Practical considerations ahead of the marine fuel sulphur cap transition
The INTERTANKO closed breakfast briefing, held on the second day of the Tanker Shipping & Trade conference in London in November 2019, was an opportunity for INTERTANKO members to hear the latest advice ahead of the IMO 2020 fuel transition.
IMO 2020 does not change the basic premise of a charterparty: the charterer provides the fuel and the owner takes responsibility for compliance with the regulations and faces the penalties of fines and detention. INTERTANKO is recommending that members match up the risks and liabilities and use the new BIMCO bunker clauses in charterparties. The organisation has also pointed out some of the pitfalls that may exist in current and legacy charterparties still in use.
The first pitfall to be aware of is the specification of the fuel listed in the charterparty. It is not unusual, noted one industry lawyer, for the fuel specification to be listed as ISO 8217:2012. As the name of the specification suggests, this is the 2012 version, and has been replaced by the 2017 version, ISO 8217:2017.
Is the fuel fit for purpose? Even though the fuel supplied meets the current ISO specification, it can still be unfit for purpose. This was the experience of the unfortunate vessels caught up in the Houston fuel crisis that affected 150 ships between 1 January and 31 May 2018. In a case that is currently being heard in the US district court in Houston, Valero alleges that Trafigura supplied it with more than 186,000 barrels of fuel oil containing 4-Cumyl-Phenol, a substance used to make epoxy. In at least one instance, a vessel supplied with the fuel broke down and drifted for two days. Trafigura denies the allegation and the case is ongoing.
INTERTANKO notes IMO 2020 does not change the fundamentals of what happens in a dispute over off-spec fuel. There is plenty of case law in this respect and it comes down to a question of facts. Owners must have a clear procedure to gather the facts at the time and in a manner that cannot be challenged.
If the vessel is fitted with a scrubber, there needs to be a description of the scrubber in the charterparty and the owners must warrant that the scrubber will perform as per the manufacturer’s specification. The description needs to include if the scrubber is open loop and if there are any restrictions regarding where it can be used.
At the briefing was some discussion about the retrofitting of scrubbers and where the responsibilities for performance lie in such circumstances. INTERTANKO recommends that owners view scrubbers as they would any other piece of kit on the ship. Even if new, the scrubber could break down and the responsibility lies with the owner in the same way as if any other equipment failed. The BIMCO and INTERTANKO clauses do provide some provisions for scrubber breakdown and these can be inserted into the charterparty by owners.
INTERTANKO’s technical specialist, who has been attending all relevant IMO meetings, warned that Port State Control (PSC) representatives are very keen to inspect vessels fitted with scrubbers. They (PSC) will be checking closely to see if the scrubber was in operation while the vessel was crossing an ECA and if the vessel is discharging wastewater from an open-loop scrubber system.
He also noted that many PSC authorities had yet to undertake training for post-IMO 2020 inspections. Some stated that training would start in December 2019, or even January 2020. This suggests that while PSC are keen to get onboard, there will be a degree of unreadiness: the result could be discord and a lack of uniformity in how post-IMO 2020 inspections occur.