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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, 21 October 19
SHIPPERS CHANGE COURSE AS FUEL RULES TARGET SULPHUR EMISSIONS - WOOD MACKENZIE
The International Maritime Organization (IMO), the industry’s regulator, will require all ships to reduce the level of sulphur in their engin ...
Monday, 21 October 19
COAL TO PLAY SIGNIFICANT ROLE IN SOUTH AFRICA POWER MIX - MINISTER, REUTERS REPORTED
South Africa’s plans for additional power generation over the next decade will involve a variety of energy sources, with coal still playing a ...
Monday, 21 October 19
ULTRAMAX: IN ASIA, TRIPS FROM THE SINGAPORE AREA WERE PAYING BETWEEN $14,000 AND $16,000, DEPENDING ON THE VESSEL SIZE AND DURATION - BALTIC BRIEFING
Capesize
The market traded in a relatively stable supported manner in the Pacific this week while the Atlantic experienced weakening turbulence ...
Friday, 18 October 19
WHY CRUDE TANKER RATES JUST FELL (HALFWAY) BACK TO EARTH - FREIGHT WAVES
Panic drove crude-tanker rates up, very briefly, to mind-bogglingly high assessed levels of around $300,000 per day. Now, the fear factor has been ...
Friday, 18 October 19
SHORT TERM STRENGTH FOR OZ COMMODITIES - BALTIC BRIEFING
Volatility in the global commodity markets is not expected to unduly rattle Australia’s commodity outlook through 2020, but the 2021 picture ...
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Showing 1306 to 1310 news of total 6871 |
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- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Australian Coal Association
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Parliament of New Zealand
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
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