Around 420,000 tonnes of compliant fuel oil (0.5% & 0.1% sulfur content) has been purchased thus far by the team, the company said, adding that it paid $447 per tonne for VLSFO, versus $400 per tonne for HSFO, during purchase period.
To pay for the fuel an additional $100 mill of revolving loan facility was agreed with a syndicate of banks, which has not affected the strength of the balance sheet, the company claimed.
Euronav explained that this move gave the company a range of benefits to its stakeholders, such as fuel provenance, compatibility, reliability, which have all been thoroughly tested, bringing security of supply to the company.
“We believe this proactive approach will deliver security of supply of quality tested fuels in sufficient quantity for the initial six to nine months of 2020 and we are working on additional fuel saving and procurement initiatives based on the experience built up over the past nine months,” the company said during a presentation.
CEO Hugo De Stoop, said:“The introduction of new sulfur emissions regulations as part of ‘IMO2020’ is one of the most progressive and significant developments for all shipping segments over the past 50 years. Reducing shipping’s sulfur footprint is a critical step forward for all seaborne transportation and Euronav wholeheartedly welcomes the new regulations and looks forward to fully complying with them.
“In summary, Euronav has purchased the equivalent of 420,000 tonnes of compliant fuel and Marine Gasoil at what we believe to be a competitive price. This volume can provide a substantial coverage of our fuel requirements during the initial period of the regulation.
“Leveraging our balance sheet strength and operational capability to purchase and secure supply of tested compliant product that should provide a natural hedge for Euronav against any lack of fuel oil availability, poor quality compliant fuel or unwanted price spikes and help establish strong, direct B2B relationships for future fuel sourcing,” he said.
As for scrubbers, the company said that it believed it can still fully capture the potential benefits of an investment in scrubbers beyond 1st January next year.
At that time, the LSFO derivatives market should have developed in size and in volume, which allows Euronav to fully lock in the benefits of the spread at the time of making the investment.
This should even provide Euronav with a ‘second mover advantage’ in learning the flaws of the first round of installations and take a decision based on facts without having to speculate.
The 2003-built 441,585 dwt ULCC ‘Oceania’ was used to store the fuel, due of her size and related economies of scale.
She is repositioning to the Singapore area later this month, Euronav said.