CMB.TECH CEO: ‘You can't go from 100% CO2 to 0% without grease in the machine’

All of the company’s new vessels are designed with dual-fuel capability, allowing them to switch between conventional and green fuels. “We can shift to diesel at any time,” he says. “So if we don’t have any molecules for the next 10 years, all my ships will still be able to sail.”

This chimes with Mr Saverys view that the group needs to find ‘pathways of least resistance’ while maintaining its overall goals. “We initially aimed to have ammonia engines ready by 2024, but the engine manufacturers were not able to supply. This required us to find a different approach, leading to our agreement with WinGD to receive the engines by the end of 2025.

At the same time, on Yara Eyde, which is planned to be the world’s first clean ammonia-powered container ship, the project partners Yara, North Sea Container Line, and Yara International asked CMB.TECH that the vessel be ready by the second quarter of 2026. We had anticipated a timeline of 2027 or 2028 but accepted the challenge and quickly assembled a team to expedite development.”

These tectonic shifts in fuel supply and usage do not denote the end of oil. “We will still have modern tankers transporting crude oil in 30 years’ time,” he says, pointing out that since the takeover of Euronav, the group has ordered four new Suezmax tankers, five VLCCs and two bitumen tankers.  

“I am somewhat pessimistic about demand for seaborne oil but very optimistic the supply of ships will decline more rapidly than the introduction of new vessels, which will support the overall supply-demand balance. It is also evident oil markets are changing beyond the ongoing disruptions from the Ukraine-Russia war and developments in the Middle East. Traditional trade patterns are being replaced by new ones. For example, large oil funds in northern Latin America are becoming significant demand drivers, alongside Brazil, which is increasingly influential. Exports from the US, which have been strong over the past few years, continue to be a major demand driver. Conversely, the Middle East has diminished in importance as it has reduced production.

“What we as a group have committed to is a rapid reduction in our dependency on crude oil transport as the majority of our income. Currently, around 90% of our profits come from crude oil tankers and we will use this to fund our green programme: you can’t go from 100% CO2 to 0% without grease in the machine. As our new ships come online in the next two years, this dependency on crude transport will decrease significantly. Our goal, however, is less about fleet composition and is more about phasing out pure diesel engines as soon as we can.”

The plan for CMB.TECH’s secondhand fleet, which consists of vessels aged between five and 15 years, is to implement standard modifications, including energy-saving devices and improved operating procedures. “We will not undertake extensive retrofits. Nor will you see 10-year-old tankers retrofitted with new engines.”

Overall, the aim is to establish a green fleet ‘as soon as possible’, with 2050 being the latest target. “I believe we can achieve this sooner, but the exact timeline remains uncertain. Will we have half of the fleet converted by 2030? Perhaps. Could we achieve more by that time? That is also a possibility. Much will depend on how quickly we can invest and the traction we gain from our customers.”

These are key variables. And CMB.TECH’s strategy is not without its critics.

Wall Street, in particular, has been sceptical of the company’s long-term vision. Mr Saverys attributes this to three main factors: the legacy of a negative campaign by previous management, the short-term focus of some investors, and a general waning of enthusiasm among the investor community for decarbonisation efforts in recent months.

“For the past two and a half years, our ideas and new strategic vision have been undermined by the previous management’s campaign against us,” he says, referring to the dispute between the Saverys family (through CMB) and the former Euronav management, which preferred to maintain Euronav as a pure-play tanker company. The Saverys family opposed a potential merger between Euronav and Frontline, which the previous management had pursued.

“I do not believe that simply increasing the number of oil tankers improves a company’s risk profile. In fact, combining oil assets raises risk when the market cycle turns.” He adds that the expected synergies from such mergers are often exaggerated. “The minimal savings from administrative costs are negligible when spread across a large fleet. Furthermore, the costs associated with merging, such as fees for advisors and investment banks, often lead to a financial deficit before any potential benefits are realised. Normally, in order to merge, you have to spend US$60-70M on advisors and investment banks before you get started.”

This situation, he says, created an uphill battle that forced the group to react rather than proactively communicate its strategy. A related challenge, he says, is many investors prefer “to ride the oil cycle for another year and postpone thinking about the future.”

Mr Saverys also perceives a wider loss of industry enthusiasm for decarbonisation over the last 18 months due to its slower-than-expected progress, with some favouring, in his words, to continue ‘milking the cow that is today’s high market for another five years’ before addressing decarbonisation.

Despite these headwinds, Euronav remains committed to its course, and the outlook is far from negative. “Our stock price has outperformed other shipping stocks, rising 30% since the completion of the Euronav takeover on 15 March. This indicates some investors do believe in our story.”

He also says there has been positive engagement with oil majors over the last six months. “Many of our oil major customers transport more than just crude oil. They are actively involved in the energy transition, producing hydrogen, ammonia and methanol, and participating in offshore wind projects. This gives us a range of shipping solutions to discuss with the oil majors that go beyond conversations around a VLCC and a Suezmax.”

Added to this, industry pressure to decarbonise will only intensify, and companies without decarbonisation plans by 2030-2035, especially regarding the FuelEU Maritime directive, are likely to face existential challenges. “Its effects are being felt by the industry even now,” he says.

However, for Mr Saverys, the biggest game changer is the Chinese government determining that green fuels are strategic for its economy and their development will be prioritised. “It was behind the curve and it is now going faster than the rest of the world.”

His clarion call to vessel operators is to invest heavily in the energy transition now.

“We have all generated substantial profits over the past few years. We need to invest a meaningful portion of these earnings in the energy transition, whether it is green technology or molecular solutions. I often hear excuses like ‘The regulations aren’t clear yet’ or ‘I’m waiting for subsidies’. The simple truth is we cannot afford to let these considerations delay action. Or to put it more starkly: we need to just do it.”

When challenged on what ‘meaningful investment’ entails, he says it is somewhere between 10% and 50%. “Apart from the dividends we have paid and will pay, we reinvest all available funds in the energy transition. We have US$3.2Bn worth of ships on order. We are all in.”

Riviera’s Maritime Decarbonisation Conference, Europe 2024 will be held in Amsterdam, 24-25 September 2024. Click here for more information on this industry-leading event.