Marine Fuels: Preventing Claims and Disputes

Published Date

August 2019


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Marine Fuels: Preventing Claims and Disputes

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Quantity and quality issues regarding the supply of marine fuels can lead to potentially complex, costly and lengthy claims and legal disputes. This guide provides helpful advice on how these claims and disputes can be avoided. Just as importantly, it also provides guidance on how to have the best chance of success when pursuing or defending a claim.

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This guide aims to assist seagoing officers, vessel operators, vessel managers and time charterers in understanding what can go wrong when purchasing, bunkering and using marine fuels and what steps can be taken to prevent them and mitigate their impact. It explores the subject of marine fuels, from the production and refining process all the way to burning in the vessel’s engines. The nature and characteristics of marine fuels is discussed along with purchasing, contractual obligations, loading, handling, sampling and testing. The guide finishes by looking at claims management and the all-important collection of evidence.

 

Increasingly stringent environmental regulation has placed more demands on seafarers and operators. Compliance with the global sulphur cap in 2020 has driven the demand for new compliant fuels and new technology. This guide considers this change in the landscape, with a particular focus on the increasing use of LNG as a marine fuel.

CONTENTS

 

INTRODUCTION

Purpose of this guide

2020 – a new era

Resolving disputes

 

PRODUCTION AND REFINING OF MARINE FUELS Characteristics of crude oils

Refinery process

Marine fuel products

Biofuels

LNG as a marine fuel

 

TYPES AND CHARACTERISTICS OF MARINE FUELS Grades

Quality characteristics

Standards for marine fuels

LNG as a marine fuel

 

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

 

BUNKERING

Safe handling

General procedures and standards

Bunker checklist

Bunker delivery note

Letter of protest

LNG as a marine fuel

 

QUANTITY MEASUREMENT

Methods of determining quantity

Mass flow meters

Bunker surveys

Fuel foul play

LNG as a marine fuel

 

 

FUEL SAMPLING AND TESTING

Sampling

Testing

LNG as a marine fuel

 

ON-BOARD STORAGE AND TREATMENT

Fuel storage and transfer systems

Fuel treatment systems

LNG as a marine fuel

 

ENVIRONMENTAL COMPLIANCE

MARPOL Annex VI

Regional and national regulations

Fuel oil non-availability

Alternative technologies

Other emission-related pollutants

LNG as a marine fuel

 

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

 

INDEX

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.

Title: Marine Fuels: Preventing Claims and Disputes
Edition: First
Number of Pages: 114
Product Code: WS1712K
ISBN: ISBN 13: 978-0-9955653-3-3 (9780995565333), ISBN 10: 0-9955653-3-3 (0995565333)
Published Date: August 2019
Weight: 0.60 kg
Author: The North of England P&I Association Ltd

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