Scrubbers not a long-term solution: DHT Holdings CEO Harfjeld

Charterers 'concerned' about availability of compliant fuel, says co-CEO of fleet owner with scrubbers installed.



Slide image from DHT Holdings' fourth-quarter earnings call presentation on February 6, 2018. Image credit: DHT Holdings


Updated on 07 Feb 2018 13:01 GMT

The top-level management at tanker vessel owner DHT Holdings discussed exhaust gas scrubbers during the company's fourth-quarter earnings call, held on Tuesday.

The Bermuda-headquartered firm is in an interesting position compared to other tanker owners leading up to the global 0.5 percent cap on the sulphur content of marine fuel in 2020, as it owns a number of newbuilds with scrubbers already installed.

Co-CEO Svein Moxnes Harfjeld remarked: "We don't think [the use of] scrubbers is a long-term solution."

Harfjeld acknowledged that the company expects the market to mainly consume 2020-compliant fuel - rather than higher-sulphur product with scrubbers.

"We understand from some of the larger refiners that they do have that [compliant] fuel available, but it will have a price. So that's really a game plan, if you like, and the cost of this will have to be borne by the end users," he said.

DHT Holdings' other CEO, Trygve Munthe, noted that charterers will be "concerned" about the availability of compliant fuel and that some are already choosing to enter into charter contracts for ships with scrubbers as a result.

One customer, described as a "big oil company", was said to be "in the process of taking maybe up to a handful of ships with scrubbers" for delivery in 2019.

Eco VLCCs vs non-eco VLCCs

Discussing the effect of bunker prices on margins for DHT's eco VLCCs compared to its non-eco VLCCs, Harfjeld explained that the eco fleet was earning a premium of between $6,000 and $6,500 above the "standard" VLCCs - said to be, on average, 10 years old.

Munthe also added: "I think there are two types of premiums: one is the premium that relates to the fuel efficiency that is better on newer ships, so they consume less bunker [fuel], simply, and that will impact your earnings. When you look at ships that are typically older, and 15 years of age, there is more waiting time involved and less customers that can use your ships."

Financial results

In its financial results for 2017, DHT posted a year-on-year drop in net income of $2.7 million, or 29.0 percent, to $6.6 million.

The company's fourth-quarter (Q4) loss of $7.5 million was lower than the $5.1 million loss recorded three months earlier. In Q4 2016, DHT's net income was $17.8 million.