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