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Gard: Bunker disputes involving VLSFO in the dual-fuel era

Gard published an insight on new bunker management challenges for VLSFO that has been brought on by the shift towards dual-fuel vessels due to regulatory and economic considerations.

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Maritime protection and indemnity (P&I) club Gard recently published an insight on new bunker management challenges for Very Low Sulfur Fuel Oil (VLSFO) that has been brought on by the shift towards dual-fuel vessels due to regulatory and economic considerations.

The article was written by Stuart Michael Kempson, with assistance by Oliver Goossens:

The short shelf life of VLSFO has been a widely recognized challenge within the industry, and it has sparked some complex disputes between owners and charterers over consumption choices and responsibilities. 

The latest CIMAC 2024 guidelines reiterate that VLSFO may degrade faster than traditional High Sulfur Fuel Oil (HSFO),and recommends that consumption should happen ideally within six months – possibly even sooner for biofuels – in other words, a period significantly shorter than the two-year storage lifespan traditionally associated with HSFO.

Typical challenges

Dual-fuel vessels typically operate with a choice between VLSFO and Liquefied Natural Gas (LNG), with charterers often opting for LNG due to economic incentives. This creates a scenario where VLSFO bunkers remain stored for extended periods, increasing the risk of deterioration. The fundamental questions that arise include:

  • Are charterers entitled to dictate fuel consumption preferences?
  • Who is responsible for monitoring and maintaining bunker quality?
  • Can owners override charterers’ fuel orders if the stored bunkers are at risk of becoming unusable?
  • Who bears the cost if fuel degradation leads to engine damage or off-hire periods?

Charterers’ right to dictate fuel usage

Charterparties, particularly in LNG carrier operations, often grant charterers the right to direct which fuel type should be used and when. Standard clauses such as those found in ShellLNGTime 1 and 2 affirm this right:

“Charterers shall provide and pay for all fuel… which in accordance with charterers’ instructions is to be used as fuel.” (ShellLNGTime1, Clause 9a)

A similar right is often found in dual-fuel vessel contracts, where owners must comply with charterers’ directives on fuel selection unless overridden by safety concerns. This raises a contentious issue—if charterers consistently instruct owners to use LNG, thereby preventing the consumption of VLSFO, is it reasonable to hold owners responsible for fuel deterioration? The issue grows more contentious when using bunkers in the EU may attract penalties.

Responsibility for bunker management

Owners may argue that charterers’ obligation to supply on-specification fuel is a continuing duty, extending beyond the point of delivery. This interpretation is particularly relevant in dual-fuel vessels, where charterers effectively control the duration for which VLSFO remains unused. Owners may also invoke an implied indemnity, asserting that charterers’ employment orders directly caused the fuel to degrade and any resulting damage.

Conversely, charterers may contend that their obligation is limited to supplying compliant fuel at the time of delivery. They argue that bunker care falls under the vessel’s operational management, making it the owners’ duty to monitor fuel stability and take preventive measures such as fuel testing, additive treatments, and circulation.

Legal and practical considerations

From a legal standpoint, there is no settled case law directly addressing fuel deterioration due to prolonged storage. However, established principles from charter party disputes provide guidance:

In The Hill Harmony case the court emphasized that charterers’ orders must not encroach upon the master’s responsibility for vessel safety and seaworthiness.

The Sale of Goods Act 1979 suggests that if fuel is supplied for a known purpose (e.g., to be used over an extended period), it should remain fit for that purpose.

Owners could claim implied indemnity, arguing that they should not bear financial losses from following charterers’ instructions for risks they had not agreed to take on.

In practice, owners may have no option but to burn the bunkers before they become unusable, even if this contradicts charterers’ fuel consumption orders. While this could lead to disputes, it may ultimately be the lesser of two financial risks compared to fuel removal, disposal, or engine damage.

Owners therefore may find themselves in a difficult position – they must follow charterers’ bunker use instructions, but doing so could lead to additional costs from having to ensure that other bunkers stored on board remain usable. 

The best way to address this issue is to include express wording in the contract that entitles Owners / Master to have the final decision over which fuel is consumed if the Master has valid and reasonable concerns over the stability of the bunkers. This is something Gard can assist members with. 

Given that calling in the EU may also raise further issues arising from choice of fuel, careful consideration should be given to the drafting of charter party Fuel EU and bunkers clauses.

Bunkers on delivery and redelivery

Another complexity arises upon vessel redelivery. Most charter parties include clauses requiring charterers to accept and pay for all remaining onboard bunkers (ROBs) upon delivery, with owners doing the same at redelivery. However, in short-term charters, this may lead to situations where deteriorated bunkers are returned in a worse condition than when received, raising further disputes over liability.

A reconciliation mechanism or specific clause addressing fuel stability at redelivery could mitigate potential conflicts, ensuring that owners are not burdened with unusable bunkers while charterers are protected from excessive liabilities.

Conclusion

The issue of bunker deterioration in dual-fuel vessels is a growing challenge with no simple solution. While charterers often have the right to dictate fuel usage, they must recognize the practical implications of prolonged VLSFO storage and they may need to make concessions on their right to give instructions on the use of their bunkers. Owners, on the other hand, should actively monitor fuel quality and take preventive measures to mitigate losses. Clear contractual terms, regular fuel testing, and cooperative decision-making between owners and charterers are essential to navigating this complex landscape. 

 

Photo credit: william william on Unsplash
Published: 11 April, 2025

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Methanol

World Fuel and partners complete first green methanol bunkering of car carrier in Shanghai

Operation involved the delivery of approximately 2,800 MT of green methanol to “Arctic Tern” via a ship-to-ship transfer using SIPG Energy’s dedicated methanol bunkering vessel “M/V Hai Gang Zhi Yuan”.
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July 22, 2026

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World Fuel and partners complete first green methanol bunkering of car carrier in Shanghai

Marine fuel provider World Fuel on Tuesday (21 July) said it successfully completed the first green methanol bunkering of M/V Arctic Tern, with EUKOR Car Carriers and SIPG Energy at the Port of Shanghai. 

Arctic Tern is the first vessel in the new Shaper Class series of car carriers. 

The operation involved the delivery of approximately 2,800 MT of green methanol to Arctic Tern via a ship-to-ship transfer using SIPG Energy’s dedicated methanol bunkering vessel M/V Hai Gang Zhi Yuan, the largest vessel of its kind in operation. 

The bunkering operation was carried out at Haitong Terminal, Waigaoqiao Port Area, Shanghai Port, with cargo handling operations conducted simultaneously during bunkering.

This marks EUKOR Car Carriers’ first green methanol operation and the first time Arctic Tern has bunkered methanol since its delivery on 9 July. The operation marked the first bunkering at Shanghai Port of green methanol produced locally in Shanghai for an international PCTC operator. 

It also demonstrated the city’s integrated green methanol value chain, spanning local production, storage and bunkering, and established a replicable “Shanghai Model” for green methanol supply.

World Fuel arranged the supply and delivery of the fuel on behalf of EUKOR Car Carriers, working with SIPG Energy as the physical supplier at the Port of Shanghai.

The green methanol supplied was produced from municipal solid waste, ISCC-EU certified, and had a carbon intensity value below 25 gCO₂e/MJ.

Arctic Tern is the first of fourteen Shaper Class vessels ordered by Wallenius Wilhelmsen. With a capacity of 9,300 car equivalent units and methanol dual-fuel capability, the vessel will be operated by EUKOR Car Carriers, jointly owned by Wallenius Wilhelmsen and Hyundai Motor Group. Following her first green methanol bunkering, Arctic Tern will continue her maiden voyage from Asia to Europe.

Xavier Leroi, COO Shipping Services at Wallenius Wilhelmsen and CEO of EUKOR Car Carriers, said: “Completing Arctic Tern’s first green methanol bunkering shortly after delivery is a significant milestone towards our decarbonisation ambition for both EUKOR Car Carriers and Wallenius Wilhelmsen. It demonstrates how investments in next-generation vessel technology and fuel flexibility are being translated into real-world operations. 

“This achievement reflects the strong collaboration between all parties involved. Together, we have shown how partnerships across the maritime value chain can help make lower-emission fuels available and operationally viable at scale.”

Mark Tamsitt, SVP Global Marine Sales at World Fuel, said, “The first bunkering event with a new fuel is a significant moment for any shipowner, and our role is to make it as seamless as possible. By connecting EUKOR Car Carriers with SIPG Energy’s proven green methanol capability at the Port of Shanghai, we were able to deliver on reliable supply, fuel quality, and safe processes. As more of our customers bring methanol dual-fuel tonnage into service, we are committed to being the partner that makes these kinds of operations routine.”

Mr. Zhang Da, General Manager of SIPG Energy, said, “Welcoming Arctic Tern to the Port of Shanghai for her first green methanol bunkering demonstrates the strength and maturity of our supply capability. Building on our well-established methanol ship-to-ship bunkering services for container vessels, we have already extended such services to pure car and truck carriers (PCTCs). This bunkering sets a new record for the largest single SIMOPs green methanol bunkering for PCTCs in China, marking another step in building Shanghai’s position as a global green energy hub for international shipping.”

This operation follows Wallenius Wilhelmsen’s announcement on 9 July that Arctic Tern would complete her first methanol bunkering shortly after delivery. The vessel entered service on routes between Asia and Europe immediately following handover from China Merchants Jinling Shipyard in Nanjing.

 

Photo credit: World Fuel
Published: 22 July, 2026

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Ammonia

HPA and MB Energy develop safety concept for STS ammonia bunkering

HPA says the Port of Hamburg will become “bunker ready” for ammonia, laying the groundwork for safe and reliable ammonia bunkering in the future.
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July 22, 2026

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HPA and MB Energy develop safety concept for STS ammonia bunkering

The Hamburg Port Authority (HPA) and integrated energy company MB Energy on Tuesday (21 July) said they have completed a comprehensive risk analysis and developed a dedicated safety concept for ship-to-ship ammonia bunkering.

MB Energy said the analysis lays the groundwork for the safe introduction of ammonia as a future marine fuel.

“With our planned ammonia import terminal in Hamburg-Blumensand, MB Energy intends to provide the reliable land side supply infrastructure needed to support this transition across northern German ports,” it said in a social media post. 

Mabanaft Group was renamed to MB Energy last year and merged over 50 existing brands under one identity. 

Separately, HPA said the Port of Hamburg will become “bunker ready” for ammonia, laying the groundwork for safe and reliable ammonia bunkering in the future.

“The focus is in particular on container ships, cruise ships as well as RoRo and ConRo (Container/RoRo) ships,” it said. 

“We expect ammonia to establish itself as an alternative marine marine fuel in the coming years. With our preparatory work, we are already creating the conditions to welcome the first ammonia-powered ships in Hamburg and to bunker them safely.:

HPA added that the import terminal for ammonia planned by MB Energy from 2029 will make a decisive contribution to ensuring the reliable availability of ammonia as a bunker fuel in northern German ports in the long term. 

“The use of an ammonia bunker barge is considered a possible addition to the landside infrastructure to enable ship bunkering in the port and beyond in the future,” it said.

Related: Mabanaft Group renames as MB Energy, merging over 50 brands under one identity

 

Photo credit: Hamburg Port Authority
Published: 22 July, 2026

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Bunker Fuel

Alkagesta highlights key insights of Malta bunkering market in 2026

Darren Lee Axisa discusses the key trends influencing Malta’s bunkering market and the factors that will determine Malta’s long-term competitiveness as a regional bunkering hub.
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July 22, 2026

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Alkagesta highlights key insights of Malta bunkering market in 2026

In an article published on Alkagesta Market Insights, Darren Lee Axisa, Malta Country Manager of Alkagesta, on Monday (20 July) discussed the key trends influencing Malta’s bunkering market and the factors that will determine Malta’s long-term competitiveness as a regional bunkering hub: 

Malta’s bunkering and energy market is moving through a period of structural adjustment. The disruptions that defined the first half of 2026 have accelerated shifts in product demand, terminal strategy, and the competitive dynamics of one of the Mediterranean’s most strategically positioned bunkering hubs. For Alkagesta, whose storage footprint on the island approaches 300,000 cubic metres, the period has tested operational flexibility while reinforcing the value of diversified infrastructure access.

A Market Shifting in Two Directions

Malta’s broader economy has remained resilient — GDP growth reached 3.9% in Q1 2026 — but the bunkering market has undergone a significant product mix shift, the roots of which predate the current geopolitical disruption.

The Mediterranean Emission Control Area, which came into force on 1 May 2025, triggered an immediate and measurable realignment in fuel demand across the region. VPS data covering the first six months post-ECA implementation shows that across the top ten Mediterranean bunkering ports, VLSFO volumes fell 23%, MGO more than doubled, ULSFO quadrupled, and biofuels increased fivefold. In Valletta specifically, the shift was even more pronounced: VLSFO dropped 57% from 111,641 mt to 47,732 mt, while MGO volumes more than tripled from 33,299 mt to 103,445 mt, and ULSFO rose from 2,821 mt to 34,535 mt over the same period.

This structural rotation has been further accelerated by the broader regulatory environment. FuelEU Maritime and EU ETS requirements are pushing shipowners toward cleaner, verifiable fuel options at every port call — a direction Alkagesta had already positioned itself ahead of, having been among the first movers in the Mediterranean to support the transition to 0.1% sulphur fuel oil following the ECA’s introduction.

Layered on top of this regulatory shift has been a period of reduced terminal capacity affecting bunkering market availability across the island. Fuel oil volumes dropped roughly 35% year-on-year between January and May 2026, falling from approximately 382,000 mt in 2025 to 247,000 mt. DMA demand moved sharply in the opposite direction, rising from around 150,000 mt in January to April 2025 to 247,000 mt over the same period in 2026 — a trend consistent with both the ECA-driven product mix shift and the disruption to heavier fuel availability during the constrained period.

Note: The full article can be read here. 

 

Photo credit: Alkagesta
Published: 22 July, 2026

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