Business

BIMCO: Floating storage clause for tankers – what to cover

While using oil tankers for floating storage is not new, the current surge in demand due to COVID-19 and plummeting oil prices give rise to unprecedented challenges.

Published

6 years ago

April 29, 2020

Admin

Grant Hunter, Head of Contracts and Clauses at BIMCO, on Thursday (2 April) published a guide to floating storage clauses and key issues to note when negotiating contracts for storage purposes:

The practice of charterers using oil tankers for floating storage is certainly not a new concept. What’s different with the current demand for storage is the huge number of ships being time chartered for floating storage purposes due to the collapse in oil prices, partly as a result of COVID-19. Therefore, BIMCO is receiving enquiries about “floating storage” clauses and questions about what additional wording owners should consider adding to their time charters.

Under a time charter party, owners place the ship at the disposal of charterers who can then give orders and directions for the employment of the ship, provided those orders are lawful. Within the limits agreed in the charter party, charterers can decide what cargoes are to be loaded and where they are to be loaded and discharged – but they can also instruct the ship to wait, pending further orders.

So, a time charter party can easily be “re-purposed” to enable charterers to use the ship for floating storage. Under time charters, an indemnity by charterers will generally be implied against the consequences of owners complying with charterers’ orders. Some tanker time charter parties include a “storage clause”, but these are often very brief provisions simply conferring an option to use the ship as storage, which they could most likely do anyway without the need for additional wording.

An example of a storage clause is Clause 21 from BPTIME 3 which was jointly developed by BIMCO and BP:

“Charterers shall have the option of using the Vessel for floating storage, but charterers undertake not to use the Vessel for floating storage in areas where additional premiums for War Risks Insurance are charged by the Vessel’s War Risks Insurance underwriters.”

Like most tanker storage clauses, the provision largely relies on other clauses in the time charter to govern the consequences, responsibilities and liabilities of the ship being used for floating storage. However, most storage clauses were not written with long term storage in mind, and the implications for owners could therefore be far reaching. In the present scenario we may be looking at potentially very long periods during which ships will be used to store oil when anchored or drifting.

From an owners’ perspective this gives rise to some important considerations:

Who pays for hull cleaning?

The first is the consequence of marine growth on the hull and other underwater parts while the ship is stationary or drifting. This will have an impact on the ship’s performance and a cost element in terms of cleaning the hull. The usual position under a time charter is that the owners are responsible for maintaining the condition of the hull. However, if fouling occurs as a direct result of charterers’ orders for the ship to wait, then they should be responsible for the consequences – which include a suspension of owners’ performance warranties until the hull is clean, and the obligation to pay for hull cleaning. To address this situation, BIMCO recommends that the BIMCO’s Hull Fouling Clause 2019 is incorporated into the time charter.

Where to wait? Is it safe?

The second is the agreed location for the ship to wait or drift when used as floating storage. It must of course be a safe place for the ship and crew and so we recommend that owners include BIMCO’s War Risks Clause for Time Charter Parties 2013 (CONWARTIME 2013) and BIMCO’s Piracy Clause for Time Charter Parties 2013. These clauses permit owners to require charterers to operate the ship only in areas where there is no actual or threatened war risks and to avoid areas where a threat of piracy exists (recognising that a drifting or anchored ship is exposed to a greater threat of attack than a ship underway).

Caring for the stored cargo

The third consideration is the duration of storage and the impact that extended storage may have on the condition of the cargo and the ship’s tanks, valves and pipework, etc. Proper insurance is an important aspect and both parties should check with their respective insurers (cargo, P&I, pollution, etc) if additional insurance premiums may be required and which party should bear the cost. Owners are contractually obliged to care for the stored cargo, so it is important that the characteristics of the cargo are taken into account and the condition of the cargo closely monitored, bearing in mind that oil products may degrade over time. In addition, there may be an impact on tank coatings and cargo-related equipment due to prolonged idleness which normally fall under owners’ maintenance obligations.

Supplying the crew with necessary provisions

The fourth consideration relates to crew. If the ship is located in a remote area, it may not be possible to obtain provisions and fresh water or to do crew changes (although that is a challenge worldwide at present). Owners may wish to consider a right to deviate the ship to the nearest location where these things can be done and how the costs should be allocated between the parties. BIMCO’s Liberty and Deviation Clause 2010 can be easily adapted for time charters.

Will floating storage impact the engines?

The fifth consideration is that if the ship is to be “re-purposed” as a floating storage unit under the time charter agreement, owners should review the ship’s time charter description in relation to the potential technical impact of the low use of the ship’s engines.

Negotiating a rate of hire for additional days

The sixth and final point for consideration is the rate of hire and duration of the charter. If you fix on a trip charter or short period charter, it could help avoid disputes if owners and charterers agree on what happens in case the charter period is exceeded because there is no suitable market for the oil cargo. A rate of hire for additional days or optional periods could be negotiated up front.

In summary, we recommend the following for tankers being used as floating storage to address the potential additional risks and costs:

Performance and hull fouling – Incorporate BIMCO’s Hull Fouling Clause 2019 for time charter parties.
War and Piracy Risks – Incorporate BIMCO’s War Risks Clause for Time Charter Parties 2013 (CONWARTIME 2013) and BIMCO’s Piracy Clause for Time Charter Parties 2013
Cargo – be aware of risk of cargo degrading over time. Consult with insurers and allocate the cost of any additional premiums.
Crew – making sure the crew obtain provisions – this may require the ship to deviate to a nearest port or place where provisions and other facilities are available. Allocation of costs for deviation. See BIMCO’s Liberty and Deviation Clause 2010
Ship’s description – owners should look at the time charter description of the ship in the context of the ship being re-purposed for floating storage.
Hire – agree optional periods or rates of hire for days used beyond the agreed charter redelivery date.

Photo credit and source: BIMCO
Published: 29 April, 2020

Legal

Singapore police arrest eight over alleged illegal MGO transaction off Tuas

SPF says preliminary investigations found that crew members of a Singapore-registered tugboat misappropriated MGO worth about SGD 10,570 without their company’s knowledge and sold it illegally.

Published

6 hours ago

August 14, 2026

Admin

Singapore police arrest eight over alleged illegal MGO transaction off Tuas

The Singapore Police Force (SPF) on Thursday (13 August) said it has arrested eight men, aged between 25 and 54, for their suspected involvement in an illegal transaction of Marine Gas Oil (MGO).

On 13 August 2026 at about 1.05am, officers from the Police Coast Guard (PCG) conducted a check on a Singapore-registered tugboat in the waters off Tuas and discovered that eight crew members were possibly involved in the illegal transaction of MGO.

“Preliminary investigations revealed that the crew members of the tugboats misappropriated MGO valued at about SGD 10,570 (USD 8,258), without their company’s knowledge,” SPF said in a statement.

“The MGO was sold illegally for their personal financial gain.”

The eight crew members will be charged in court on 14 August 2026 with the offence of theft by servant of property in possession of master under Section 381 of the Penal Code 1871 If convicted, they shall be punished with an imprisonment term that may extend to seven years and shall also be liable to fine.

“The Police take a serious view of illegal transaction of MGO in Singapore Territorial Waters and will continue to conduct enforcement and security checks to prevent, deter and detect such illicit activities in Singapore waters,” SPF added.

Photo credit: Singapore Police Force
Published: 14 August, 2026

Port & Regulatory

Gard: Sulphur-related bunker claims rise amid tighter China MSA enforcement

Claims involving excessive sulphur content in marine fuels have been rising, while stricter inspections by the China MSA have heightened the focus on sulphur compliance, particularly in the Bohai Sea.

Published

6 hours ago

August 14, 2026

Admin

Maritime protection and indemnity (P&I) club Gard on Wednesday (12 August) highlighted that claims involving excessive sulphur content in marine fuels have been rising, while stricter inspections by the China MSA have heightened the focus on sulphur compliance, particularly in the Bohai Sea:

Rise in off-spec sulphur claims

Recent claims experience indicates that bunker quality continues to pose a significant operational risk for shipowners. In our earlier review of bunker-related claims during the first five months of 2026, we highlighted a rise in off-specification bunker incidents amid increased pressure on global fuel supply chains following the escalation of the conflict in the Middle East.

Specifically for Sulphur compliance, between January and June 2026, the number of sulphur-related cases increased by more than threefold compared with the same period in 2025. Notably, the number of cases recorded in the first six months of this year has already exceeded the total number reported during the whole of last year by approximately 40%.

While each case is fact-specific, the increase is notable because excessive sulphur content constitutes a MARPOL compliance issue. Unlike many other bunker quality problems, sulphur non-compliance identified through port state inspections can result in vessel delays, enforcement action, and substantial costs associated with debunkering and fuel disposal.

The map below illustrates the geographical distribution of sulphur-related claims recorded during the first six months of 2026, based on the location where the bunkers were stemmed.

Distribution of sulphur related claims

China MSA steps up sulphur compliance enforcement

According to our correspondent, Huatai, on 5 June 2026, the maritime authorities of Tianjin, Hebei, Liaoning and Shandong jointly launched a special campaign on ship pollution prevention and control in the Bohai Sea region. The campaign involves coordinated supervision by local MSA branches across the region and is expected to last nearly five months. It covers major ports and surrounding port areas in the Bohai Sea region, including Tianjin, Tangshan, Qinhuangdao, Huanghua, Jinzhou, Yingkou and Longkou.

While the initiative is broader than bunker sulphur compliance alone, its scope includes inspections relating to air pollution prevention, SOx emissions, fuel compliance and other high-pollution-risk operations. Enforcement measures are expected to comprise onboard inspections, cross-regional enforcement activities, unannounced spot checks and remote monitoring. These efforts will be supported by a combination of UAV patrols, maritime patrol vessels, shore-based monitoring systems and rapid on-site fuel testing.

As a result, vessels trading in the Bohai Sea region may experience increased scrutiny of fuel compliance documentation, fuel sampling records, onboard fuel management procedures, and the handling or disposal of suspected non-compliant fuel.

Documents typically requested by China MSA

Based on our recent experience, including the case discussed above, and subject to the specific requirements of the local MSA office, owners and operators may be requested to provide supporting documentation such as:

Bunker documentation – Bunker Delivery Notes (BDNs), MARPOL fuel sample records, fuel test reports, and relevant fuel quality certificates.
Statutory certificates – including the International Air Pollution Prevention (IAPP) Certificate and International Oil Pollution Prevention (IOPP) Certificate.
Operational records – engine logbooks, deck and navigation logbooks, Oil Record Book entries, and records relating to fuel transfers, storage and consumption.
Sampling documentation – the Master’s statement and any records demonstrating how fuel samples were drawn, sealed, labelled, handled and retained.
Correspondence records – communications with the authorities, bunker suppliers, charterers and other relevant stakeholders.
Fuel disposal records – approved disposal plans, debunkering documentation, receipts and evidence of final disposal, where applicable.

The exact documentation required will depend on the nature of the investigation, the findings of the inspection, and the requirements of the local enforcement authority.

Possible regulatory consequences in China

Under the Air Pollution Prevention and Control Law of the People’s Republic of China, ocean-going vessels are required to use fuel oil meeting atmospheric pollutant control requirements after berthing. Vessels operating within designated emission control areas must also comply with applicable emission standards. Article 106 provides that where vessel fuel oil fails to meet applicable standards or requirements, the competent maritime authorities may impose fines ranging from RMB 10,000 to RMB 100,000. Liability may extend to shipowners, ship operators and ship managers depending upon the circumstances of the case.

Recommendation

Sulphur compliance should be treated as both a fuel quality and regulatory risk. Owners and operators are encouraged to take preventive steps before bunkering, act promptly if non-compliant fuel is suspected, and preserve evidence carefully if an inspection or claim arises. Under amended

Resolution A.1206(34), Appendix 18, 2.1.5, if the BDN shows compliant fuel, but the master has independent test results of the fuel oil sample taken by the ship during the bunkering which indicates non-compliance, the master may document this by notifying the ship’s flag Administration, with copies to:

the competent authority of the relevant port of destination,
the Administration under whose jurisdiction the bunker deliverer is located,
and to the bunker deliverer.

Photo credit: shraga kopstein on Unsplash / Gard
Published: 14 August, 2026

LNG Bunkering

Shell expands LNG bunkering footprint in Spain with Valencia

As one of the region’s key maritime hubs, the company said Valencia expands the options available to shipowners seeking LNG supply along major shipping routes.

Published

6 hours ago

August 14, 2026

Admin

Shell expands LNG bunkering footprint in Spain with Valencia

British oil giant Shell on Thursday (13 August) said Valencia has joined its growing network of bunkering locations, making LNG available as a marine fuel.

The successful completion of the first LNG bunkering operation in Valencia marked an important milestone for Spain and further strengthened Shell’s LNG supply capabilities across the Mediterranean.

In a video shared by the company, bunkering vessel Alice Consulich was shown supplying an undisclosed volume of LNG to the container ship MSC Sabrina.

“As one of the region’s key maritime hubs, Valencia expands the options available to shipowners seeking LNG supply along major shipping routes,” Shell said in a social media post.

Shell said the achievement reflected the strong collaboration across the maritime value chain, including MSC Mediterranean Shipping Company, the Port of Valencia and Fratelli Cosulich Group.

“We look forward to making more LNG bunker deliveries in Valencia and across the Mediterranean as LNG infrastructure and capabilities continue to expand,” the company said.

Photo credit: Shell
Published: 14 August, 2026