Maritime law firm Hill Dickinson says that the IMO 2020 transition to low sulphur marine fuels has ‘so far been smooth’, but the industry must now plan ahead to meet the second part of the regulations – the ban on the carriage of high sulphur fuel which comes into effect on 1 March.
In a statement sent to Bunkerspot today, Hill Dickinson said that: ‘In the opening weeks of 2020 there have been very few reports of enforcement action taken against vessels for non-compliance with the sulphur cap.’
However, Beth Bradley, a London-based Partner at Hill Dickinson, said that while this suggests a high level of compliance, it is only part of the picture – as issues relating to the sulphur content of fuel, as well as the quality of some blended low sulphur fuels, are already arising.
According to Hill Dickinson: ‘Compliance with Regulation 14.1.3 means using a fuel with a sulphur content of 0.50% m/m maximum. If the sulphur content exceeds that threshold, owners may be exposed to enforcement action. Consequently, the frequency of owners having samples tested for sulphur content has increased.
‘Where the bunkers are found to be marginally in excess of the limit, problems are arising largely owing to the difference between Regulation 14.3.1 and most supply contracts. An on-specification supply for sulphur content will, usually, from a suppliers’ point of view be deemed to be up to 0.53% m/m, since that reflects the laboratory margin of confidence for testing.’
Bradley said that this means ‘a time consuming and costly stand-off can occur while the sulphur content issue is resolved and decisions made regarding whether to de-bunker and obtain alternative bunkers’.
Hill Dickinson flagged up that since the 0.50% global sulphur cap was introduced there have been a number of alerts issued concerning sediment issues, in particular, in low sulphur fuels supplied in Singapore, Piraeus, Amsterdam, Rotterdam, Miami and San Vincente.
Bradley warned: ‘Quality claims relating to bunkers are not a new phenomenon but, in the past, they have tended to be localised. The spread of alerts concerning sediment, suggests a potentially wider issue concerning the stability of some blended low sulphur fuel.
‘Liability, depending on the reasons for sedimentation, may not be straightforward. While charterparties and bunker supply contracts will contain a specification for the fuel, usually by reference to the ISO 8217 standard, some organic compounds which cause sedimentation may not be caught by the Table Two parameters (although the issue may be caught by clause 5.3 of ISO 8217).’
Hill Dickinson noted that where shipowners have devolved the responsibility to provide bunkers to the vessel to their time charterers, the time charterers obligation as a matter of English law is two-fold; (a) to provide bunkers in accordance with the contractual specification and (b) to provide bunkers which are fit for purpose.
‘As such,’ said Bradley, ‘if the bunkers are within specification but are causing sedimentation, or are otherwise not fit to be consumed by the vessel, owners may have recourse against their time charterers. The position is not necessarily the same under bunker supply contracts, particularly if there are clear provisions excluding claims relating to fitness for purpose, which can make it difficult to pursue the supplier.’
Hill Dickinson advised owners to follow the usual best practice steps: maintain clean bunker tankers; avoid commingling of fuels; and monitor sampling during bunkering.
Looking ahead, Bradley said: ‘The next pinch point will be 1 March 2020 when the carriage ban takes effect. Owners have a little over a month in which to arrange to de-bunker high sulphur fuel and would be best advised to start planning those operations (if not already in hand) now, so as to avoid the consequences of missing the deadline.’