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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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Monday, 04 November 19
COAL INDIA'S OCTOBER PRODUCTION MAY FALL 20% - PTI
Coal India’s production in October is likely to be 19-20 per cent lower at about 40 million tonne, as compared to 49.77 million tonne produce ...
Monday, 04 November 19
PANAMAX: WEAKER SENTIMENTS CONTINUED FROM LAST WEEK, WITH RATES FURTHER SOFTENING IN BOTH BASINS - BALTIC BRIEFING
Capesize
The Capesize market meandered slightly upwards this week before giving back much of its gains mid-week. Opening the week at $24,945, t ...
Thursday, 31 October 19
U.S. COAL-FIRED POWER PLANTS SCHEDULED TO SHUT - REUTERS
U.S. power companies expect to retire or convert from coal to gas over 13,800 megawatts (MW) of coal-fired plants in 2019 after shutting over 13,30 ...
Thursday, 31 October 19
SE ASIA MAY BECOME NET FOSSIL FUEL IMPORTER IN COMING YEARS - IEA
Southeast Asia is set to become a key driver of world energy trends over the next 20 years as its energy demand grows at twice the global average, ...
Monday, 28 October 19
ULTRAMAX: ASIA RATES REMAINED UNDER PRESSURE WITH THE NORTH LACKING FRESH ENQUIRY - BALTIC BRIEFING
Capesize
The end of the week brought about a small increase in sentiment heading into a long weekend for some regions. After sustaining a drop ...
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Showing 1296 to 1300 news of total 6871 |
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- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
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