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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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Tuesday, 15 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 Co ...
Monday, 14 October 19
WINTER OIL MARKET OUTLOOK - OPEC
Product markets in the last two months have benefitted from seasonal maintenance which have led to a tighter product market environment, providing ...
Sunday, 13 October 19
INDONESIA: PANAMAX VESSELS OPEN SOUTH CHINA WERE REPORTEDLY FIXED AT $14,000 LEVEL, WITH REDELIVERY BACK IN CHINA - BALTIC BRIEFING
Capesize
The Capesize market managed to find a floor and rally a little this week after several weeks of declines. While the West Australia to ...
Friday, 11 October 19
INDIAN MINERS REJECT PLAN TO LINK NATIONAL COAL INDEX TO FOREIGN PRICES - REUTERS
India’s miners are rejecting a government proposal to establish a national coal index that would be linked to international prices, documents ...
Friday, 11 October 19
THE OCTOBER BENCHMARK PRICE OF INDONESIAN THERMAL COAL DECLINES TO LOWEST SINCE OCTOBER 2016
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
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Showing 1316 to 1320 news of total 6871 |
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- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Australian Coal Association
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Marubeni Corporation - India
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- PTC India Limited - India
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
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