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Monday, 16 September 19
SCRUBBERS AND FUEL PROFIT SHARE CLAUSES - CLYDE&CO
 From 1 January 2020, Regulation 14 of MARPOL Annex VI provides that the sulphur content in fuel oil used on board ships shall be reduced from a maximum limit of 3.5% to a maximum limit of 0.5% (the limit in emission control areas remains at 0.1%). Regulation 4 of MARPOL Annex VI permits equivalent methods of compliance provided such methods are at least as effective in terms of emissions reductions.
Whilst it is up to individual port state control and flag states to implement and enforce MARPOL Annex VI, the use of Exhaust Gas Cleaning Systems (“Scrubbers”) is widely expected to be a legitimate option as an equivalent method of compliance.
The anticipated key financial benefit for Owners that have invested or are considering in investing in Scrubber-fitted vessels, is that there will be substantial savings in the cost of trading the vessels due to the expected price differential between fuels with a high sulphur content and ‘compliant’ fuels with a low sulphur content. For example, this week press reports suggest that the fuels currently being traded result in a price differential of about $150-$250 per mt between 0.5% sulphur fuels and high sulphur fuels and predict a price differential of over $400 per mt in 2020 (the differential between high sulphur fuels and 0.1% sulphur fuels is greater).1
Owners have various options available to them in terms of benefitting from the expected fuel differential for Scrubber-fitted vessels.
For example, if Owners are spot trading their Scrubber-fitted vessels, typically it is Owners that pay for the fuel so Owners will therefore benefit from the lower costs of burning high sulphur fuels. If Owners are time chartering their vessel, typically under a time charterparty Charterers will pay for the fuel so Charterers will therefore benefit from the lower costs of burning high sulphur fuel. In consideration for providing this benefit under a time charter, Owners may simply demand a higher charter rate or a ‘scrubber premium’ on the market charter rate.
Alternatively, there are a number of creative ways in which Owners and Charterers can share the benefit of the expected or actual fuel savings for Scrubber-fitted vessels. One of these ways is through implementing a fuel profit-sharing scrubber clause (“FPS Scrubber Clause”) into the time charterparty. It has been reported in the press recently that these are being used with good effect by some owners to keep charter rates competitive.2
There are a number of different legal, operational and commercial factors which will have to be considered in negotiating and drafting FPS Scrubber Clauses and so it is unlikely there is a one-size fits all FPS Scrubber Clause that can be applied across the market. By way of example, the ongoing delay to an intended Bimco industry-standard scrubber clause is illustrative of the complexity and competing interests at play. For example, if owners are bearing the majority of the capital risk and operational risk of the Scrubber, then should owners be entitled to the majority of the benefit of the fuel differential? In the event that the Scrubber is not operational for technical or regulatory reasons, who is responsible for providing compliant low sulphur fuel?
An FPS Scrubber Clause is an innovative way for Owners and Charterers to allocate the anticipated risks and benefits of complying with the implementation of MARPOL Annex VI from 1 January 2020 through the use of Scrubbers. James Kennedy and Fanos Theophani have been involved in the negotiation and drafting of FPS Scrubber Clauses and are well placed to advise and assist the market on these issues.
1 “Songa Container pioneers profit-sharing scrubber clause” Tradewinds 30 August 2019
2 “IMO2020: RAI 2020 Marine Fuel Availability Study Re-Boot” Ship and Bunker 3 September 2019, and “IMO2020: Rollercoaster HSFO Prices Send Singapore VLSFO Premiums Under $85/mt” Ship and Bunker 30 August 2019
Source: Clyde&Co
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Wednesday, 11 September 19
THE INDONESIAN COAL PRICE REFERENCE FELL HEAVILY IN SEPTEMBER
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 11 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
We are going through one of the rare instances where we see optimism building in the dry bulk industry and, as the momentum is still going, the bel ...
Monday, 09 September 19
INDIAN COMPANIES READY TO INVEST IN DEVELOPMENT OF NEW COAL DEPOSITS IN RUSSIA'S YAKUTIA - TASS
Indian metallurgical companies, which received trial batches of coal from Kolmar mining company, are satisfied with the quality of the products and ...
Monday, 09 September 19
COLOMBIA COAL OUTPUT DOWN YEAR-ON-YEAR IN 2ND QUARTER - REUTERS
Colombia, the world’s fifth-largest exporter of coal, produced 18.9 million tonnes of the fuel in the second quarter, down 4.5% from the same ...
Monday, 09 September 19
ULTRAMAX: ASIA A 58,000-TONNER FIXED DELIVERY FUZHOU, VIA INDONESIA, REDELIVERY CHINA, AT $12,800
Capesize
0px The market reached new heights this week as the 5TC topped $38,014, a level not seen in the sector since 2013. Fridays 5TC closed ...
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Showing 1341 to 1345 news of total 6871 |
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- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- The University of Queensland
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
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