Retrofits as Good as Eco-Newbuilds at "Fraction of the Cost"

Euronav said installing technology like the Mewis duct is more cost-effective than ordering newbuilds

Facing continuing losses in the third quarter of 2013 in a market oversupplied with oil carriers, independent tanker company Euronav reiterated its argument that fuel-saving retrofits are preferable to newbuild eco-ships, and if the market is to rebalance itself it needs more scrapping and an end to new vessel orders.

"So-called 'eco-ships' do not exist in the large tanker sector as most 'eco gains' can be replicated through retrofitting fuel saving devices which can be done to existing ships at a fraction of the cost of a newbuilding," the company said.

Despite remaining in negative territory, Euronav's latest results did show improvement with a loss of $27.1 million in Q3 on revenues of $93.5 million, compared with a $34.9 million loss in the same period last year.

The company said the demand side of the tanker market is strong, with high numbers of cargoes being exported from the Persian Gulf and West African light crude oil being transported to the Far East rather than the U.S.

"This substitution had a significant impact on ton-miles, which is the true measure of demand for shipping," Euronav said.

The company's average daily time charter equivalent (TCE) rates for the quarter were $14,000 for very large crude carrier (VLCC) TI Pool spot rates, up from $11,500 in Q3 last year; $21,000 for time-chartered Suezmaxes, down from $22,100; and $17,000 for Suezmax spot rates, up from $15,750.

Euronav has produced a report arguing that retrofits such as Mewis ducts and electric heavy fuel heaters - which allow vessels to switch off their boilers while slow steaming or drifting - save fuel as well as efficient newbuilds without exacerbating the oversupply of tonnage on the market.