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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, 25 December 19
COVER FOR WAR AND TERRORISM RISKS, AND COVER IN RESPECT OF BIOLOGICAL AND BIO-CHEMICAL WEAPONS - 2020 POLICY YEAR: AMERICAN CLUB
KNOWLEDGE TO ELEVATE
This Circular describes the arrangements which have been made to provide special cover for war and terrorism risks, and c ...
Wednesday, 25 December 19
EXHAUST GAS CLEANING SYSTEMS (SCRUBBER) GUIDANCE - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
In a few weeks, IMO’s ‘global sulphur cap’ will take effect. The permitted levels of SOx in ship emissi ...
Wednesday, 25 December 19
INDONESIAN BUKIT ASAM TARGETS TO MINE 30 MLN T OF COAL IN 2020 - REUTERS
Indonesian state-owned coal miner PT Bukit Asam targets to produce around 30 million tonnes of coal in 2020, compared with an estimate of 28.5 mill ...
Wednesday, 25 December 19
SHIPPING MARKET INSIGHT - INTERMODAL
As another year in the shipping industry is coming to an end, it is interesting to look at the dry bulk and tanker markets and how these performed ...
Monday, 23 December 19
VLSFO PRICING & AVAILABILITY NEEDS CAREFUL WATCHING - INTEGR8 FUELS
As we approach January 1st 2020 , the VLSFO price premium to HSFO has widened considerably
We are clearly well into the IMO 2020 transition; ch ...
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Showing 1226 to 1230 news of total 6871 |
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- Singapore Mercantile Exchange
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Australian Coal Association
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
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