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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, 04 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
For yet another time, the market seems to have its own drivers. After a very disappointing first half, the recent recovery in the shipping market i ...
Tuesday, 20 August 19
NORDEN HAS BEEN AWARDED A 3-YEAR CONTRACT FOR THE TRANSPORTATION OF COAL FROM INDONESIA TO HONG KONG
NORDEN has been awarded a 3-year contract with a power company in Hong Kong for the transportation of coal from Indonesia to Hong Kong.
...
Tuesday, 20 August 19
THE AUGUST 2019 INDONESIAN COAL PRICE REFERENCE POSTS THE FIRST MONTHLY GAIN SINCE AUGUST 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Monday, 19 August 19
INDONESIAN COAL RUNS, A 82,000DWT SHIP WAS FIXED DELIVERY CHINA VIA INDONESIA, REDELIVERY JAPAN, IN THE MID $16,000S - BALTIC BRIEFING
Capesize
The Capesize market was buoyant in both basins this week, posting gains across the board. After bottoming out the previous week, rates ...
Sunday, 11 August 19
ULTRAMAX: A 58,000DWT VESSEL OPEN KEMAMAN FIXED FOR TWO TO THREE LADEN LEGS, REDELIVERY SINGAPORE-JAPAN, AT $12,250 - BALTIC BRIEFING
Capesize
With typhoon Lekima gathering pace, numerous China ports were closed by the end of the week and will likely be for two to three days. ...
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Showing 1346 to 1350 news of total 6871 |
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- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- The University of Queensland
- VISA Power Limited - India
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Australian Coal Association
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
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