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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, 17 September 19
THE DRY BULK FREIGHT MARKET IS ALREADY ON A DOWNWARD CORRECTION - ALLIED
Here we are again, just a breath before the final quarter of the year. Under typical circumstances and on the basis of what we have seen during the ...
Monday, 16 September 19
COLOMBIAN COAL PRODUCTION TO FALL 5% THIS YEAR, MINING GROUP SAYS - REUTERS
Colombia’s coal production will decline to around 80 million tonnes in 2019, nearly 5% below last year’s, because of low prices and dro ...
Monday, 16 September 19
THE COAL-D SHOULDER? - BALTIC EXCHANGE
Good fortune and the number 13 don’t usually go hand in hand, but when it comes to coal, 2013 actually seems to have been the commodity&rsquo ...
Monday, 16 September 19
KOREA SOUTH-EAST POWER INVITES BIDS FOR MAX 1,290,000 METRIC TONS OF STEAMING COAL
COALspot.com: South Korea’s Korea East-West Power Co. Ltd has issued an international tender for total 1,290,000 Metric Tons steam coal.
...
Sunday, 15 September 19
SUPRAMAX / ULTRAMAX: MORE STEMS WERE NOTICED GOING TO VIETNAM FROM INDONESIA - BALTIC BRIEFING
Capesize
Overall it was a negative week for the Capesize market, with many routes losing ground. A limited amount of time charter appeare ...
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Showing 1336 to 1340 news of total 6871 |
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- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Eastern Energy - Thailand
- The University of Queensland
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Indogreen Group - Indonesia
- Bukit Makmur.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Baramulti Group, Indonesia
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