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NorthStandard: Contractual issues for methanol in alternative and dual-fuel future

Established time charter terms and legal frameworks require attention to accommodate methanol’s rise as a key alternative bunker fuel, writes Scott Pilkington, Senior Solicitor (FD&D), NorthStandard.
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NorthStandard: Contractual issues for methanol in alternative and dual-fuel future

Scott Pilkington, Senior Solicitor (FD&D) of global marine insurer NorthStandard on Wednesday (27 March) shared an article with Singapore-based bunkering publication Manifold Times on possible future contractual disputes arising from the use of methanol as an alternative bunker fuel and how to avoid it:

Shipping’s need to decarbonise continues to drive orders for vessels featuring alternative and dual fuel capability, but established charter forms and terms are unlikely to be fully equipped to deal with the use of methanol.

The alternative marine fuel, whose potential as a route to ship decarbonisation saw orders for new ‘methanol-ready’ ships overtake those set up for LNG in 2023, remains the subject of ambiguity where procurement, bunkering costs, product quality and onboard handling are concerned. 

These are fertile areas for future contractual disputes, suggesting that robust provisions need to be tailored to methanol’s peculiarities to navigate uncertainties, and to allocate risks and costs clearly and comprehensively.

Consider these scenarios and issues:

  • Bunkering Delays: Limited methanol bunkering stations, and supply mainly being available by small ships could lead to extended waiting times. Who bears the delay time? Specific provisions for methanol bunkering defining acceptable waiting times, cost-sharing mechanisms for delays, and procedures for sourcing alternative fuels in case of unavailability would need to be considered.
  • Methanol Quality Issues: Contaminated methanol could damage engines, necessitating repairs, and causing delays to charter service. When does off-hire commence during repairs or when seeking alternative fuels? Would time charterers be willing to warrant the quality of supplying an unfamiliar fuel and accept the risks of any fitness and off-specification issues? Clear quality and sampling/testing protocols and pre-bunkering inspections would need to be agreed and consequences for contaminated fuel, including off-hire periods and responsibility for repair costs would need to be allocated.
  • Engine Switching Malfunctions: Dual-fuel engines might face issues switching between methanol and traditional fuels. Outlining off-hire events, repair procedures, and cost allocation during downtime if such malfunctions disrupt operations would ideally be addressed.
  • Performance: Speed and consumption disputes may arise if the vessel’s performance deviates significantly from the agreed warranties in the charter. Having an initial trial period for methanol and dual-fuel use, and for switching between fuel types on a “without guarantee” basis may need to be considered before performance metrics are clear and binding figures can be agreed. Tolerances for “about” would need to be carefully defined.
  • Off-hire and Safety Concerns: Off-hire and other disputes might arise if the vessel cannot operate safely with methanol as a dual fuel or if environmental regulations are breached. “Breakdowns” would usually be included as off-hire, but specific outlining of other methanol-related off-hire events may need to be considered.
  • Incidents and accidents: Provision will need to be made allocating liabilities and responsibilities in the event of incidents or accidents related to methanol use including pollution risks, damage to third parties, and other liabilities arising from the adoption of methanol as a marine fuel.
  • Crew Competency and Training: Specific provisions may need to be included in charters that require adequate training for crew members for methanol handling to enhance crew safety and wellbeing and to minimise legal risks associated with human error.

Given the likely propensity for disputes arising from the use of methanol as a relatively new alternative fuel, alternative dispute resolution agreements for claims related to technical issues, or performance may assist the parties to reach early settlement and avoid uncertain and drawn-out arbitration or litigation which is likely to be dependent on technical and expert evidence.

Note: More information on NorthStandard and decarbonisation in shipping can be found here.

 

Photo credit: NorthStandard
Published: 28 March 2024

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Western Baltic Engineering unveils green methanol bunkering vessel design for Klaipėda

Designed for flexible operations in shallow waters and local bunkering routes, the concept features an 800-metric-tonne green methanol capacity and the potential to supply up to 250,000 mt annually.

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July 20, 2026

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Western Baltic Engineering unveils green methanol bunkering vessel design for Klaipėda

Ship design and engineering service provider Western Baltic Engineering on Thursday (16 July) showcased its latest concept design for a green methanol bunkering vessel, developed for the operational needs of the Port of Klaipėda.

Designed for flexible operations in shallow waters and local bunkering routes, the concept features an 800-metric-tonne green methanol capacity and the potential to supply up to 250,000 metric tonnes (mt) annually. 

“It is Western Baltic Engineering’s first concept dedicated exclusively to green methanol bunkering, expanding our portfolio of alternative-fuel vessel solutions,” the company said in a social media post.

“Building on our experience in methanol-ready vessel design, it reflects our continued focus on enabling the industry’s transition to cleaner fuels.”

“As the maritime sector evolves, engineering companies have a responsibility not only to respond to market needs but also to anticipate future challenges,” said Marius Arkusauskas, Director at Western Baltic Engineering.

“By exploring emerging technologies and alternative fuel applications, we help our partners prepare for the next generation of maritime operations while contributing to a more sustainable future.”

 

Photo credit: Western Baltic Engineering
Published: 20 July, 2026

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China launches methanol shipping supply chain alliance to accelerate green transition

Marine fuel suppliers in the alliance include Sinopec Fuel Oil Sales, China Marine Bunker (PetroChina), SIPG Energy (Shanghai), and Shenzhen Port Energy Development.
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July 17, 2026

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China Waterborne Transport Research Institute under the Ministry of Transport and China Transport News recently jointly launched a Methanol Fuel Shipping Supply Chain Innovation Alliance with 20 organisations spanning the shipping, port, energy, equipment, research and industry association sectors.

The alliance was officially announced during the main event of China Maritime Day 2026 on 11 July, where members also released a joint initiative to develop a collaborative methanol-fuelled shipping supply chain.

The alliance aims to implement China’s national strategy for green economic transformation and support the Ministry of Transport’s “One Network, Four Modernisations” initiative by building a safe, efficient, economical and reliable methanol marine fuel supply chain

Under the joint initiative, alliance members pledged to align with China’s national decarbonisation strategy by promoting methanol as a key pathway for the shipping sector’s green transition and optimising the industry’s energy mix.

The members also pledged to strengthen collaboration across the supply chain to improve coordination between bunker fuel production, transportation and end users while advancing technological innovation.

Lastly, the alliance will support the development of policies, planning and technical standards, promote resource sharing and joint research, and accelerate the large-scale adoption of methanol as a marine fuel.

The alliance brings together companies and organisations representing the entire methanol shipping supply chain.

Members include shipping and port members such as China Changjiang National Shipping (Group) Corporation, COSCO Shipping Bulk Co., Ltd., Shandong Port Group, and Wuhan Chuangxin Jianghai Shipping Co., Ltd.

Energy companies in the alliance include Sinopec Chemical Commercial Holding Company Limited and Methanex Corporation.

Marine fuel suppliers including Sinopec Fuel Oil Sales, China Marine Bunker (PetroChina), SIPG Energy (Shanghai) Co Ltd and Shenzhen Port Energy Development Co Ltd are also part of the alliance. 

Equipment manufacturers in the alliance are CSSC 711th Research Institute, CSSC Power (Group) Corporation Ltd and Chongqing Hongjiang Machinery Co Ltd.

Research, media and industry organisations participating in the alliance include the China Waterborne Transport Research Institute, China Transport News, and the Methanol Institute.

The Methanol Institute said methanol is moving beyond individual projects towards coordinated action across the entire value chain. 

“And China continues to play a leading role in advancing methanol as a marine fuel,” it said in a social media post.  

“We’re proud to work alongside our fellow alliance members to help strengthen the methanol supply chain and support the continued growth of methanol as a marine fuel.”

 

Photo credit: David Yu from Pixabay
Published: 17 July, 2026

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MTF releases new safety guidelines for methanol-fuelled ships

Recognising that methanol as a marine fuel remains at an early stage of adoption, the guidelines place particular emphasis on risk-based decision-making, continuous improvement and organisational agility.

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July 17, 2026

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The Maritime Technologies Forum (MTF) recently announced the publication of new guidelines to support companies in developing new Safety Management Systems (SMS) and strengthening existing SMS for ships using methanol as marine fuel.

As the maritime industry accelerates its decarbonisation efforts, low-carbon methanol has emerged as one of the most scalable alternative fuel options. 

Its liquid state under ambient conditions, compatibility with existing fuel infrastructure, and increasing industry adoption make methanol an attractive near-term solution. However, its toxicity, low flashpoint and invisible vapour and flame characteristics introduce new safety challenges for the maritime industry that require enhanced procedural controls and risk management measures for safe operations.

“Developed collaboratively by MTF members and industry stakeholders with expertise in methanol fuel technologies and the International Safety Management (ISM) Code, the guidelines provide methanol-specific recommendations across all functional areas of an SMS,” MTF said in a statement. 

Recognising that methanol as a marine fuel remains at an early stage of adoption, the guidelines place particular emphasis on risk-based decision-making, continuous improvement and organisational agility. 

The guidelines emphasised the importance of learning from hazardous occurrences, near-misses and accidents involving methanol fuel.

The report also highlighted the importance of developing versatile SMS frameworks capable of supporting mixed-fuel operations during the transition period, where both conventional fuels and methanol may be carried and used onboard.

Human factors are identified as a critical element in ensuring safe methanol operations. The guidelines recommend that companies assess competency, training, familiarisation and resource requirements based on individual roles and responsibilities.

By providing clear, practical recommendations aligned with the ISM Code, the new MTF guidelines aim to support the safe and effective adoption of methanol as fuel while enabling the maritime industry’s transition towards lower-carbon shipping.

Note: The new guidelines can be viewed here.

 

Photo credit: CHUTTERSNAP on Unsplash
Published: 17 July, 2026

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