25/03/2019
Please be advised that Port of Fujairah has decided to ban the use of open-loop scrubbers in its waters. Ships will have to use compliant fuel once the IMO 2020 sulphur cap comes into force.
IMO 2020 Sulphur Cap
As of 1st January, 2020, amendments to MARPOL brought in a global sulphur cap of 0.50%. This regulatory change, although undoubtedly a positive one for the marine environment, has nevertheless brought with it significant commercial, financial, legal and practical implications for owners and charterers alike.
In this dedicated section of our website, we offer a series of focused bulletins as well as resources and external industry guidance for the benefit of our Members.
Drafting considerations
In the lead-up to 2020, owners and charterers alike sought to implement practical and contractual measures in time for the implementation of the sulphur cap on 1st January, 2020 and the carriage ban on 1st March, 2020.
Although the transition clauses issued by BIMCO are not of on-going relevance, Members are reminded to consider the incorporation of appropriate clauses relating to sulphur content and other relevant matters when drafting new charterparties. See our commentaries on the BIMCO IMO 2020 clauses and, in the context of voyage charters, bunker pricing clauses.
Bunker quality and compliance
With fuel regularly being found to have sulphur contents only marginally above the 0.50% cap, a common and often complex debate that has arisen, and continues to arise, is whether there a margin for error.
Aside from sulphur content, many of the quality issues associated with VLSFO that were anticipated at the outset of 2020 have indeed come to the fore. In particular, we have seen a number of cases involving high sediment content (TSP), as well as low flash point, excess cat fines and presence of unidentified contaminants. There have been incidences, for example, of jet fuel (surplus during the pandemic) being used in bunkers, with potentially volatile results. Owners have also encountered issues with the incorrect use of lube oils with the new types of fuel.
Although many of the teething problems with the new fuel appear to have settled down, there continues to be a steady stream of fuel quality issues which seems likely to continue for the short term at least, given the relatively volatile and varied nature of low sulphur fuel.
For detailed guidance to dealing with fuel quality claims, please see our comprehensive Guide to Bunker Claims. The Club can also provide Members with up to date reports on bunker quality and availability.
Scrubbers
Finally, although the uptake of scrubbers as an alternative to using VLSFO has been relatively low, and may remain so in light of the narrowing price difference between VLSFO and HSFO, we remind readers of our commentary on the issues associated with scrubbers which considers some of the contractual considerations and practical pitfalls involved.
Whilst it is hoped that many of the disputes relating to the IMO sulphur cap will continue to tail off as problems with new fuels are ironed out and parties now have the appropriate contractual and technological framework in place, if issues do arise, Members are invited to contact the Club for further guidance and support.
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25/03/2019
'A Guide For Singapore-Registered Ships' and 'A Guide For Ships Calling To Port Of Singapore'.
25/03/2019
Despite the different solutions available for the industry to comply with the impending 2020 Sulphur Cap, there is still no consensus from the industry on which works best for the long-run. This is outlined by industry experts in a newly-launched Sea Asia industry insights report, ‘2020 Sulphur Cap: Is the industry ready for the long-run?’.
25/03/2019
A panel of industry leaders offer perspectives from the energy, finance and legal standpoints on the IMO global sulphur cap 2020 regulation, with a focus on the risks and challenges the shipping industry faces in the run up to a multi-fuel future. The panel raised the issues of fuel availability, contaminants, new building vs retro-fitting, and regional attitudes to the regulation.
25/03/2019
The following ICS Guidance was first issued in September 2018. This version has been updated to take account of decisions made by the IMO Marine Environment Protection Committee (MEPC) in October 2018. A further update is anticipated after the next IMO MEPC meeting in May 2019.
25/03/2019
Guidance on the development of a ship implementation plan for the consistent implementation of the 0.50% sulphur limit under MARPOL Annex VI.
25/03/2019
MARPOL amendments entered into force on 1 January 2019. Data collection on fuel oil consumption by larger ships begins. Also, IMSBC Code amendments entered into force.
25/03/2019
Taiwan's Ministry of Transportation and Communications (MOTC) has announced that Taiwan will start implementing this limit a year early.
28/02/2019
In this edition of our “Sulphur Series”, we look in more detail at the practical steps that will need to be taken in order to prepare ships without scrubbers for the switchover to low sulphur fuel on 1st January, 2020. We also consider how the allocation of responsibilities and costs related to such steps might be dealt with contractually.
07/01/2019
As an alternative to switching to cleaner, yet more expensive, low sulphur fuel some ship operators
have chosen to achieve compliance with the MARPOL sulphur emissions regime by means of the
installation of exhaust gas cleaning systems, commonly known as scrubbers, which will enable them
to filter non-compliant fuel at a lower cost.
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