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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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Thursday, 02 January 20
SULPHUR 2020 COMPENDIUM - HOW ARE INDIVIDUAL PORT STATES EXPECTED TO REACT? - STANDARD CLUB
KNOWLEDGE TO ELEVATE
With the new sulphur limits soon to be in force, Standard Club has been investigating the ways in which certain jurisdict ...
Monday, 30 December 19
AUSTRALIAN MINERS HIT BY LOWEST THERMAL COAL PRICE IN MORE THAN A DECADE - THE GUARDIAN
Australian coal exporters have experienced the biggest annual drop in thermal coal prices in more than a decade during 2019, raising doubts about i ...
Monday, 30 December 19
INDIA'S COAL IMPORTS RISE 4% TO 161.43 MT IN APRIL-NOVEMBER 2019 - PTI
The country’s coal imports registered an increase of 4.4 per cent to 161.43 million tonnes (MT) in the April-November period of the ongoing f ...
Sunday, 29 December 19
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Sunday, 29 December 19
IMO 2020 COMPLIANCE: IT'S UP TO US TO BE GOOD CITIZENS - IBIA
One of the concerns around implementation of the 0.50% sulphur limit has been, and continues to be, the need for effective enforcement to ensure a ...
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Showing 1216 to 1220 news of total 6871 |
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- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Australian Coal Association
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- The University of Queensland
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Chamber of Mines of South Africa
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- ASAPP Information Group - India
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
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