With so many success stories under its belt, you’d be forgiven for thinking it was all plain sailing in the Scandinavian market, but that’s not necessarily the case
Swedish clean tech innovators Lean Marine – located in Gothenburg which hosts the largest port in Scandinavia – has seen the number of Scandinavian tanker owners using its propulsion optimisation hardware skyrocket in recent years. In fact, Scandinavian tanker owners now represent its largest customer group.
Since being introduced to the market in 2014, the FuelOpt propulsion optimisation system – which comprises hardware installed on the bridge that makes use of existing sensors in the engine machinery to automate and optimise the propulsion line – has been installed on 175 ships for more than 40 different shipowners.
Stenersen, Team Tankers (which acquired tanker owner and operator Laurin Maritime in 2018), Utkilen, Ektank, Älvtank, Veritas Tankers and Wisby Tankers are just some of the Scandinavian tanker operators that are reaping the benefits associated with the FuelOpt system.
Laurin Maritime, a Swedish owner and operator of 16 45-50,000 dwt IMO II/III chemical tankers, was the first to adopt the technology, with the decision taken by the then chief executive Mikael Laurin, who is now chief executive of Lean Marine.
Mr Laurin says: “During my days at Laurin Maritime, I came across the technology FuelOpt, a propulsion optimisation system that automates fuel saving. My initial take on the technology was that of a sceptical tanker owner, and I questioned if the product really worked and if so, why this had not done already or by someone else. But the estimated saving levels were encouraging and eventually Laurin
Maritime became one of Lean Marine’s first customers in 2014. We initially installed it on six vessels, and some time thereafter implemented FuelOpt on the full fleet of medium-range oil and chemical tankers. Installation was completed in few days, with no off-hire time required. We were very happy with the fuel saved and operational efficiencies gained resulting in reduced carbon emissions.”
Lean Marine offers propulsion optimisation through automation via the FuelOpt system to enhance operational efficiency. It also offers performance management and reporting capabilities through the transformation of big data into meaningful information via their smart software system Fleet Analytics to improve operational execution. FuelOpt and Fleet Analytics provide shipowners and operators with the ability to obtain knowledge and continuously improve operational efficiency on a vessel and fleet level to maintain a competitive and environmentally sustainable business.
“We were very happy with the fuel saved and operational efficiencies gained resulting in reduced carbon emissions”
The practicalities of the FuelOpt system are simple. The bridge crew activates the system with the push of a button from the control panel on the bridge. Through this intuitive control panel, they can set the commands for power, fuel consumption and/or speed, or a combination. Once the system is activated, it controls the propulsion line in real time and makes sure that propulsive power is constantly optimised based on this command. This removes costly variations in speed and power to reduce excess fuel consumption and emissions, caused by changing sea states, weather conditions, and human operational factors.
To achieve the maximum efficiency on vessels with a controllable pitch propeller, FuelOpt acts as a dynamic tuning system to ensure that the engine and propeller operate at optimal conditions. The system achieves this by controlling the propeller’s pitch and the main engine RPM separately to produce the maximum amount of propeller thrust with the minimum amount of power, hence significantly less energy is wasted. Additionally, FuelOpt adds an extra layer of operational safety by avoiding the risk of overload on the engine system and propulsion line.
With FuelOpt in operation, up to 15% direct fuel savings and corresponding emission reductions are possible depending on the type of propulsion, trade patterns and existing system settings for the vessel. As an example, one client of Lean Marine operating a 14,000-dwt product/chemical tanker with an average consumption of 15.6 tonnes per day, saved more than 600 tonnes of fuel annually by using FuelOpt. This translates into more than 2M kilogrammes of CO2 emissions saved per year.
To-date, across all customers and vessel equipped with FuelOpt, Lean Marine cites savings achieved of more than 162M kilogrammes of CO2 per year.
At one time, the undoubted centre of Danish tanker shipping was AP Moller. The public company has since spun off its tanker division into the privately-owned Maersk Tankers, which has very rapidly found its feet as a tanker pool and commercial manager. In March 2020, the company announced that it will take over the commercial management of 27 tankers from Team Tankers and establish two new pools.
Team Tankers commented that the move will allow it access to Maersk Tankers’ digital approach to commercial management, with its strong emphasis on reducing CO2 emissions and improving partner returns. For Maersk Tankers, the agreement will increase its fleet under management to more than 225 vessels across a range of different segments, while cementing its position as one of the market leaders in the medium-range (MR) segment, where it manages a pool jointly with Cargill.
As part of the agreement, employees within the operations, chartering and bunker management teams will transfer from Team Tankers International to Maersk Tankers’ offices in Copenhagen, Houston, and Singapore. “The co-operation is a further step towards building scale for our tanker fleet,” said Team Tankers International president and chief executive officer Hans Feringa. “We believe the timing of the co-operation is good as the medium- and longer-term outlook for the product and chemical tanker market is positive, and the orderbook is at a historically low level,” said Mr Feringa. “We look forward to working with Maersk Tankers to achieve both companies’ goals.”
“The medium- and longer-term outlook for the product and chemical tanker market is positive”
Out of the 27 tankers, nine are 13,000 dwt, four are Flexis (25,000 dwt) and 14 are MR tankers between 46-49,000 dwt. By taking over the vessels, Maersk Tankers enters two new segments in which it establishes two new pools. According to Maersk Tankers, this allows the company to serve customers with greater flexibility, while expanding its products to pool partners.
“The co-operation between Team Tankers International and Maersk Tankers is powerful, and we look forward to welcoming our new colleagues. With this, we are taking yet another step to deliver our strategy of building scale through partnerships forged by the common goal of using digitalisation to reduce CO2 emissions and increase partner returns. The growth in capacity means we can offer our customers additional flexibility in transporting their cargoes and improve our returns to existing and new pool partners,” said Maersk Tankers chief investment officer Claus Gronborg.
At the same time, Team Tankers transferred its technical teams to a new joint venture with V.Group. Team Tankers will own 30% and V.Group 70% of the joint venture, Dania Ship Management AS Denmark, which will continue to be based in Copenhagen, although additional parties may join in the future. The joint venture will benefit both parties by combining the valuable technical and crewing organisation skills from Team Tankers together with V.Group’s global reach and expertise.
The collaboration will give Team Tankers access to the ShipSure IT system developed by V.Group that will enhance safety and efficiency, and the joint venture will also provide procurement advantages to Team Tankers from the scale of V.Group. Team Tankers will transfer its in-house managed fleet, consisting of 10 MR tankers and two 25,000 dwt coated tankers, to Dania Ship Management, along with its onshore technical organisation and seafaring expertise. Team Tankers already has 21 ships with V.Group for technical management.
Separately, the board of Team Tankers International announced its intention to delist the company’s common shares from the Oslo Stock Exchange. This was in agreement with 90% of the shareholders, effectively taking the company into private ownership.
While Team Tankers was contemplating leaving the Oslo Stock Exchange, Hafnia Limited chief executive officer Mikael Skov was applying for admission to trading on the Oslo Stock Exchange by a transfer of Hafnia’s current listing on Oslo Axess to the Oslo Stock Exchange. Hafnia joined the Oslo Stock Exchange on 31 April 2020 and it is a credit to the rate that Mr Skov has fast-tracked Hafnia from its successful completion of its Pre-Listing Private Placement of US$230M in November 2019. The placement won Mr Skov many plaudits and Marine Money named it Equity Private Placement – Deal of the Year 2019.
OSI leads the way
Hafnia’s arrival on the Oslo Stock Exchange highlights how the Norwegian exchange has become the largest lister of shipping companies in Europe, not just Scandinavia. The Oslo Stock Exchange Shipping Index (OSI) consists of 28 shipping companies in total. Global tanker giant Frontline dominates the OSI, with a market cap several times the size of its compatriots. Another noticeable company is Okeanis Eco Tankers, which was the subject of an arbitration over the ownership of four VLCCs.
The decision to take the dispute to arbitration has its roots in the launch of an eco-tanker company in 2018. Okeanis Eco Tankers was launched on the Oslo Stock Exchange in July 2018, raising US$100M in an IPO. The company was sponsored by the Alafouzos family of Greece, which operates through the private company Kyklades Maritime Corporation.
The aim of the new public company was to take advantage of the pro-scrubber sentiment ahead of the IMO sulphur cap and operate several scrubber-equipped eco-tankers ordered in the Far East by Alafouzos family-associated companies. The four disputed VLCCs were part of the new Okeanis Eco Tankers’ fleet.
In February 2018, the four VLCCs – Nissos Rhenia, Nissos Antiparos, Nissos Santorini, and Nissos Despotiko – were sold to 100% owned subsidiaries of Ocean Yield, which had agreed to acquire the four VLCC crude tankers with 15-year bareboat charters (2034) to companies owned and guaranteed by Okeanis Marine Holdings. Each VLCC came with a five-year sub-charter to Koch Shipping of Singapore.
According to Ocean Yield, the gross purchase price was US$83.75M per vessel and the net cash purchase price was US$74.25M, after a seller’s credit of US$9.50M. Ocean Yield also announced at the time that Okeanis Marine Holdings would have certain options to acquire the vessels during the charter period, with the first purchase option exercisable after seven years.
“The aim of the new public company was to take advantage of the pro-scrubber sentiment”
In October 2019, Okeanis Eco Tankers Corp (OET) announced that each of the four single-purpose companies wholly owned by OET that each operated one VLCC on long-term bareboat charter from Ocean Yield had given notice to Ocean Yield requiring the sale of those four VLCCs back to the single-purpose companies for 103% of the VLCC’s cumulative outstanding lease amount, plus certain breakage fees.
Ocean Yield immediately disputed the single-purpose companies’ right to require such sales under the bareboat charters, disagreeing that the conditions for exercising the options had been fulfilled, and the matter was therefore referred to arbitration. The arbitration tribunal decided that Okeanis did not have the right to exercise such options to repurchase the VLCCs under the lease agreements.
Tanker Shipping Leaders webinar, 14:00-14:45 Friday 26 June. Join Hafnia chief executive Mikael Skov and Scorpio USA president Robert Bugbee in discussing how the tanker market is positioning itself to withstand today’s unprecedented trading challenges.