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

04 Jul 2018

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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