Recognised as a leading shipping law firm by Legal 500 2015
Bunker Contamination Cases Sound a Warning Bell
August 14 2018
Bunker contamination claims have been a growing trend this year. It is reported that in excess of 100 vessels have now reported damage relating to contaminated bunkers stemmed from places as varied as Houston to Singapore. The precise cause of the contamination is still to be determined and each case will turn on its facts. However, these claims give an insight into the potential complications that may arise from the MARPOL Convention amendments due to take effect in less than 18 months.
The MARPOL Convention
Otherwise known as The International Convention for the Prevention of Pollution from Ships, the MARPOL Regulations are intended to prevent both accidental and operational pollution from ships. One pollutant in particular that MARPOL aims to reduce is Sulphur Oxide, a by-product of the combustion of heavy marine fuel.
In its current form, MARPOL limits the Sulphur content of marine fuel to 0.1% inside “Emission Control Areas” (ECAs). Major ECAs include the Baltic and North Seas, the English Channel, the Caribbean and the North American Area. Outside the ECAs, sulphur content of marine fuel is limited to 3.5%.
From 1 January 2020 onwards, the sulphur content of marine fuel used outside of ECAs will be capped at 0.5%. Sulphur limits inside ECAs will remain unchanged. Should owners fail to adhere to these new regulations, they face the prospect of heavy fines.
How can owners comply with the incoming Sulphur Cap?
In order to be MARPOL compliant, shipowners have main three options at their disposal:
1. Switch to LNG fuel.
2. Retrofit vessels with emission cleaning systems (scrubbers).
3. Switch to low sulphur fuel options.
The signs from the market are that an overwhelming majority of ship owners will simply switch to low sulphur fuel options.
This, of course, makes sense. The cost of retrofitting vessel with scrubbers, or gas fired engines is prohibitive and with the 2020 deadline fast approaching, current dry-dock capacity could only serve a fraction of the global fleet. In the short term at least, most owners see low sulphur fuel as the most efficient and cost-effective way of meeting the incoming MARPOL requirements. However, this option is not without inherent difficulties and there significant pitfalls of which owners should be aware.
Cleaner, but more risks?
There is an increasing body of evidence supporting a link between the use of low sulphur fuel and mechanical breakdowns . Low sulphur fuel, like other refined products, is known to contain a higher concentration of mineral contaminates, particularly catalytic fines. These fines are tiny particles, about the diameter of a human hair. However, the fines can be twice as hard as the iron and steel used in engine parts. If catalytic fines make their way into a main engine, they have the potential to cause serious abrasive damage and even catastrophic engine failure.
Only around 2% of the current low-sulphur fuel market would meet the new MARPOL requirements. Demand for post-2020 compliant fuel is likely to be satisfied by blending current high sulphur fuel stocks with low sulphur fuel, particularly as blended low sulphur fuels should be more economical than straight distillate low sulphur fuels. However, the blending process is known to be a stage in production where contaminates are even more likely to enter the fuel supply.
The recent bunker contamination cases may serve as a cautionary tale to vessel owners expecting a smooth transition to low sulphur fuel in 2020. The industry now has less than 18 months to try to minimise the potential risks. If it fails to do so, history may record the 2018 cases as little more than a prelude to a growing trend of contaminated bunker cases.
MFB are frequently instructed in relation to fuel contamination disputes. Should you wish to speak with us concerning any of the matters raised in this article, please refer to your usual contact at the firm or the authors.
BrochureDownload our online brochure