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