TEN CEO Fears Things Will Get Worse without Sulphur Cap Transition Period

Nikolas Tsakos, President and CEO of Tsakos Energy Navigation (TEN), fears that ships will experience numerous navigational problems or breakdowns due to the poor quality of bunkers being produced ahead of the 2020 sulphur cap, supposing no transitional period is introduced.

“I think what the industry is trying right now is for a transition period to allow for the right type of bunkers to be available,” he said in a conference call on TEN’s Q2 results.

As explained, the producers are now experimenting with new blends and there should be at least a two-year transition period to allow for safe and proven solutions to be available and avoid potential risks to ships.

“With 2020 ahead of us, where the majority of the fuels appear to be blended fuels, and without having standards for this 2020 fuel, we feel that this thing is only going to get worse,” he added.

As a Chairman of INTERTANKO, Tsakos said he plans to lobby with the IMO for the introduction of a transitional period for the sulphur cap regulations over the upcoming period.

TEN’s CEO believes this is particularly important having in mind the recent developments regarding bunker contamination that resulted in over 120 ships reporting incidents on board due to bad bunkers.

“This is something that as bunker buyers we have seen happening every three or five years. So we need to take corrective action to make sure that we don’t take a necessary risk for which we pay,” he said.

 “We think the bunker industry is responsible in making sure that they will provide the right fuel which is fit for purpose and we will not have to deal with the difficulties in such a large scale as it was the case with the latest incident.”

TEN’s management is a supporter of 0.5 sulphur fuel as a way of complying with the IMO’s regulations in 2020, however, it has not ruled out the option of scrubbers being installed on some of its ships by their respective charterers. These relate to ships that have been chartered out on long-time contracts and for which the charterers would bear the installation costs.

” I would say two-thirds of our charterers are not looking at scrubbers, one third might install the scrubbers,” according to Tsakos.

Nevertheless, Tsakos is not a big fan of the technology, especially when it comes to open-loop scrubbers, which he believes are a “short-term fix” as there is likelihood they would be banned to discharge washwater in certain geographical zones.

Initiatives have been made to ban the discharge of the washwater from scrubbers into certain regions as the contents of the released water include heavy metals and poly-aromatic hydrocarbons, posing a risk to marine life.

The Greek shipping company managed to shrink its loss in the second quarter of 2018 by 23 percent, but still reported a net loss of USD 9.6 million. Net losses in the six months to June 30, 2018 amounted to USD 21 million.

“During this quarter, almost 80% of the fleet was employed on secured revenue contracts, a third of which with profit sharing provisions, which, as in the first quarter of 2018, led TEN’s fleet earnings to outperform the spot market by more than 100%,” TEN said.

The company has 66 ships, including 6 in operation and two newbuilding orders. Out of these, 50 vessels are on secured employment contracts, with an average duration of 2.5 years.

Looking ahead, the tanker market seems to have bottomed out and a gradual market recovery is being recorded moving into the second half of the year.

“We are confident for the future and await for the critical fundamentals that may lead to a recovery to become more apparent by the end of the year. These fundamentals include a more balanced global fleet following a high level of scrapping, a slow-down in the pace of deliveries, increasing tanker demand arising from global growth, new refineries and adequate supply by increased US
and OPEC oil exports. In addition, the anticipated IMO 2020 disruptions will result to a healthier supply and demand equilibrium,” George Saroglou, COO of TEN concluded.

World Maritime News Staff