2020 sulphur cap
and bunker quality
disputes

Read time: 8 minutes

News & blog Blog 2020 sulphur cap and bunker quality disputes

2020 sulphur cap and bunker quality disputes

Walter Dekkers

Walter Dekkers

Managing Director

Read time: 8 minutes
Within the scope of Marpol Annex VI, the IMO’s global sulphur cap will be enforced from 1 January 2020. The effects for the marine industry are expected to be huge as the 3.5% m/m sulphur fuel limit will be reduced to 0.5%. The uncertainty of availability, quality and prices of compliant low sulphur fuel oil makes decision making complicated, to say the least.

Earlier, I identified the following main options for ship-owners:

  • installing scrubbers to clean exhaust gases of high-sulphur bunker fuel
  • the use of compliant fuel
  • switching to LNG (liquefied natural gas) or any other alternative fuel

All of these options require hefty investments in fleets. Even the use of compliant fuel is likely to require considerable adaptations to ship systems. One of the worries is a high level of cat (catalytic) fines: the purification equipment should be up-to-date to bring down the levels of cat fines, which are higher in low sulphur fuel oils than in heavy fuel oils and are known to cause serious damage. In addition, compliant fuel comes at higher costs although how prices will be set is uncertain as well. Complicating the issue of pricing is that unknown demand means refiners will be unable to commit on how much to produce. For refiners too, the transition in production is a massive undertaking.

Low Sulphur Fuel Oils (LSFO): a rise in bunker quality disputes

It should be noted that in designated Emission Control Areas (ECAs), the sulphur cap at 0.1% is even lower and already in force. ECAs include the North Sea and Baltic areas as well as the coastal areas off the US and Canada including US Caribbean.

As most of our work takes place in the North Sea ECA, we at Van Ameyde Marine have experienced a rise in bunker quality disputes and damage to ship systems related to burning LSFO. So has Veritas Petroleum Services (VPS), which was faced with a widespread problem onboard its customers’ vessels. The standard ISO 8217 test methods gave no indication as to the cause of the problems experienced by the vessels. However, thanks to proprietary test methods, VPS, as well as we at Van Ameyde Marine, identified chemical contamination and increased sediment levels in violation with Clause 5 of ISO 8217.

In its 2017 ‘Bunker Alerts’ Veritas Petroleum Services (VPS) reported a 70% increase in distillates fuels not meeting the ISO 8217 test specifications. In comparison, residual fuel showed a 30% increase on 2016.

In 2018 the main causes of claims were:

  • chemical contamination
  • sulphur content above limit
  • increased sediment levels
  • cat fines (catalytic fines)

With the standard tests overlooking vital clues, the case of VPS shows that proving the fuel to be off-spec is complicated and time-consuming. In addition, suppliers generally reject claims based on their terms and conditions. They tend to hold the opinion that the burden of proof is on the buyer. Not only is the question whether the fuel is off spec, the second question is whether the fuel is not fit for use. Widely differing test methods, revisions of the Marine Fuel Quality Standard, the question of de-bunkering and the question of who will foot the bill only add to the confusion in the dispute process.

Quality issues expected to increase

Attempting to comply with new sulphur limits entails the risk of non-compliance with other parameters of the fuel quality standard. Issues related to e.g. flash point – due to blending with more volatile components – and cold-flow properties of distillates are on the rise, as is contamination. To detect causes of contamination not originally covered by the quality standard – such as bio-derived contaminants and chemical waste – laboratories must use increasingly high-end analytical techniques. As demand for compliant fuels increases, so will the quality issues.

Prevention

Preventing damage as a result of unknown fuel properties and – as yet – undetected contaminants will prove a serious challenge. ISO 8217 is revised at an ever increasing frequency to keep abreast with these developments, which is why basic testing must take place in accordance with the latest version. But basic testing is not enough. Additional quality control of distillates should include cold flow properties as well as bacterial analysis, whereas residual fuels require additional testing for stability and organic compounds.

The bunker industry could provide more transparency as to its supply chain and blending, making data accessible to the interested parties. Quality systems should cover all aspects of ISO 8217, including clause 5. And finally, the International Bunker Industry Association’s ‘Best practice guidance for suppliers’ should be strictly adhered to.

Ship-owners, operators and managers have a range of measures at their disposal, such as:

  • dealing with reputable suppliers and traders
  • applying the Bimco bunker contract, rather than the supplier’s terms and conditions
  • ensuring that the latest fuel standard applies
  • training engineers to strictly follow bunker procedures, including sampling procedures, clearing lines and following change-over procedures
  • taking measures related to storage such as
    • no mixing of different bunker deliveries
    • dedicated tanks and systems
    • temperature above pour/cloud point
    • water draining of settling and service tanks
  • monitoring the effectiveness of the fuel oil treatment plant utilising sample analysis
  • follow the best-practice guidelines of P&I clubs and Hull & Machinery underwriters

Heading towards 2020 and beyond

With the introduction of so many different types of fuel, compatibility, stability and quality issues pose a real concern for ship-owners and operators. Following best-practice guidelines by both the bunker and shipping industry could dramatically reduce the potential risk of damage. This should, after all, be a mutual concern, requiring a mutual approach as no one benefits from a rise in bunker disputes.

A word of thanks

I should like to thank Ferry van Eykel of VPS for his valuable contribution to our mutual presentation on Marine Fuels, given at the November 2018 Marine Fuels and the Global 2020 Sulphur Cap seminar for the Dutch and Belgium Shipping Associations, on which this post is based.

Quote

We at Van Ameyde Marine have experienced a rise in bunker quality disputes and damage to ship systems related to burning LSFO.

Walter Dekkers
Managing Director Van Ameyde Marine

Walter Dekkers

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