The urea costs for M/E selective catalytic reduction systems when sailing in NECAs can be significant, especially for larger Main Engines.
Do you think that there is ground to pass these costs to the Charterers in the case of a timecharter?
I find this topic quite interesting.
Let’s discuss the cost breakdown of running a vessel:
There are two main components to consider:
- Routine running costs: These are the expenses that occur daily and are unaffected by specific voyages. Examples include crew wages, victualling, lubricants, spares/stores, and insurance.
- Voyage costs: These costs primarily depend on a specific voyage. They include expenses such as bunkers, port disbursements, tug hire, pilot costs, canal dues, and so on.
In a time charter party, the charterer uses the ship for a specific trip or a predetermined period. Generally the charterer covers the voyage costs of a time chartered vessel.
Let’s assume a time chartered vessel equipped with selective catalytic reduction system in the M/E and D/Gs.
If it operates within a NECA (Tier III) area, based on the charterer’s instructions, compliance with the Tier III Regulations specific to that sailing area requires the operation of a selective catalytic reduction system, which necessitates urea consumption.
Therefore, it is evident that the urea consumption costs should be considered as voyage costs and should be borne by the charterer under a time charter party.
It’s worth noting that urea consumption costs are not trivial. For example, in a VLCC equipped with a MAN ES 7G80 Main Engine and a low-pressure selective catalytic reduction system, the average urea consumption for the Main Engine is around 300 liters per hour.
Considering an average urea price of 0.9 USD per liter, the associated cost would amount to approximately 270 USD per hour or 6,480 USD per sailing day for the Main Engine only.
Therefore, it is advisable to take the above into account when drafting time charter parties ].