Marine Fuels: Preventing Claims and Disputes (eBook)

Published Date

August 2019


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Marine Fuels: Preventing Claims and Disputes (eBook)

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This guide identifies potential causes of dispute in the supply of marine fuel and provides guidance on how to have the best chance of success when pursuing or defending a claim.

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This guide highlights what can go wrong when purchasing, bunkering and using marine fuels and the steps that can be taken to avoid disputes and mitigate their impact.

 

It examines each stage of the supply chain, including the production and characteristics of fuel oil, contracts, transfer and handling operations, quantity and quality assessment, onboard storage and environmental compliance. It considers the impact of the 2020 global sulphur cap, with a particular focus on the increasing use of LNG as a marine fuel.

 

The guide also discusses collection of evidence relating to quality and quantity disputes and advises on claims management.

 

The appendices set out recommended BIMCO clauses, standard letters and no lien provisions.

1. INTRODUCTION
Purpose of this guide
2020 – a new era
Resolving disputes

 

2. PRODUCTION AND REFINING OF MARINE FUELS
Characteristics of crude oils
Refinery process
Marine fuel products
Biofuels
LNG as a marine fuel

 

3. TYPES AND CHARACTERISTICS OF MARINE FUELS
Grades
Quality characteristics
Standards for marine fuels
LNG as a marine fuel

 

4. PURCHASING MARINE FUELS
Specifying the right fuel
Delivery contracts
Confirmation of stem
Supplier’s standard terms and conditions
Terms implied by law
Bunkers supplied by charterer
LNG as a marine fuel

 

5. BUNKERING
Safe handling
General procedures and standards
Bunker checklist
Bunker delivery note
Letter of protest
LNG as a marine fuel

 

6. QUANTITY MEASUREMENT
Methods of determining quantity
Mass flow meters
Bunker surveys
Fuel foul play
LNG as a marine fuel

 

7. FUEL SAMPLING AND TESTING
Sampling
Testing
LNG as a marine fuel

 

8. ONBOARD STORAGE AND TREATMENT
Fuel storage and transfer systems
Fuel treatment systems
LNG as a marine fuel

 

9. ENVIRONMENTAL COMPLIANCE
MARPOL Annex VI
Regional and national regulations
Fuel oil non-availability
Alternative technologies
Other emission-related pollutants
LNG as a marine fuel

 

10. CLAIMS MANAGEMENT AND COLLECTING EVIDENCE
Action in the event of a quality dispute
Action in the event of a quantity dispute
Impact on insurance

 

APPENDICES
Recommended clauses
Draft letters
No lien provisions

The deterioration in quality of marine fuel oils over recent decades, coupled with increasingly stringent environmental legislation, presents a real challenge for shipowners and operators. Disputes relating to marine fuel oils – commonly referred to as ‘bunker fuel’ or simply ‘bunkers’ – show no sign of abating and are increasingly complex.

 

Shipowners, vessel managers and seafarers must remain alert to the problems associated with the supply of marine fuel oils. Identifying and understanding the issues will allow steps to be taken to ensure their vessels are provided with fuel oil suitable for use by their vessels’ power plants and, if any problems do arise, the impact is minimised.

 

The consequences of burning unsuitable fuel can be very serious. In addition to potentially costly damage to the vessel’s engines, a disabled vessel in a congested waterway, in poor weather, carrying an expensive or environmentally sensitive cargo can cause catastrophic damage to life, property and the environment. As refineries develop their processes to capture more of the higher value light grades of oil, the quality of the residual grades has deteriorated. Combined with blending problems, this has resulted in an increased frequency of vessels being supplied with residual marine fuel oil unsuitable for use.

 

PURPOSE OF THIS GUIDE

 

This loss prevention guide tackles fuel quality, quantity and contractual issues at source by giving those involved in the purchase and use of marine fuel oils a thorough understanding of the problems that they may face.

 

Bunker disputes can be approached from two distinct viewpoints. There is the viewpoint of those actually operating the vessel — for example, the crew who manage bunkering and are at risk if the vessel is supplied with unsuitable fuel oil. There is also the viewpoint of those ashore, who manage the vessel and may be involved in purchasing the fuel oil. They must know what action should be taken by the crew when dealing with unsuitable fuel oil on board and which parties should be held responsible.

 

The guide is for everyone who comes across bunker quality and quantity disputes in their working day. It is neither a legal text book nor an engineer’s manual, but it does aim to give a basic understanding of the technical and legal implications.

 

The guide takes each stage in order. It first deals with the nature of fuel oil, its production and resulting characteristics. Consideration is then given to the contracts under which fuel oil may be ordered and its ownership. Chapters on the loading and handling of fuel oil on board and the ever-increasing environmental legislation are followed by details on evidence collection and the handling of claims.

 

At the end of the guide are appendices, which include a number of specimen texts and various recommended standard letters.

NORTH P&I CLUB

North is a leading global marine insurer with over 160 years of history in the industry. Our purpose today remains as it was on our inception in 1860; to enable our Members to trade with confidence.

Over the years our service offering and our global office network has grown but our business has remained grounded where it all began; the North East of England. With a global service built around you and your business, expect a warm and friendly welcome whenever or wherever you deal with us, from people who genuinely care about your business.

https://www.nepia.com/about-us/who-we-are/about-north/

Title: Marine Fuels: Preventing Claims and Disputes (eBook)
Edition: First
Number of Pages: 114
Product Code: WS1712EA
Published Date: August 2019
Author: The North of England P&I Association Ltd

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