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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, 20 November 19
FOREIGN DIRECT INVESTMENTS IN COMMERCIAL COAL MINING IN INDIA? - DIPESH DIPU
In August 2019, Government of India announced its approval for Foreign Direct Investment (FDI) for coal mining, processing and sale. Not that FDI i ...
Wednesday, 20 November 19
AUSTRALIA'S NEW HOPE POSTS 66% SURGE IN Q1 SALEABLE COAL OUTPUT - REUTERS
Australian coal producer New Hope Corp Ltd reported on Tuesday a 66% jump in saleable coal production in the first quarter, as output ramped up at ...
Wednesday, 20 November 19
THE IMO AND THE PRICE OF GAS OR THE IMPACT OF THE INTERNATIONAL MARITIME ORGANISATION'S SULPHUR 2020 LIMIT FOR MARINE FUEL OIL ON THE PRICE OF GAS - KING & SPALDING
The main bunker fuel for ships is High Sulphur Fuel Oil (HSFO, with sulphur up to 3.5% m/m (mass by mass)). This will all change on 1 January 2020 ...
Wednesday, 20 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
While the market expects the next OPEC meeting, there are still no clear signs indicating that the organization will keep supporting oil prices, wh ...
Monday, 18 November 19
CHINA RECORDS STABLE COAL PRODUCTION IN JAN-OCT: XINHUA
China’s raw coal output registered stable growth in the first 10 months, while its imports remained robust, official data showed.
...
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- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Sical Logistics Limited - India
- Minerals Council of Australia
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Global Business Power Corporation, Philippines
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