As 1st January, 2020 looms large, with less than a month to go, many operators have started to use low sulphur fuels and, in line with industry predictions, issues are already being experienced in relation to the measurement of sulphur levels. In particular, it appears that purported “low sulphur” bunkers are regularly being found to be above the required 0.50% limit and discrepancies between test results for the same bunkers are being noted.

The first IMO 2020 compliant low sulphur fuels (“LSFO”) are starting to be trialled and appear on the market, but at present it is still really anyone’s guess as to how these new types of fuels will behave. Linked with this uncertainty are a myriad of potential concerns as to fuel quality and handling issues. We outline some practical and contractual precaution that can be taken to minimise risk and scope for disputes. Find out more....

On the 1st July 2019 the International Chamber of Shipping issued a document entitled 'Guidance to Shipping Companies and Crews on Preparing for Compliance with the 2020 Global Sulphur Cap’ for Ships’ Fuel Oil, in accordance with MARPOL Annex VI.

In response to industry-wide concerns as to whether there will be sufficient supplies of low sulphur fuel available after 2020, the IMO has made provisions in MARPOL. In the event of non-availability, ships are not required to deviate to find compliant fuel and may submit a fuel oil non-availability report, or “FONAR”. In this article we consider the extent of the protection afforded by these provisions and related contractual issues.

As the clock counts down ever closer to 2020, when ships will need to comply with the reduced bunker sulphur content cap of 0.5%, Members are advised to give careful thought to their charterparty provisions with a view to minimising scope for contractual disputes.

Last week at the 74th MEPC Summit, the IMO considered a number of matters relating to the 0.5% sulphur limit taking effect on 1st January, 2020 and provided welcome guidance and clarity on various key issues. We summarise some of the key takeaways in this Soundings update.

Under a time charter, the charterer is usually responsible for fuel and the owner for compliance with MARPOL whereas under a voyage charter an owner would generally be responsible for both. Whilst this should make the position more straightforward, one crucial question will be how best to mitigate the potential impact of volatile fuel prices linked to 2020.

The following table lists countries which have imposed bans on vessels fitted with open-loop SOx scrubbers calling at their ports, and on the discharge of washwater from these scrubber systems within their port waters.

The International Energy Agency called the impending 2020 global sulphur limit “easily the most dramatic change in fuel specifcations in any oil product market on such a large scale”. As this paper will reference, it is a truly daunting prospect for multiple stakeholders with shipowners and operators, charterers, bunker suppliers, traders, financiers, insurers, and refiners all impacted. Indeed, from a shipping perspective, the fear of the known unknowns that 2020 generates has been well-documented, yet often lacking in detail. 

Chinese Ministry of Transport issued a new regulation regarding requirements of emission control areas in Chinese territorial waters which will become effective from 01.01.2019. This new regulation introduces some substantial changes to the existing ECA scheme previously announced by Chinese authorities.

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