TORM establishes joint venture with Guangzhou Shipyard International and ME Production to manufacture scrubbers to reduce sulfur emissions
TORM plc has established a joint venture with ME Production, a leading scrubber manufacturer, and Guangzhou Shipyard International (GSI), which is part of the China State Shipbuilding Corporation group. The joint venture, ME Production China, will manufacture and install scrubbers in China and deliver them to a range of maritime industry customers for both newbuildings and retrofitted vessels. TORM holds an ownership stake of 27.5% in the new joint venture.
TORM has ordered a total of 16 scrubbers with ME Production China and signed a letter of intent for additional 18 scrubbers with the new joint venture. With these orders, TORM has committed to install scrubbers on 21 vessels and potentially up to 39 vessels or roughly half of TORM’s fleet. The CAPEX related to the confirmed scrubber orders is on average estimated below USD 2m per scrubber including installation costs. TORM expects to be able to obtain financing for a significant portion of this investment.
From 1 January 2020, the limit for sulfur emissions from fuel oil used on board vessels operating outside designated emission control areas will be reduced to 0.50%. This will significantly reduce the amount of sulfur oxides emanating from vessels and should have major health and environmental benefits for the world.
By installing exhaust gas cleaning systems, also known as “scrubbers”, air pollutants can be limited. These scrubbers are designed to remove sulfur oxides from a vessel’s engine and boiler exhaust gases. A vessel fitted with a scrubber can continue to use cheaper heavy fuel oil, as the sulfur oxides emissions will be reduced by the scrubber.
Based on the current market expectations for the future price spread between high and low sulfur fuel, TORM expects the installation of scrubbers to be an environmentally and commercially positive business case with a short payback time.
TORM is one of the world’s leading carriers of refined oil products. The Company operates a fleet of approximately 80 modern vessels with a strong commitment to safety, environmental responsibility and customer service. TORM was founded in 1889. The Company conducts business worldwide. TORM’s shares are listed on NASDAQ Copenhagen and NASDAQ New York.