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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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Monday, 22 July 19
SUPRAMAX: THE ASIAN ARENA SAW INCREASED ACTIVITY AND STRONGER NUMBERS BEING CONCLUDED; INDONESIAN ROUNDS REMAINED FIRM - BALTIC BRIEFING
Capesize
Another week of gains as the Atlantic basin continues to be pressurised on tonnage and Brazilian cargoes keep up a steady flow. The Ca ...
Thursday, 18 July 19
WORLD TRADE IN HARD COAL ROSE BY 4.7% IN 2018 - GERMANY COAL IMPORTERS ASSOCIATION
World Trade in Hard Coal Rose by 4.7% in 2018
Hard Coal Can Prevent Stress in the Electric Power System in Germany
• Sharp decl ...
Wednesday, 17 July 19
MARKET INSIGHT - INTERMODAL
The Strait of Hormuz is one of the most important waterways in the world, connecting crude producers in the Middle East with key markets in the res ...
Tuesday, 16 July 19
KING COAL RULES IN JAPAN AS POWER UTILITIES IN THRALL TO LOW-COST FUEL - REUTERS
Japanese utilities will rely on the return of coal-fired power plants from maintenance to meet peak electricity demand this summer, highlighting th ...
Tuesday, 16 July 19
SUPRAMAX: THE ASIAN ARENA WAS SPLIT, WITH A BUILD-UP OF TONNAGE AND LACK OF ENQUIRY IN THE NORTH - BALTIC BRIEFING
Capesize
It was a Brazilian affair with a strong splash of bunkers characterising the Capesize market over the past week. Largely traded in Eur ...
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Showing 1361 to 1365 news of total 6871 |
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- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Bahari Cakrawala Sebuku - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
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