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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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Tuesday, 17 December 19
AUSTRALIA ENERGY MARKET OPERATOR TURNS SCROOGE ON COAL LOBBY: RUSSELL
Australia, which vies with Indonesia for the title of the world’s largest coal exporter, is planning for an electricity future where use of t ...
Tuesday, 17 December 19
BACK TO FUTURE FOR BUSH AS AUSTRALIA CONSIDERS MOVING AWAY FROM COAL NEWCASTLE - HERALD
Looking backwards could show the way forward for regional communities planning for a future beyond mining.
One of Australia’s ...
Tuesday, 17 December 19
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.01 PCT - XINHUA
China Taiyuan coal transaction price index stood at 133.16 points, down 0.01 percent week on week.
The index, released by China Taiy ...
Tuesday, 17 December 19
YEAR 2019: IT IS LOOKING SET THAT THIS YEAR WILL BE ONE OF THE SLOWEST IN TERMS OF DRY BULK NEWBUILDING ACTIVITY - ALLIED
With just two weeks remaining before 2019 comes to an end, it is now looking set that this year will be one of the slowest in terms of dry bulk new ...
Monday, 16 December 19
ULTRAMAX: A 63,000DWT SHIP FIXING DELIVERY FOR A SINGAPORE TRIP VIA INDONESIA, FOR RE-DELIVERY TO CHINA AT $11,000 - BALTIC BRIEFING
Capesize
It was one-way traffic for the Capesize market this past week, with all routes giving up value. While downward momentum may have slowe ...
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Showing 1241 to 1245 news of total 6871 |
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
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