The ships in question include three minicapes and one VLCC, the company said, while the rest of the fleet will switch over to low-sulphur fuel.
Essar Shipping estimates the installation of scrubbers to be completed by April/May 2020.
“With the installation of scrubbers, the capital expenditure recovery (payback period) may be 18 to 24 months depending on differential of prices between higher sulfur heavy fuel oils (HSHFO) and LSHFO,” the company explained.
“However, there are some challenges that need to be taken into account. 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.”
As disclosed, it is estimated that the present requirement of approx. 400 million ton of HSHFO will have to be replaced with compliant fuels, while approx. 15~20% of 400 million tons will be handled by vessels fitted with scrubbers.
The cautious approach to scrubber installation is also impacted by the expected recession and resulting low demand for deadweight tonnage (DWT) from the shipping industry.
According to the latest estimates from the Exhaust Gas Cleaning System Association (EGCSA), there will be at least 4,000 ships fitted with scrubbers in 2020.
The scrubber installations have gravitated towards the larger vessels and vessels with high installed power where the economics of the investment versus the lower fuel cost are projected to give a high rate of return.
The majority of the installations are open-loop scrubbers that use seawater as the process fluid and discharge the treated and continuously monitored water overboard.