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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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Friday, 18 October 19
SINGAPORE'S APEX TO LAUNCH LOW-SULFUR FUEL OIL CONTRACT AHEAD OF NEW SHIPPING RULES - REUTERS
Singapore-based Asia Pacific Exchange (APEX) will launch a low-sulfur fuel oil (LSFO) futures contract on Friday aimed at helping shipping and ener ...
Thursday, 17 October 19
INDIA READIES POLICY TO ATTRACT FOREIGN INVESTMENT IN COAL MINING - REUTERS
India expects to have formulated a policy within the next two weeks to attract foreign investment to its coal mining industry, the country’s ...
Wednesday, 16 October 19
INDIA CALLS FOR A RESET OF CLIMATE DEBATE ON COAL AS A FUEL - LIVEMINT
India on Tuesday called for a reset on climate debate on coal as a fuel, in the backdrop of India becoming one of the top renewable energy producer ...
Wednesday, 16 October 19
LESSONS LEARNT FROM CREW INJURED IN HEAVY WEATHER - UK P&I CLUB COMMENTS
KNOWLEDGE TO ELEVATE
Stuart Edmonston, Loss Prevention at UK P&I Club, discusses an incident in which crew were injured whilst on deck in ...
Wednesday, 16 October 19
SHIPPING MARKET INSIGHT - INTERMODAL
In perhaps the most interesting market conditions of the past years, the tanker and the dry bulk industry have created a positive sentiment with re ...
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Showing 1311 to 1315 news of total 6871 |
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Economic Council, Georgia
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- MS Steel International - UAE
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Planning Commission, India
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
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