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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, 07 May 19
UNDOUBTEDLY A VERY TROUBLED YEAR FOR THE DRY BULK MARKET, SAYS ALLIED SHIPPING
Undoubtedly a very troubled year for the dry bulk market says Allied Shipping in its latest weekly report.
Thomas Chasapis, Re ...
Saturday, 04 May 19
HOW THE 'FAIR VALUE' OF COAL ASSETS IS AFFECTED BY COMMODITY CYCLES - CRU
As with any commodity, valuing coal assets can be tricky due to the cyclical nature of the market. In this insight, CRU discusses how commodity cyc ...
Friday, 03 May 19
SUPRAMAX: WITH WIDESPREAD HOLIDAYS DURING THE WEEK, THE MARKET LACKED IMPETUS - BALTIC BRIEFING
Capesize
The market last week was a tale of two halves, with substantial volatility. Beginning the week on a positive note the C5 West Australi ...
Friday, 03 May 19
COAL INDIA APRIL OUTPUT RISES 1% TO 45.29 MILLION TONNE - PTI
Coal India Ltd (CIL) Wednesday said its coal production in April 2019 rose by 1 per cent to 45.29 million tonne as compared with 44.86 million tonn ...
Sunday, 28 April 19
SUPRAMAX: A 54,000DWT VESSEL OPEN GRESIK FIXED VIA AUSTRALIA, REDELIVERY CHINA, IN THE MID $12,000S - BALTIC BRIEFING
Capesize
Following the holidays, activity increased in both the Pacific and Atlantic Basins. The 5TC average rallied, closing at $8,596, up $1, ...
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Showing 1406 to 1410 news of total 6871 |
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- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Bhatia International Limited - India
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Planning Commission, India
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
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