No Rush to Install Scrubbers, Says Oak Maritime Director

Jack Hsu of Oak Maritime says he is in no rush to install scrubbers prior to 2020.

Jack Hsu, managing director of Oak Maritime (HK) Inc Ltd (Oak Maritime) says shipowners should be in no rush to install scrubbers to achieve compliance amid tighter global emission regulations on shipping set to come into force in 2020.

"In 2020, the 0.5 percent sulfur cap comes in and that 0.5 percent is basically a distillate," IHS Fairplay quoted Hsu as saying at the recent Asian Logistics and Maritime Conference (ALMC) in Hong Kong.

"So we are talking about bunker oil that is currently around $270 per tonne against distillate that is roughly $400 per tonne. When the prices will equilibrate is only a matter of time, so from an owner's perspective I would rather delay installing scrubbers as a way to take care of the SOx problem."

The costs of installing a scrubber system vary, and could be as little as $1 million per ship or as high as $12 million, meaning that even if owners get a favourable ROI from the technology they still need to make an upfront capital outlay.

"The numbers are moving around all the time, but the amount of funds needed to retrofit a ship are huge," said Richard Grenier, Partner at Moore Stephens.

"The challenge is how to find that extra money. If there is one thing the industry does not have at the moment it is a lot of spare cash."

Hsu also sounded a note of caution in regard to scrubber waste.

“There is controversy surrounding the use of scrubbers over what to do with the residue that is left," he said.

"The International Maritime Organization [IMO] still needs to pass regulations to ensure the ports have reception facilities for the residue."

As owners continue to debate what their best compliance solution will be, Nick Confuorto, President and COO of CR Ocean Engineering last week warned the cost of compliant fuel should not be underestimated.