cap, Essar Shipping is installing scrubbers in some of its vessels and switching over to low-sulphur fuel in the rest of its vessels.

The company announcement said that it will make capital investments in four out of the 12 owned vessels. The four vessels consist of three minicapes (bulk carriers) and one VLCC.

The IMO has directed that the global cap of sulphur content in shipping fuel is to be reduced to 0.5% (from the current 3.5%) starting from January 2020.

There is a huge amount of damage taking place in the marine environment due to high sulphur emissions, especially in Northern European countries, the UK being the highest sufferer.

Essar Shipping has pronounced its support and is in a process to be more environment-friendly and implementing processes that will reduce the harm caused to the maritime environment due to sulphur in the fuel.

The company estimates the installation of the scrubber to be completed by April/May 2020. With the installation of scrubbers, the capital expenditure recovery maybe 18 to 24 months depending on the differential of prices between HSHFO and LSHFO.

However, there are some challenges. While forecasting in this business, there are numerous variables that come into play, such as, demand and supply of tonnage, number of ships that are currently trading, the number of ships that will be scrapped, the number of ships that would be installed with scrubbers, the number of ships that are being ordered, the commodity cycle of a particular vessel, etc.

It is estimated that the present requirement of approx. 400 million ton of HSHFO will have to be either replaced with compliant fuel (low sulphur compliant fuel, marine gas oil). It is estimated that approx. 15~20% of 400 million tons will be handled by vessels fitted with the scrubber.

“The imminent recession is also a factor at play. During a period of recession, the demand for commodities is low, which leads manufacturers to cut down on production, which in turn leads to a lesser demand of deadweight tonnage (DWT) from the shipping industry,” says the release.