Business

Hill Dickinson: Ongoing LSFO sediment issues lead to bunker alerts

Bunker quality claims are not new to the industry, but these claims going global indicate an issue with the stability of low sulphur fuel.

Published

6 years ago

February 7, 2020

Admin

The following article discussing potential legal issues from bunker quality claims has been written by Beth Bradley of international legal firm Hill Dickinson; the article has been shared with Manifold Times:

It is nearly a month from the implementation date of regulation 14.1.3 of Marpol Annex VI, and while it is too early to draw concrete conclusions, a nuanced picture is emerging of the effect of the change.

Regulation 14.1.3 Marpol Annex VI, lowers the sulphur content for marine fuel for use onboard vessels not fitted with exhaust gas cleaning equipment from 3.5% m/m to 0.50% m/m and took effect of 1 January 2020 (the sulphur cap). Regulation 14.4.3 Marpol Annex VI limiting sulphur content to 0.10% m/m in Emission Control Areas remains in place.

In the opening weeks of 2020 there have been very few reports of enforcement action taken against vessels for noncompliance with the sulphur cap. Consequently, the transition has been smoother than expected from a port state control perspective. This is in no small amount attributable to the efforts of the key stakeholders (owners, charterers, insurers and bunker suppliers) to prepare to be compliant as of 1 January 2020.

While this suggests a high level of compliance, it is only part of the picture. Claims relating to the sulphur content of fuel as well as the quality of some blended low sulphur fuels are already being made.

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 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. As a result, a time-consuming and costly stand-off can occur while the sulphur content issue is resolved and decisions made regarding the need to de-bunker and obtain alternative bunkers.

In addition, over the past four weeks 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. The propensity to sediment can cause engine problems, from sludging of filters to engine damage and blackouts in the worst circumstances.

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 2 parameters (although the issue may be caught by clause 5.3 of ISO 8217).

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 twofold; (a) to provide bunkers in accordance with the contractual specification and (b) to provide bunkers which are fit for purpose. As such, if the bunkers are within specification but are causing sedimentation, or are otherwise not fit to be consumed by the vessel, owners will 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.

From a practical point of view, the usual advice to owners to ensure that they have clean bunker tanks, avoid co-mingling of bunkers and to monitor sampling during the supply applies. Time charterers arranging the supply of bunkers (or owners if dealing direct with the suppliers) need to ensure that they understand the supply contract and have the time bar and sampling provisions firmly in mind in order to preserve their rights of recourse against the supplier, if available.

Looking ahead, enforcement action and quality issues will remain live topics as the shipping industry adjusts to the sulphur cap, the next pinch point will be Sunday 1 March 2020 when the carriage ban takes effect. While the use onboard of high sulphur fuel is now impermissible unless the vessel is fitted with exhaust gas cleaning systems, high sulphur fuel may be carried until 1 March. 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.

Source: Hill-Dickinson
Published: 7 February, 2020

Winding up

Singapore: Notice of intended dividend issued for Xihe Holdings’ subsidiaries

Creditors will need to produce proofs of debt to liquidators of Da Xin Tankers and Nan Chiau Maritime by 5 August, according to Government Gazette notice.

Published

15 hours ago

July 23, 2026

Admin

Two notices to declare the intended dividend of Xihe Holdings’ subsidiaries to their creditors have been posted on the Government Gazette on Wednesday (22 July).

The subsidiaries are Da Xin Tankers Pte Ltd and Nan Chiau Maritime Pte Ltd.

The following are the details of the notices of intended dividend:

Name of Company : Da Xin Tankers (Pte) Ltd (In Creditors’ Voluntary Liquidation)
Unique Entity No. / Registration No. : 198400895W
Address of Registered Office : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960
Last Day for Receiving Proofs : 5 August 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960

Name of Company : Nan Chiau Maritime (Pte.) Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No. / Registration No.: 200814296Z
Address of Registered Office : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960
Last Day for Receiving Proofs : 5 August 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960

Photo credit: steve pb from Pixabay
Published: 23 July, 2026

Biofuel

South Korea: S-Oil launches B30-VLSFO bio bunker fuel supply

Company says it has established an integrated operating system in the Ulsan region covering the entire value chain, from feedstock procurement and blending to supply.

Published

15 hours ago

July 23, 2026

Admin

South Korea: S-Oil launches B30-VLSFO bio bunker fuel supply

South Korean petroleum and refining company S-Oil on Wednesday (22 July) said it has started supplying B30 very low sulphur fuel oil (VLSFO), as the company seeks to support shipping’s decarbonisation efforts and growing demand for lower-carbon bunker fuels.

The company said its B30 VLSFO contains 30% sustainable biofuel blended with conventional VLSFO and can be used without requiring modifications to existing vessels, enabling shipowners to comply more readily with emissions regulations from the International Maritime Organization (IMO) and the European Union (EU).

S-Oil said it has established an integrated operating system in the Ulsan region covering the entire value chain, from feedstock procurement and blending to supply. The system combines VLSFO produced at its Onsan refinery with biofuel production facilities and storage infrastructure in the Ulsan region, allowing the entire process to be carried out within a single logistics hub.

According to the company, the integrated supply chain reduces transportation requirements during production while improving supply efficiency and reliability.

S-Oil also highlighted Ulsan Port as a strategic location for marine biofuel supply, noting the port has strong demand for bio-bunker fuels, particularly from car carriers, enabling prompt and stable deliveries to key customers.

An S-Oil official stated: “In the bio-marine fuel market, not only product quality but also securing a stable supply of raw materials and an efficient supply system are important competitive advantages.

“Based on our existing bunkering business capabilities and the excellent supply infrastructure in the Onsan area, we plan to supply stable and competitive low-carbon fuel.”

Photo credit: S-Oil
Published: 23 July, 2026

Decarbonisation

Yang Ming and PSA to develop integrated sea-land decarbonisation solutions

Both will explore solutions spanning emissions measurement and verification, a digital Book-and-Claim framework, and a joint maritime-land inset token package.

Published

15 hours ago

July 23, 2026

Admin

Yang Ming and PSA to develop integrated sea-land decarbonisation solutions

PSA International (PSA) on Monday (20 July) said it has signed a Memorandum of Understanding (MoU) with Yang Ming Marine Transport Corporation (Yang Ming) to jointly accelerate the adoption of low-carbon solutions across the maritime value chain.

Beyond emissions measurement and verification, the collaboration will focus on a digital Book-and-Claim framework and a joint maritime-land based inset token package.

“This synergy provides cargo stakeholders with a transparent and accountable sea-land pathway to achieve their decarbonisation targets,” PSA said on its website.

Yang Ming launched the green transport service, EcoSea+. This initiative integrates Yang Ming’s low-carbon navigation capabilities to empower customers with a flexible and transparent strategy to effectively reduce their Scope 3 transportation emissions. By joining forces with PSA, Yang Ming is able to expand the impact of these sustainability actions beyond the ocean.

Building on its position as a global port operator, PSA advances its Node to Network strategy through integrated port and supply chain capabilities that enable a green network of terminal and landside operations to reduce end-to-end supply chain emissions.

The agreement was officially signed by Mr Ivan Chiang, Chief Logistics Officer & Senior Vice President of Yang Ming, and Mr Eddy Ng, Group Head of Operations, Technology and Sustainability of PSA International.

Mr Ong Kim Pong, PSA International Group CEO, said, “As responsible stewards of tomorrow, PSA is committed to delivering sustainable impact across the global port and supply chain ecosystem.

“Tackling the challenges arising from climate change will require the collective efforts of all players in the maritime supply chain sector. We are excited to partner Yang Ming on the decarbonisation of global supply chains and support the transition towards a more sustainable global economy.”

Photo credit: PSA International
Published: 23 July, 2026