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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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Wednesday, 11 September 19
THE INDONESIAN COAL PRICE REFERENCE FELL HEAVILY IN SEPTEMBER
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 11 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
We are going through one of the rare instances where we see optimism building in the dry bulk industry and, as the momentum is still going, the bel ...
Monday, 09 September 19
INDIAN COMPANIES READY TO INVEST IN DEVELOPMENT OF NEW COAL DEPOSITS IN RUSSIA'S YAKUTIA - TASS
Indian metallurgical companies, which received trial batches of coal from Kolmar mining company, are satisfied with the quality of the products and ...
Monday, 09 September 19
COLOMBIA COAL OUTPUT DOWN YEAR-ON-YEAR IN 2ND QUARTER - REUTERS
Colombia, the world’s fifth-largest exporter of coal, produced 18.9 million tonnes of the fuel in the second quarter, down 4.5% from the same ...
Monday, 09 September 19
ULTRAMAX: ASIA A 58,000-TONNER FIXED DELIVERY FUZHOU, VIA INDONESIA, REDELIVERY CHINA, AT $12,800
Capesize
0px The market reached new heights this week as the 5TC topped $38,014, a level not seen in the sector since 2013. Fridays 5TC closed ...
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Showing 1341 to 1345 news of total 6871 |
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- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
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