Oil majors avoiding responsibility during sulphur cap transition

The above image was not taken at ALMC 2018

During the dry bulk forum at this year’s Asian Logistics and Maritime Forum, Dr Henrietta Van Niekerk probably managed to ruffle a few feathers among owners and operators on the divisive issue of the IMO sulphur cap.

The director and global head of Dry Bulk Freight Analysis, Clarksons Platou, citing the viewpoint that owners investing in scrubbers are cheats, alleged the accusers were like “jealous kids in the playground.”

“You need to respect the owner who takes a big capital risk to invest in a scrubber,” she asserted.

While on paper the investment makes a lot of sense, and the spreads appear to indicate almost a US$7,000 a day premium, the reality is there are risks to that spread, she said.

“It is assumed that the spread will be wide but there is no consensus even within the oil companies as to what the price differential will be between the fuels.”

The risk that scrubber-positive owners are taking on involves an investment in a technology that is burdened with misconceived ideas that could lead to it being banned. Another potential risk is non-availability of the high sulphur fuel.

“I think you need to applaud the guys for taking such a big risk,” Dr Van Niekerk concluded.

When addressing the ‘fear of not available fuel’ Dr Van Niekirk was perhaps equally contentious when suggesting this should be described as “the joy of not having available fuel.” “The reality is if the fuel is not available you might end up as a non-scrubber fitted ship competing with a scrubber-fitted ship,” she said.

But ultimately, Dr Van Niekerk’s argument was that the responsibility of addressing sulphur reduction measures was aimed in the wrong direction, and was leading to unnecessary division in the shipowning community.

“Shipowners, instead of standing together and asking where are the oil majors in this, they would rather blame each other,” she maintained.

“BIMCO is busy drafting legislation that seeks to impose responsibility in the transitional phase either on shipowners or ship operators. Has anybody seen any documentation on the responsibility of the oil majors?” she asked without receiving a reply.

“Who is going to pay? The end user of course, in the form of the freight rate. If you have installed a scrubber you will put that in your time charter rate. If you don’t install a scrubber you will claim back from your bunker bill. This will influence your voyage rate. One way or the other the bill will come down to the end user. “Why should there be such divisions? Could we not ask the question why should this be the responsibility of shipping? Why can we not just buy the right fuel?”

The Asian Logistics and Maritime Forum is part of Hong Kong Maritime Week, 18-24 November.

 

 

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