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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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- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- PTC India Limited - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- The University of Queensland
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Central Electricity Authority - India
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
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