Norden Chooses Scrubbers for Up to 31 Vessels
Danish shipping company Dampskibsselskabet Norden A/S has unveiled its intentions to install scrubbers on up to 31 vessels from its owned and chartered fleet.
Namely, the company informed that during 2018 it secured installation of 26 scrubbers with options for 5 more. Of these, 2 scrubbers will be installed on newbuildings, 16 retrofitted on selected, owned vessels, and the remaining 8 will be installed on long-term chartered tonnage.
The costs are estimated to amount to around USD 54 million, of which USD 41 million would be invested for upgrading owned vessels and some USD 13 million in increased TC hire over the coming years.
“Recognising uncertainties, Norden considers the investment highly attractive with an estimated financial return of approximately 25% within 5 years on own vessels with significant upside,” the company said, adding that it expects a net positive cash flow effect of USD 40 million over the first 5 years.
On January 1, 2020, a global cap of sulphur emissions from bunker fuel will come into effect, reducing the allowed sulphur content from the current level of 3.5% to 0.5%.
Compliance with the regulation can be achieved either by switching to low sulphur fuel or by installing an exhaust gas scrubber on vessels enabling continued use of high sulphur fuel oil. Throughout the last 18 months, NORDEN has evaluated how the sulphur cap will affect both the shipping and bunker markets.
The company revealed the details of the retrofit decision as part of its second quarter of 2018 financial report, in which it said that it realised an adjusted result for the period of USD 4 million, against a loss of USD 3 million seen a year earlier, in a dry cargo market which continued its gradual improvement and a historically poor tanker market.