Ardmore Not Going Down the Scrubber Route for Now

Ardmore SeaventureImage Courtesy: Ardmore

Ardmore Shipping Corporation is refraining from installing scrubbers on board its tankers for the time being as a way of preparing for the entrance into force of the 2020 sulphur cap.

Anthony Gurnee, Ardmore’s Chief Executive Officer, said that the main reason for doing so is a non-compelling return on investment and potential risks involving installation of the technology on board a Medium Range (MR) tanker.

Gurnee added that if pursued the endeavor would cost the company between USD 60 and 70 million.

“Quite frankly, we would be buying ships rather than installing scrubbers, if we had that kind of capital ready to invest,” he added while speaking in a conference call on the company’s third quarter results.

Another key concern is the availability of 3.5 pct heavy fuel oil in ports worldwide post 2020.

“Very often we have no idea where the ship is actually going when it’s committed to a charter because we give the oil trader such a broad range of discharge options and therefore the availability of 3.5% sulfur fuel if you have a scrubber on MRs is one of the key concerns because we tend to trade to what you would call outputs rather than the inputs,” he added.

The company reported a net loss of USD 12.2 million for the three months ended September 30, 2018, as compared to a net loss of USD 4.6 million for the same period in 2017.

The nine-month net loss came at USD 26, as compared to a net loss of USD 8.7 million for the nine months ended September 30, 2017.

“MR charter rates bottomed out early in the third quarter as the market experienced significant downward pressure from Atlantic Basin local market issues that initially presented themselves in the latter part of the second quarter. Nevertheless, MR rates are now trending upwards, driven by increased cargo volumes and a significantly improved crude tanker market that is reducing the encroachment of larger tankers on MR trades,” Gurnee commented.

“Despite the challenging market environment, we believe the MR tonne-mile demand outlook remains very positive, supported by continued strong underlying oil consumption growth of 1.4mbd for 2018 and 2019 and ongoing refinery expansion in export-oriented locations.”

The recovery is also expected to be supported by a record low orderbook, combined with scrapping that has accelerated during the recent market downturn, resulting in net fleet growth of close to zero in 2018 and around 1% in 2019.

The fundamental reshaping of the global petroleum supply chain related to the IMO 2020 marine fuel switch should also heighten MR demand from mid-2019 onward, Gurnee believes.

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