keeps you connected across the coal world

Submit Your Articles
We welcome article submissions from experts in the areas of coal, mining, shipping, etc.

To Submit your article please click here.

International Energy Events

WTI Crude Oil

BRENT Crude Oil

Search News
Latest CoalNews Headlines
Wednesday, 29 August 18

The challenges introduced by the global sulphur cap are not exclusively technical. The new limits are likely to impact contracts and charterparties. Forward planning now could help to avoid painful disputes in the future.
Time charterparties will require particularly close attention, with more challenges anticipated for vessels already in long-term charterparties that span the enforcement date of 1 January 2020. Unfortunately, there is no single “magic” charterparty clause to deal with all of the issues that might arise. All bunker clauses will almost certainly need to be reviewed but other clauses might also need to be considered, depending upon the chosen method of compliance. Below, we look at some of the issues that we anticipate will more commonly arise.
Carriage of non-compliant fuel
It is likely that a prohibition on the carriage of non-compliant fuels will come into force on 1 March 2020 for vessels not fitted with Exhaust Gas Cleaning Systems (“EGCS” or “scrubbers”). Non-compliant fuels will have to be removed to avoid fines or the vessel being detained. Assuming such fuel is not consumed before 01.01.2020, who is obliged to arrange or pay for the removal of such fuel will depend upon the wording of the charterparty, so it will be important for this to be considered at the drafting stage. There may be significant logistical difficulties in removing non-compliant fuel and it is likely that the re-sale value will be less than the original purchase price. Issues might also arise over who owns the non-compliant fuel and who therefore has the right to remove it.
Definition of ‘high sulphur’ and low sulphur’
At the moment, vessels burn either ‘low sulphur’ (0.1%S max) fuel in ECAs or ‘high sulphur’ (3.5%S max) fuel outside ECAs. In 2020, there will be three sulphur types (<0.1%S, <0.5%S and >0.5%S). This raises the question: what will ‘low sulphur’ mean in 2020? Will it be <0.1% or <0.5%? It is therefore advisable to move away from the use of terms such as ‘high’ and ‘low’ sulphur but instead to specify the exact sulphur limit of fuel e.g. <0.5% sulphur content; <0.1% sulphur content etc.
Bunkers on redelivery (“BOR”)
When a vessel is redelivered by a time charterer, the charterparty usually requires that the vessel is redelivered with approximately the same quantities of ‘high sulphur’ and ‘low sulphur’ fuel as on board at delivery. The owner will usually be required to buy this fuel back at a certain price (often the same price as at delivery). ‘High sulphur’ fuel bought from the charterer at redelivery will have little value to the owner unless the vessel is fitted with scrubbers. BOR requirements in the charterparty might mean that the charterer can redeliver the vessel with insufficient compliant fuel on board to reach a bunker port. Therefore, Owners might want to ensure that BOR clauses are adjusted accordingly.
Bunker quality clause
Some bunker quality clauses require the charterer to provide fuel that complies with the international quality standard ISO 8217. However, not all fuels are covered by ISO 8217 (e.g. hybrids) so the bunker quality clause might need to be amended to ensure that the charterer is obliged to provide fuel of the correct specification, which is safe and suitable for the vessel, and in compliance with MARPOL and any other relevant regulations.
Fuel availability
Although it is anticipated that there will be enough compliant fuel available to meet demand, it may be geographically fragmented. So a vessel might trade in areas where compliant fuel cannot be supplied or even be unable to trade in such areas, such that trading limit clauses might need to be reviewed. The same is likely to be true for new hybrids/blends, and LNG is already known to have limited availability.
Bunker tank cleaning
Bunker tank cleaning will be needed if switching from heavy fuels to hybrid/blends/ distillates. Tank cleaning might also be needed before switching between different products, depending upon the advice given by the relevant fuel provider. Cleaning products will be needed, waste will need to be disposed of and time might be lost during the cleaning. Responsibility for all of this will depend upon the charterparty wording.
Performance warranties
Different fuels have different calorific values and energy densities. The performance of the vessel could be affected by any of the chosen compliance methods so the performance warranties might need to be amended. Owners should check with engine manufacturers.
Costs of installing an EGCS
It is unlikely that existing charterparties will expressly say who is to pay for a vessel to have an EGCS installed. If the charterer is likely to benefit in fuel cost savings then there may be scope for a commercial agreement as to who will pay.
Can owners be compelled to install an EGCS?
The Court of Appeal considered this type of issue in the Elli and the Frixos [2008] 2 Lloyd’s Rep. 119. In 2005, new MARPOL regulations came into force, which made it unlawful for any ship to carry fuel oil as cargo unless it was either double-hulled or double-sided. Expensive modifications would be required to the ships in question to allow them to comply with the new regulations. The Court found that the owners were in breach of certain clauses in the particular charterparties for not having carried out the necessary modifications, namely; a warranty relating to compliance with MARPOL and a clause requiring the vessel to have on board documents required by any applicable law to allow the vessels to trade. Installation of an EGCS is only one option for compliance and, as things currently stand, it will be possible to meet the new sulphur requirements without installing an EGCS. Therefore, the absence of an EGCS on a vessel will not necessarily put the vessel or its owner in breach of MARPOL or impact on the vessel’s documentation. Hence it seems likely that the Elli and the Frixos will not apply but it will depend on the facts of the individual case.
Fines for non-compliance
In the first instance, the owner will be responsible for paying any incurred penalties but they might be entitled to be indemnified by the charterer depending upon the charterparty terms. It might be less clear who will be responsible for lost time and costs if the vessel is detained by port state control.
Looking ahead
Early consideration of the above issues will be key to avoiding future headaches. The solutions will not be the same in every case and will be best considered in the context of the trade that the vessel is going to perform. Additional issues could arise as technologies develop and as we get an idea about availability of compliant fuels etc, which might necessitate further review of charterparties from time to time.
Source: North P&I Club

If you believe an article violates your rights or the rights of others, please contact us.

Recent News

Thursday, 06 December 18
Capesize There is cautious optimism for the Capes, with healthier volumes and improving rates in the Pacific. West Australia round is gradually ...

Thursday, 06 December 18
EIA expects total U.S. coal consumption in 2018 to fall to 691 million short tons (MMst), a 4% decline from 2017 and the lowest level since 1979. U ...

Thursday, 06 December 18
The global shipping sector outlook remains negative reflecting the demand-side risks of protectionism and slower economic growth, Fitch Ratings say ...

Thursday, 06 December 18
Foreign shipping companies will find it easier to establish wholly-owned subsidiaries in China thanks to a revised regulation due to take effect on ...

Wednesday, 05 December 18
WORLD COAL PRICES FALL, WITH INDONESIA BENCHMARK FOR DECEMBER, ENDING AT LOWEST SINCE JUNE 2018 The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...

   1 2 3 4 5   
Showing 1 to 5 news of total 5332
News by Category
Popular News
Total Members : 25,664
User ID
Remember Me
By logging on you accept our TERMS OF USE.
Forgot Password
Our Members Are From ...

  • Maersk Broker
  • Indonesia Power. PT
  • Panama Canal Authority
  • Heidelberg Cement - Germany
  • IMC Shipping - Singapore
  • Straits Asia Resources Limited - Singapore
  • Holcim Trading Pte Ltd - Singapore
  • Clarksons - UK
  • OCBC - Singapore
  • Sindya Power Generating Company Private Ltd
  • Jindal Steel & Power Ltd - India
  • Star Paper Mills Limited - India
  • Parry Sugars Refinery, India
  • Attock Cement Pakistan Limited
  • Gujarat Sidhee Cement - India
  • Rashtriya Ispat Nigam Limited - India
  • CoalTek, United States
  • Idemitsu - Japan
  • CESC Limited - India
  • Siam City Cement PLC, Thailand
  • Platou - Singapore
  • Indian Oil Corporation Limited
  • Arutmin Indonesia
  • Alfred C Toepfer International GmbH - Germany
  • Britmindo - Indonesia
  • Bank of Tokyo Mitsubishi UFJ Ltd
  • The India Cements Ltd
  • Grasim Industreis Ltd - India
  • EIA - United States
  • Vale Mozambique
  • UBS Singapore
  • Gujarat Electricity Regulatory Commission - India
  • Argus Media - Singapore
  • Bangladesh Power Developement Board
  • Coaltrans Conferences
  • Ministry of Transport, Egypt
  • GVK Power & Infra Limited - India
  • Credit Suisse - India
  • Cardiff University - UK
  • Deloitte Consulting - India
  • Jorong Barutama Greston.PT - Indonesia
  • Indorama - Singapore
  • NTPC Limited - India
  • Barclays Capital - USA
  • GB Group - China
  • Krishnapatnam Port Company Ltd. - India
  • Bank of America
  • JPMorgan - India
  • Thiess Contractors Indonesia
  • The Treasury - Australian Government
  • Coalindo Energy - Indonesia
  • Eastern Coal Council - USA
  • Kaltim Prima Coal - Indonesia
  • Eastern Energy - Thailand
  • TNPL - India
  • Tata Power - India
  • Uttam Galva Steels Limited - India
  • Mercuria Energy - Indonesia
  • KPMG - USA
  • bp singapore
  • Bhoruka Overseas - Indonesia
  • Coal and Oil Company - UAE
  • Independent Power Producers Association of India
  • Makarim & Taira - Indonesia
  • globalCOAL - UK
  • Vedanta Resources Plc - India
  • ACC Limited - India
  • Xstrata Coal
  • APGENCO India
  • U S Energy Resources
  • Thomson Reuters GRC
  • Mintek Dendrill Indonesia
  • Mitsui
  • CNBM International Corporation - China
  • Kapuas Tunggal Persada - Indonesia
  • Adaro Indonesia
  • Bank of China, Malaysia
  • Asmin Koalindo Tuhup - Indonesia
  • Energy Link Ltd, New Zealand
  • MEC Coal - Indonesia
  • GHCL Limited - India
  • Gupta Coal India Ltd
  • Surastha Cement
  • Merrill Lynch Commodities Europe
  • Kalimantan Lumbung Energi - Indonesia
  • Madhucon Powers Ltd - India
  • Bukit Baiduri Energy - Indonesia
  • Jaiprakash Power Ventures ltd
  • Planning Commission, India
  • Medco Energi Mining Internasional
  • Inco-Indonesia
  • Meenaskhi Energy Private Limited - India
  • SASOL - South Africa
  • Bukit Makmur.PT - Indonesia
  • World Bank
  • Lafarge - France
  • Russian Coal LLC
  • Freeport Indonesia
  • Cargill India Pvt Ltd
  • Noble Europe Ltd - UK
  • LBH Netherlands Bv - Netherlands
  • Enel Italy
  • KPCL - India
  • Globalindo Alam Lestari - Indonesia
  • Binh Thuan Hamico - Vietnam
  • Moodys - Singapore
  • Shree Cement - India
  • Billiton Holdings Pty Ltd - Australia
  • Petrosea - Indonesia
  • Cigading International Bulk Terminal - Indonesia
  • Australian Coal Association
  • ETA - Dubai
  • Sojitz Corporation - Japan
  • ING Bank NV - Singapore
  • Banpu Public Company Limited - Thailand
  • PowerSource Philippines DevCo
  • Chamber of Mines of South Africa
  • Directorate General of MIneral and Coal - Indonesia
  • Coal India Limited
  • Sinarmas Energy and Mining - Indonesia
  • Bahari Cakrawala Sebuku - Indonesia
  • Maruti Cements - India
  • Toyota Tsusho Corporation, Japan
  • ASAPP Information Group - India
  • Asia Cement - Taiwan
  • Trasteel International SA, Italy
  • World Coal - UK
  • Economic Council, Georgia
  • Bayan Resources Tbk. - Indonesia
  • Price Waterhouse Coopers - Russia
  • Interocean Group of Companies - India
  • Standard Chartered Bank - UAE
  • McKinsey & Co - India
  • Rio Tinto Coal - Australia
  • Edison Trading Spa - Italy
  • Ministry of Finance - Indonesia
  • Malco - India
  • Maheswari Brothers Coal Limited - India
  • Neyveli Lignite Corporation Ltd, - India
  • Agrawal Coal Company - India
  • Kartika Selabumi Mining - Indonesia
  • Runge Indonesia
  • Ambuja Cements Ltd - India
  • PNOC Exploration Corporation - Philippines
  • Bulk Trading Sa - Switzerland
  • Mitsubishi Corporation
  • Commonwealth Bank - Australia
  • Karbindo Abesyapradhi - Indoneisa
  • SUEK AG - Indonesia
  • TANGEDCO India
  • Singapore Mercantile Exchange
  • Ceylon Electricity Board - Sri Lanka
  • Ind-Barath Power Infra Limited - India
  • Glencore India Pvt. Ltd
  • Australian Commodity Traders Exchange
  • SRK Consulting
  • Videocon Industries ltd - India
  • Essar Steel Hazira Ltd - India
  • Bharathi Cement Corporation - India
  • Tamil Nadu electricity Board
  • Total Coal South Africa
  • Minerals Council of Australia
  • Thailand Anthracite
  • Mjunction Services Limited - India
  • IHS Mccloskey Coal Group - USA
  • Carbofer General Trading SA - India
  • Oldendorff Carriers - Singapore
  • Central Java Power - Indonesia
  • Rudhra Energy - India
  • Posco Energy - South Korea
  • Peabody Energy - USA
  • Formosa Plastics Group - Taiwan
  • Cement Manufacturers Association - India
  • Ernst & Young Pvt. Ltd.
  • Kobe Steel Ltd - Japan
  • Merrill Lynch Bank
  • Maharashtra Electricity Regulatory Commission - India
  • HSBC - Hong Kong
  • Metalloyd Limited - United Kingdom
  • Gresik Semen - Indonesia
  • Larsen & Toubro Limited - India
  • Thermax Limited - India
  • ICICI Bank Limited - India
  • Samtan Co., Ltd - South Korea
  • Platts
  • PetroVietnam
  • Mercator Lines Limited - India
  • CIMB Investment Bank - Malaysia
  • Arch Coal - USA
  • IOL Indonesia
  • Vijayanagar Sugar Pvt Ltd - India
  • Sakthi Sugars Limited - India
  • Qatrana Cement - Jordan
  • Goldman Sachs - Singapore
  • Cosco
  • SGS (Thailand) Limited
  • IBC Asia (S) Pte Ltd
  • Karaikal Port Pvt Ltd - India
  • Ministry of Mines - Canada
  • International Coal Ventures Pvt Ltd - India
  • IEA Clean Coal Centre - UK
  • South Luzon Thermal Energy Corporation
  • Salva Resources Pvt Ltd - India
  • Reliance Power - India
  • Mechel - Russia
  • Dong Bac Coal Mineral Investment Coporation - Vietnam
  • Romanian Commodities Exchange
  • KEPCO - South Korea
  • OPG Power Generation Pvt Ltd - India
  • Permata Bank - Indonesia
  • Petrochimia International Co. Ltd.- Taiwan
  • BNP Paribas - Singapore
  • Orica Mining Services - Indonesia
  • McConnell Dowell - Australia
  • Gujarat Mineral Development Corp Ltd - India
  • Sree Jayajothi Cements Limited - India
  • GNFC Limited - India
  • Timah Investasi Mineral - Indoneisa
  • Miang Besar Coal Terminal - Indonesia
  • Maybank - Singapore
  • Barasentosa Lestari - Indonesia
  • Pendopo Energi Batubara - Indonesia
  • Parliament of New Zealand
  • Wood Mackenzie - Singapore
  • Chettinad Cement Corporation Ltd - India
  • Orica Australia Pty. Ltd.
  • PetroVietnam Power Coal Import and Supply Company
  • Intertek Mineral Services - Indonesia
  • Latin American Coal - Colombia
  • Power Finance Corporation Ltd., India
  • Bangkok Bank PCL
  • Pinang Coal Indonesia
  • Savvy Resources Ltd - HongKong
  • Tanito Harum - Indonesia
  • Central Electricity Authority - India
  • Indika Energy - Indonesia
  • Aditya Birla Group - India
  • Manunggal Multi Energi - Indonesia
  • PLN Batubara - Indonesia
  • Leighton Contractors Pty Ltd - Australia
  • Bhatia International Limited - India
  • Port Waratah Coal Services - Australia
  • Indo Tambangraya Megah - Indonesia
  • CCIC - Indonesia
  • Indonesian Coal Mining Association
  • Siam City Cement - Thailand
  • The State Trading Corporation of India Ltd
  • Borneo Indobara - Indonesia
  • PTC India Limited - India
  • KOWEPO - South Korea
  • Wilmar Investment Holdings
  • SMG Consultants - Indonesia
  • New Zealand Coal & Carbon
  • Fearnleys - India
  • Marubeni Corporation - India
  • Mitra SK Pvt Ltd - India
  • Vizag Seaport Private Limited - India
  • Infraline Energy - India
  • Altura Mining Limited, Indonesia
  • UOB Asia (HK) Ltd
  • EMO - The Netherlands
  • Xindia Steels Limited - India
  • Thriveni
  • GAC Shipping (India) Pvt Ltd
  • Georgia Ports Authority, United States
  • Malabar Cements Ltd - India
  • Sical Logistics Limited - India
  • Directorate Of Revenue Intelligence - India
  • Electricity Generating Authority of Thailand
  • Ince & co LLP
  • Coal Orbis AG
  • JPower - Japan
  • Filglen & Citicon Mining (HK) Ltd - Hong Kong
  • WorleyParsons
  • Coeclerici Indonesia
  • Kobexindo Tractors - Indoneisa
  • Adani Power Ltd - India
  • Jatenergy - Australia
  • London Commodity Brokers - England
  • Simpson Spence & Young - Indonesia
  • TNB Fuel Sdn Bhd - Malaysia
  • PLN - Indonesia
  • Kumho Petrochemical, South Korea
  • BRS Brokers - Singapore
  • Kohat Cement Company Ltd. - Pakistan
  • Riau Bara Harum - Indonesia
  • VISA Power Limited - India
  • Indogreen Group - Indonesia
  • Core Mineral Indonesia
  • Bhushan Steel Limited - India
  • MS Steel International - UAE
  • India Bulls Power Limited - India
  • Indian School of Mines
  • European Bulk Services B.V. - Netherlands
  • Humpuss - Indonesia
  • Asian Development Bank
  • TeaM Sual Corporation - Philippines
  • Vitol - Bahrain
  • Cemex - Philippines
  • Lanco Infratech Ltd - India
  • Sucofindo - Indonesia
  • Anglo American - United Kingdom
  • Coastal Gujarat Power Limited - India
  • Samsung - South Korea
  • Dalmia Cement Bharat India
  • NALCO India
  • RBS Sempra - UK
  • GMR Energy Limited - India
  • Africa Commodities Group - South Africa
  • Dr Ramakrishna Prasad Power Pvt Ltd - India
  • Kideco Jaya Agung - Indonesia
  • Global Coal Blending Company Limited - Australia
  • Thai Mozambique Logistica
  • Berau Coal - Indonesia
  • Deutsche Bank - India
  • ANZ Bank - Australia
  • Aboitiz Power Corporation - Philippines
  • Truba Alam Manunggal Engineering.Tbk - Indonesia
  • Geoservices-GeoAssay Lab
  • Tata Chemicals Ltd - India
  • Inspectorate - India
  • Renaissance Capital - South Africa
  • Bukit Asam (Persero) Tbk - Indonesia
  • J M Baxi & Co - India
  • The University of Queensland
  • Offshore Bulk Terminal Pte Ltd, Singapore
  • DBS Bank - Singapore
  • Antam Resourcindo - Indonesia
  • White Energy Company Limited
  • Shenhua Group - China
  • Japan Coal Energy Center