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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, 24 April 19
PANAMAX: IN THE EAST, THE MARKET MOVED SIDE-WAYS, WITH FEWER COAL CARGOES FROM INDONESIA PUTTING PRESSURE ON RATES - INTERMODAL
Sentiment in the Dry Bulk market slowly but steadily kept improving last week as Capesize rates remained in recovery mode and Panamax earnings also ...
Wednesday, 24 April 19
SHIPPING MARKET INSIGHT - IS THIS A BANKERS' MARKET? - INTERMODAL
Over the last 10 years, many of the traditional and top lending banks have made the decision to either downsize their portfolios or even exit shipp ...
Monday, 22 April 19
COAL INDIA TO ASK POWER PLANTS TO CUT COAL IMPORTS - DNA
Co to encourage import substitution with domestic supplies at power plants
Surge in coal imports has now forced Coal India Ltd (CIL) ...
Thursday, 18 April 19
BIMCO SEES HARD TIMES AHEAD FOR CAPESIZES
China’s increased use of scrap metal for its production of crude steel is fundamentally critical to the dry bulk shipping industry. Mostly Ca ...
Wednesday, 17 April 19
ONCE AGAIN WE FACED WITH THE SITUATION OF THE DRY BALTIC INDEX BEING BELOW 1,000 POINTS - INTERMODAL
Once again we are faced with the situation of the Dry Baltic Index being below 1,000 points. In a market where the feeling of insecurity is almost ...
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Showing 1411 to 1415 news of total 6871 |
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- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- The University of Queensland
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
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