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Scorpio Tankers to fit 90 product tankers with scrubbers ahead of IMO 2020

Houston — Scorpio Tankers announced Monday its intention to fit approximately 90 product tankers with Exhaust Gas Cleaning Systems (Scrubbers) in preparation for the International Marine Organization's 2020 bunker fuel regulation changes.

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The announcement, sent through Scorpio Tankers' global news wire, quoted Chairman and CEO Emanuele Lauro, who stated that the company would fit "approximately 90 ships in [their] fleet" with hybrid-ready scrubbers.

Scorpio Tankers, a global company, had previously entered an agreement to retrofit 15 Long Range 2 vessels with scrubbers, and stated in the announcement Monday that the new round of scrubbers would be fitting into Medium Range, Long Range 1, and Long Range 2 vessels in the fleet. These would include vessels owned and financed-leased by Scorpio Tankers, approximately 75 vessels. These scrubbers would be installed between the second quarter of 2019 and the second quarter of 2020.

The announcement stated that the estimated cost of the scrubbers would be between $1.5 million and $2.2 million per vessel. Additionally, Scorpio Tankers "anticipates that between 60-70% of these costs will be financed," according to the announcement. Scorpio Tankers did not specify by whom the scrubbers would be financed.

The statement follows Scorpio Group chief operating officer Cameron Mackey's announcement at the Association of Ship Brokers & Agents conference in Miami on September 27 that the company would install 100 hybrid-ready scrubbers across its fleet of 56 bulkers and 109 tankers. The majority of these scrubbers would be installed on the larger vessels within each group, according to Mackey, who stated that the scrubbers would be installed on the vessels and ready sometime in 2020.

The International Maritime Organization has mandated bunker sulfur limits to drop to 0.5% sulfur on January 1, 2020, from 3.5% sulfur currently. The installation of scrubbers allows shipowners to continue using 3.5% sulfur bunkers, as the exhaust gas cleaning systems bring emissions in line with the 0.5% sulfur limit.

Emanuele Lauro, in Monday's announcement, anticipated massive changes to the clean tanker market with the passing of IMO 2020. "We have long maintained that the IMO 2020 regulations are both disruptive to the shipping industry generally as well as a powerful demand catalyst for product tankers. Although many well-capitalized and publicly-listed shipowners can source capital and publicize their intentions to pursue Scrubbers, most of our industry cannot, and will rely on cleaner fuels to the benefit of ton-mile demand for product tankers. Irrespective, our focus remains on operating the most competitive fleet in our marketplace, and this has led us to carefully evaluate and ultimately opt for the benefits of fitting hybrid-ready scrubbers," Lauro said.

Scorpio Tankers' executive office is based in Monaco, and another office is in New York City. The company currently owns or finance leases 109 product tankers, and ships petroleum products globally on the time charter and spot tanker market.

--Marieke Alsguth, marieke.alsguth@spglobal.com

--Barbara Troner, barbara.troner@spglobal.com

--Edited by Jennifer Pedrick, jennifer.pedrick@spglobal.com