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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, 26 November 19
PREPARATIONS INTENSIFY AS 1 JANUARY 2020 GLOBAL CUT IN SULPHUR IN SHIP'S FUEL OIL LOOMS: IMO
“IMO 2020” requirements for ships to cut sulphur oxide emissions enter into effect in just over one month’s time. This will signi ...
Monday, 25 November 19
COAL SUPPLY BY CIL TO POWER SECTOR DROPS OVER 8 PC TO 253 MT IN APRIL-OCTOBER - PTI
Supply of coal by state-owned CIL to the power sector registered a decline of 8.5 per cent to 253 million tonnes in the April-October period of thi ...
Monday, 25 November 19
A 53,000DWT SHIP FIXED AT $9,500 DELIVERY SINGAPORE TRIP, VIA INDONESIA, REDELIVERY VIETNAM - BALTIC BRIEFING
Capesize
After a week of value being eroded on the Capesize market, Friday brought improved sentiment across most of the routes. The 5TC averag ...
Monday, 25 November 19
KOWEPO INVITED 6.79 MILLION TONS OF (SUB)BITUMINOUS STEAM COAL BIDS
COALspot.com: South Korea’s Korea Western Power Co., Ltd. (KOWEPO) has issued an international tender for 6,798,000 tons of coal for 5 years ...
Friday, 22 November 19
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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Showing 1271 to 1275 news of total 6871 |
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- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Interocean Group of Companies - India
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- VISA Power Limited - India
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- The University of Queensland
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