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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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Hercules Tanker Management acquires five product and chemical tankers

Acquisitions form part of a broader and ongoing fleet development programme at Hercules; programme also includes investing in the construction of an 18,000 cbm LNG bunkering vessel at Hyundai Mipo.
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June 2, 2026

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Hercules Tanker Management plans fleet expansion with new chemical bunker tankers

Hercules Tanker Management (HTM) on Monday (1 June) announced the acquisition of five product and chemical tankers as part of its continued fleet expansion.

HTM is the shipping venture launched by John A. Bassadone, founder and CEO of independent marine fuel supplier Peninsula.

The company acquired STI Madison (2014 LR2), STI Brooklyn (2015 MR2) and STI Black Hawk (2015 MR2) – acquired from Scorpio Tankers; and Nord Marvel (2020 MR2) and Nord Maverick (2020 MR2) – acquired from Norden.

 The acquisitions represent a combined investment of approximately USD 225 million, with all vessels secured on long-term commercial charters, reinforcing Hercules’ strategy of pairing asset ownership with contracted earnings visibility.

“The acquisitions have been completed against the backdrop of a firm tanker asset market, with second-hand values continuing to trade at historically elevated levels due to strong freight markets, constrained fleet growth and limited shipyard availability,” the company said. 

 All five vessels enter the Hercules fleet with long-term commercial employment already secured, consistent with the company’s strategy of combining asset-backed exposure to tanker markets, with downside protection through contracted earnings, and operational flexibility to serve the growing global cargo flows of its partners and affiliates.

The acquisitions form part of a broader and ongoing fleet development programme at Hercules. 

The company continues to progress its newbuilding programme with Jiangmen Hangtong Shipyard in China, where it has committed to a series of up to 10 ‘ultra-spec’ chemical tankers, designed with flexibility to supply conventional fuels, biofuels and methanol, alongside enhanced efficiency and emissions performance. 

In parallel, Hercules is also investing in next-generation energy infrastructure through the construction of an 18,000 cbm LNG bunkering vessel at Hyundai Mipo, scheduled for delivery in 2027.

Market benchmarks indicate vessels of this type are currently contracting at approximately USD 90–95 million per unit, underlining the strategic and capital commitment behind this segment.

John A. Bassadone, Founder and CEO of Hercules Tanker Management, said: “This is another step in building Hercules carefully and deliberately. We are not trying to grow for growth’s sake. Our focus is on acquiring the right assets, at the right time, with the right commercial backing.

“These vessels come with strong employment already in place, which provides stability, while still allowing us to participate in a market we believe has solid fundamentals over the medium term. We are fortunate to be in a position where global cargo flows can underpin our investments, and we remain mindful that discipline is critical in this cycle.

“Additionally, we are currently engaged in negotiations for newbuilds of all sizes including LR2s, MRs, and Handys, as well as additional ultra spec vessels.”

Related: Peninsula founder launches shipping firm Hercules Tanker Management
Related: Hercules Tanker Management plans fleet expansion with new chemical bunker tankers
Related: Hercules Tanker Management orders LNG bunkering vessel from Hyundai Mipo

 

Photo credit: Hercules Tanker Management
Published: 2 June, 2026

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Methanol

GENA Solutions: Total renewable and low-carbon methanol project pipeline rises from 61 to 61.6 Mt by 2031

Information shared by the Methanol Institute meant to assist the maritime industry in the adoption of methanol as a mainstream marine fuel heading into IMO 2030/2050.
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GENA Solutions: Total renewable and low-carbon methanol project pipeline rises from 61 to 61.6 Mt by 2031

The Methanol Institute recently shared with Manifold Times the renewable and low-carbon methanol project pipeline May 2026 release produced by GENA Solutions Oy.

Information from the release is meant to provide the bunkering publication’s readers with insight on renewable methanol availability, and to assist the maritime industry in the adoption of methanol as a mainstream marine fuel heading into IMO 2030/2050.

Key takeaways from GENA’s May 2026 Methanol release are as follows:

  • A biomethanol project in China signed an EPC contract in May. GENA estimates that more than 3 Mt of biomethanol and e-methanol capacity is currently under construction in China.
  • Six new projects were added to Project Navigator, while five frozen projects were excluded. The project pipeline increased by 0.6 Mt month on month.
  • Project Navigator tracks 282 renewable and low-carbon methanol projects, representing 61.6 Mt of capacity by 2031, including 24.9 Mt of e-methanol, 25.6 Mt of biomethanol, and 11.2 Mt of low-carbon methanol.
  • GENA estimates that renewable methanol capacity could grow from 0.9 Mt in 2025 to 1.5 Mt by the end of 2026, 2.2–2.4 Mt in 2027, and 5-12 Mt in 2030.
  • Europe accounts for more than 10 Mt of renewable and low-carbon methanol projects, about 79% of which use hydrogen as one of the feedstocks.
  • More than 31 Mt of projects are under development in China, with biomass gasification accounting for 61% of the pipeline.
  • North America accounts for more than 10 Mt of projects, mainly using CCS.

Note: The full article can be viewed here.

Renewable methanol 1

Renewable methanol by feedstock 9

Renewable methanol by region 8

Renewable methanol by status 1

Renewable methanol capacity scenarios 2

 

Photo credit: GENA Solutions
Published: 2 June, 2026

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Methanol

Maritime Blue calls for proposals on methanol bunker barge design

Maritime Blue, in collaboration with the Port of Seattle, Port of Tacoma, Northwest Seaport Alliance, and ABS, is seeking a naval architecture firm to develop design schematics for a methanol bunker barge.
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May 29, 2026

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RESIZED Venti Views on Unsplash

Maritime Blue, in collaboration with the Port of Seattle, Port of Tacoma, Northwest Seaport Alliance, and American Bureau of Shipping (ABS), is seeking a qualified naval architecture firm to develop design schematics for a methanol bunker barge.

A Request for Proposals (RFP), issued on 11 May, invited companies to submit a proposal for the barge, which will be used as the supply ship in a ship-to-ship methanol bunkering exercise during a high level risk assessment workshop planned for September 2026. 

The design is intended for a desktop exercise to identify operational requirements and safety gaps for green methanol bunkering in the Seattle-Tacoma Gateway.

The bunker barge is expected to have a methanol capacity of approximately 30,000 bbls but contractors may propose alternative capacities with justification. 

The receiving ship for the workshop has not been selected yet, but is anticipated to be a cargo, container, cruise, or ro-ro ship.

Maritime Blue said the submission deadline for the proposals is 1 June at 3pm PDT.

 

Photo credit: Venti Views on Unsplash
Published: 29 May, 2026

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