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North P&I: Tight Time Bars in the US for Bad Bunkers

Buyers may wish to consider placing seller on notice of potential claims arising due to fuel issues.

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North P&I Club issued the following statement on Tuesday in regards to off-spec bunker fuels appearing at the US Gulf:

Contaminated IFO 380 bunkers in the US Gulf have resulted in a significant number of vessels experiencing system clogging and, in more extreme cases, engine damage.

The principal contaminant has been identified as the phenolic compound 4-Cumyl-Phenol. This compound has adhesive (sticky) characteristics and is commonly used in the manufacture of epoxy resins and pesticides. This has led to clogging of fuel filters on board vessels and in some cases damage to the engine. The sticking or seizure of fuel pumps has been particularly troublesome.

The problem is not limited to one fuel supplier and it is difficult at this stage to identify the definitive source. However, the contamination has been linked to the use of fuel oil cutter stock, a product added to residual fuels to reduce viscosity.

It is important to note that standard testing of fuel in accordance with ISO 8217 will not identify this contaminant and additional specialist testing is required in order to do so. Vessels bunkering fuel at ports in the US Gulf may wish to consider this additional testing when sending the fuel samples to their chosen laboratory. However, it should be noted that the limited number of laboratories worldwide which are capable of carrying out the additional tests are currently experiencing a significant backlog as a result of the Houston fuel issues.

Engineers should pay particular attention to the fuel system and engines when using these fuels and take early action if problems such as fuel pump seizures or filter clogging are noted.

In addition to the practical issues outlined above, the notoriously short time-bar clauses in bunker supply contracts are problematic, particularly in circumstances where there may be a delay between stemming the bunkers in question and starting to burn them, with problems not becoming apparent until that time. Many contracts require disputes as to the quality or quantity of fuel to be notified to the seller within 30 days of delivery, failing which the claim is deemed waived and time-barred. Liability caps stipulated in the contracts give rise to further issues. Naturally, the bunker supply contracts which concern stems made in the US Gulf tend to be governed by US law, which will likely recognise and give effect to contractual time bars and liability caps. However, there may be an alternative route available to buyers which circumvents problematic contractual clauses where claims are brought in tort.

Should buyers have concerns about the quality of fuel stemmed prior to burning and prior to the expiration of the time-bar, they may wish to consider placing the seller on notice of potential claims arising in relation to the stem. Whilst this may be of assistance in protecting the buyer’s position in relation to the time-bar, so far as we are aware the argument has not yet been tested in the US Courts.

Related: FOBAS suggests ‘quick solution’ to spot contamination, such as US Gulf bunker issues
Related: IBIA: Comment on current problem fuels at US Gulf
Related: U.S. Coast Guard issues bunker safety alert
Related: FOBAS: Fuel Problems in the Galveston Area

Published: 4 July, 2018
 

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Research

Yamna identifies five potential global ammonia bunkering hubs

Unlike methanol, ammonia is not constrained by biogenic CO2 availability, and its production process is relatively simple.

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Yanma projected ammonia bunkering hubs

Specialised green hydrogen and derivatives platform Yamna in early December identified several potential ammonia bunkering hubs around the world.

The hubs are Port of Rotterdam, Port of Algeciras, Suez Canal, Jurong Port, and Port of Salalah.

“The shipping industry faces an ambitious challenge: reducing emissions by 20% by 2030 (compared to 2008 levels) and achieving net-zero emissions by 2050, in alignment with IMO targets,” it stated.

“Achieving these goals in the medium to long term depends on the adoption of alternative low-emission fuels like green ammonia and methanol.

“Among these, ammonia is attracting growing interest as a viable option. Unlike methanol, it is not constrained by biogenic CO2 availability, and its production process is relatively simple.”

However, the firm noted kickstarting ammonia bunkering on a large scale required four enablers to align:

  • Ammonia fuel supply
  • Application technology
  • Bunkering infrastructure
  • Safety guidelines and standards

It believed ammonia bunkering hubs will first emerge where affordable and scalable ammonia supply is available.

Yanma Why use ammonia for bunkering fuel

 

Photo credit: Yanma
Published: 31 December 2024

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Research

Port of Long Beach releases Clean Marine Fuels White Paper

Document intended to prepare and position the port and its stakeholder for adopting low carbon alternative fuels.

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Clean Marine Fuels Port of Long Beach (December 2024)

The Port of Long Beach (PLB) in late December released the Clean Marine Fuels White Paper as part of efforts to identify solutions capable of reducing emissions from ships.

“To understand the opportunities and challenges related to the adoption of clean marine fuels, the Port of Long Beach hired ICF Consulting to develop this white paper as an educational resource and guidance document,” stated PLB

“This document is also intended to prepare and position the port and its stakeholder for adopting low carbon alternative fuels.

“The white paper provides high level information on the array of currently available low carbon marine fuels, along with an exploration of the potential infrastructure needs for their deployment.”

The document covers the use of different types of clean bunker fuels such as green hydrogen, green methanol, green ammonia, renewable LNG and biofuels for shipping.

“The shift to clean marine fuels is no longer optional but a necessity for the sustainability of the maritime industry,” stated PLB in its closing remarks.

“This transition, while presenting challenges such as high costs, limited fuel availability, and the need for extensive infrastructure development, is advancing due to evolving policy frameworks and growing industry commitment.

“Addressing these obstacles will require targeted initiatives and robust collaboration between public and private sectors. Continued policy support, government funding, and sustained industry commitment will be essential to driving this progress and ensuring the long-term sustainability of maritime operations.”

Editor’s note: The 123-page Clean Marine Fuels White Paper may be downloaded from the hyperlink here.

 

Photo credit: Clean Marine Fuels White Paper
Published: 26 December 2024

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Port & Regulatory

Clyde & Co: FuelEU Maritime Series – Part 6: Legal issues

Bunker purchasers should consider the wording of their bunker supply contracts carefully and ensure that they are comfortable with the contractual provisions.

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CHUTTERSNAP MT

Global law firm Clyde & Co on Thursday (19 December) released the final instalment of its six-part series uncovering the FuelEU Maritime Regulation.

In it, the firm looked at the legal issues that could potentially arise between various parties, such as owners, charterers, ship managers, bunker suppliers, and ship builders, as a result of the compliance requirements imposed by the Regulation.

The following is an excerpt from the original article available here:

Bunker supply contracts - legal issues

Both vessel owners and bunker purchasers will want to ensure that they are able to take advantage of the preferential treatment provided under the FuelEU Regulation for consuming renewable fuels, including biofuels and renewable fuels of non-biological origin (RFNBOs) (such as methanol and ammonia).

Article 10 of the FuelEU Regulation states that such fuels must be certified in accordance with the Renewable Energy Directive (RED) 2018/2001. If the fuel consumed by the vessel does not meet the applicable standards or have the appropriate certification, then it “shall be considered to have the same emissions factors as the least favourable fossil fuel pathway for that type of fuel[1].

In order to confirm that the fuel complies with greenhouse gas (GHG) intensity and sustainability requirements, the vessel owner and bunker purchaser will want to ensure that the bunker supplier provides the appropriate certification required under the FuelEU Regulation. The EU has required certification of such fuels, with the aim of guaranteeing “the environmental integrity of the renewable and low-carbon fuels that are expected to be deployed in the maritime sector.”[2]

The FuelEU Regulation provides that the GHG intensity of fuel is to be assessed on a “well-to-wake” basis, with emissions calculated for the entire lifespan of the fuel, from raw material extraction to storage, bunkering and then use on board the vessel.

Vessel owners and bunker purchasers will, therefore, need to be mindful of the importance of establishing how “green” the fuel actually is, and of the risk of bunker suppliers providing alternative fuels that will not allow for preferential treatment under the FuelEU Regulation.

It would, therefore, be advisable for bunker purchasers to consider whether the wording of their bunkering supply contracts is sufficient to ensure that the fuel is properly certified under the FuelEU Regulation. This could include contractual provisions that require the supplier (i) to provide a bunker delivery note (BDN), setting out the relevant information regarding the supply (such as the well-to-wake emission factor), and (ii) to provide the necessary certification under a scheme recognised by the EU.

Bunker purchasers should also be mindful that bunkering supply contracts often contain short claims notification time bars and provisions restricting claims for consequential loss. Issues could therefore arise where a purchaser tries to advance a claim against the supplier for consequential loss due to a lack of certification, but the bunker supplier argues that such losses are excluded under the terms of the bunker supply contract.

Bunker purchasers should therefore consider the wording of their bunker supply contracts carefully and ensure that they are comfortable with the contractual provisions.

 

Photo credit: CHUTTERSNAP from Unsplash
Published: 26 December 2024

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