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Scorpio maintains plan for scrubber installations despite port bans

Houston — Scorpio Tankers said Thursday it will continue to install scrubber systems on 75 of its tankers, despite recent bans for open-loop scrubber systems in major ports such as Singapore and Fujairah due to environmental concerns.

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In a fourth quarter 2018 earnings call Thursday, Scorpio Chief Operating Officer Cameron Mackey commented on the environmental concerns raised about scrubbers, acknowledging that scrubbers did have harmful effects, but that the company would maintain its policy to install scrubber systems on 75 of its tankers, with options for 18 more retrofit installations.

"The industry is in transition. Scrubbers represent opportunity, and we maintain that position with the anticipated regulatory 5- to 10-year lifespan of scrubbers," Mackey said. "We're not here to take ethical or scientific views; we're just complying with regulations."

Scorpio Senior Financial Officer James Doyle pointed to economic factors as supporting Scorpio Tankers' choice to install scrubbers, showing projected savings of $908,400/year for a Medium Range tanker with a scrubber system, a time charter equivalent saving of $2,489/day. Long Range 1 vessels with scrubber systems were projected to save $1,017,450/year, a time charter equivalent saving of $2,788/day. The projections are based on the spread between marine gasoil and high sulfur fuel oil prices. Doyle said that for every $100 change in the MGO/LSFO spread, time charter equivalent earnings for MRs would increase by $1,244, and earnings for $1,394 for LR1s.

When questioned about the recent bans of open-loop scrubbers in ports such as Singapore and Fujairah, Doyle pointed out that the scrubber fuel savings calculations in the earnings call were based on no scrubber use in port for discharge or load. Doyle said that he didn't doubt that most port states would prevent scrubber wash water discharge, and that Scorpio's projected scrubber savings took this into account.

So far, ports and regions including Fujairah, Singapore, China, Belgium, California, Massachusetts and Germany's Rhine River have announced bans on the use of open-loop scrubbers or the discharge of wash water from open-loop scrubbers. Fujairah announced a ban of open-loop scrubbers in port waters on January 22, 2019. Singapore's ban on wash water discharge comes into effect January 1, 2020, while China's wash water ban came into effect January 1, 2019 in its emission control areas.

--Marieke Alsguth,

--Edited by Annie Siebert,