DHT Holdings is splashing out $25m to outfit the last of its scrubber-less, eco-designed VLCCs with exhaust gas cleaning systems.
The New York-listed tanker owner said in its second quarter earnings release that it was sending eight of its ships to the yard for scrubbers, with work beginning in the fourth quarter of this year and finishing up in the first quarter of 2021.
“The combination of lower cost and the current higher fuel spreads makes this a compelling investment,” the company said. “The investment will be funded with liquidity at hand hence no new debt will be issued.”
DHT owns 24 VLCCs, 15 of which are outfitted with scrubbers with one pending installation, according to Clarksons.
The move comes as the ailing VLCC sector is seeing four tiers form as the market struggles to improve.
An eco-designed VLCC with a scrubber earned an average of $38,838 per day in the spot market for the week ending 5 August, Clarksons said in its weekly report.
A VLCC without an eco design, but outfitted with a scrubber, earned $32,051 per day that same week, while a scrubber-less eco-designed VLCC earned $26,653 per day.
A VLCC without a scrubber and without an eco design earned the least, at $15,667 per day, the broker said.
All but seven of DHT's ships trade in the spot market, with the 299,999-dwt DHT Ospery (built 2016) set to begin a five-year charter this month at $37,000 per day with options to extend a year at $40,000 per day and another year at $45,000 per day.
For the quarter, DHT posted a $10m profit, up from the $800,000 profit recorded in the second quarter of 2021.
The modest profit was followed by three consecutive quarterly losses.
In the most recent quarter, its fleet brought in $99.2m in revenue versus $66m for the same period last year, as its ships earned an average rate of $24,300 per day.
For the third quarter, DHT said it has booked 68% of its available VLCC days at an average of $23,600 per day.
The company said Covid-19 lockdowns in China were continuing to impact oil demand and that the reshuffling of the global oil market following Russia's invasion of Ukraine was affecting the supply of oil.
But like many in the market, it expects demand to rise, while ship supply stays low.
“The world fleet is rapidly ageing at a time when ordering of new ships is very limited,” the company said.
“It is not unthinkable for the fleet to shrink at a time when demand for transportation is expected to recover, likely creating a rewarding environment for large tankers.”
The ships set to undergo scrubber installation are the 319,713-dwt DHT Colt (built 2018), 299,900-dwt DHT Jaguar (built 2015), 299,629-dwt DHT Leopard (built 2016), 299,629-dwt DHT Lion (built 2016), 299,629-dwt DHT Panther (built 2016), 299,900-dwt DHT Puma (built 2016), 319,713-dwt DHT Stallion (built 2018) and the 299,629-dwt DHT Tiger (built 2017).
