Scrubber fittings now uneconomical: Seanergy CEO

Scrubber fittings are now an uneconomical solution to the global sulphur regulations, Capesize shipowner Seanergy's chief executive Stamatis Tsantanis told a recent webinar with Noble Capital Markets.

The technicalities of installing the exhaust-filtering systems that allow the continued burn of 3.5pc sulphur fuel have proved to be more problematic than initially appeared, Tsantanis said. There are hundreds of new piping connections passing through the engine room and the equipment is very demanding with respect to maintenance, he said.

These complications are exacerbated by Covid-19, because crew-change restrictions make it very difficult to get technicians or engineers on board if any extensive maintenance, repairs or replacement parts are required.

The financials of a scrubber have fundamentally changed, because the spread has narrowed between the 0.5pc sulphur fuel that is compliant with the International Maritime Organisation (IMO) rules and the 3.5pc sulphur fuel that is not. The spread at the port of Singapore — one of the leading bunkering hubs in the world — was $370.5/t on 1 January but has dropped to just $82.85/t yesterday.

The payback period for a scrubber was anticipated at 6-12 months given a certain spread in fuel prices. That has now been revised upwards towards five years, Tsantanis said.

Seanergy recently completed a scrubber fitting because of a contract that was already in place with a charterer. There are a number of these contracts across the fleet that were negotiated when 0.5pc sulphur fuel prices were forecast to be much higher than they are. In these contracts, the shipowner would install the scrubber and then lease the vessel to a charterer for an extended period of time at a set time charter rate, which would allow the charterer to benefit from any fuel cost savings.

Without this contract "I definitely would not be seeking additional scrubber fittings in the future," said Tsantanis.

Seanergy owns 10 Capesize ships. It has installed scrubbers on five and will use IMO-compliant 0.5pc sulphur fuel on the remaining five.

By John Ollett