ii) Scrubbers Installed However, some owners are considering installing scrubbers, which will allow vessels to stem higher sulphur content fuels, and ‘clean’ them to produce emissions which meet the requirements of the rules. Generally, the time and cost involved in the installation of scrubbers is a matter for owners.
Installation of scrubbers will have an impact on owners’ maintenance obligations, including crew training, in order to deal with this new piece of equipment. Owners will be liable should their crew not be properly trained in the use of the scrubbers.
Further, if the scrubbers break down the costs of repair will obviously be for owners’ account, and if any time is lost in effecting repairs, it will be an off-hire event under clause 15. If excessive low sulphur fuel is consumed due to the breakdown of the scrubbers (which would otherwise allow the use of cheaper high sulphur fuels), then this may also raise a claim by charterers for the difference in fuel prices (subject of course to establishing the breakdown was caused by a breach of charterparty).
2) COST OF BUNKERS
Charterers are to provide and pay for all fuel whilst the vessel is on hire (see clauses 2 and 20 of the NYPE). Charterers will be required to supply fuel which complies with the new sulphur limit, in line with ISO 8217 standards, and which is “of a quality suitable for burning in the Vessel’s engines and auxiliaries”.
i) No Scrubbers Charterers will be required to provide fuel which complies with the new sulphur limit, the cost of which will be at the Charterers’ risk. It has been predicted that the increased costs could be as much as around USD600 per metric ton.
ii) Scrubbers Installed Charterers will be able to purchase fuel oil with a higher sulphur content (< 3.5% m/m), and will therefore benefit from lower fuel costs in the short term. This is likely to make vessels with scrubbers already installed more attractive to prospective charterers, although a long term charterer may be able to offset these costs by sub-chartering out the vessel.
3) QUALITY OF BUNKERS / REMOVAL OF NON- COMPLIANT FUEL
Under the BIMCO Bunker Fuel Sulphur Content Clause, charterers are required to supply bunkers of such specifications and grades to permit the vessel to comply with the maximum sulphur content requirement of any ECAs within which the vessel is ordered to trade. This includes all waters regulated by the E.U (EU Directive 2005/33/EC, amending Directive 1999/328/EC).
The BIMCO quality control clause requires charterers to supply bunkers which comply with ISO 8217 standards, and which are “of a quality suitable for burning in the Vessel’s engines and auxiliaries”.
The above clauses do not expressly deal with the new sulphur limit outside ECAs. Whilst no doubt BIMCO will publish a further clause in due course, the new global limits do not specifically alter the terms of these clauses.
i) No Scrubbers If the expected prohibition on the carriage of non-compliant fuel is approved then ships without scrubbers will not be permitted to carry fuel with a sulphur content of more than 0.5% m/m beyond 1 March 2020.
In order to assess the relevant control measure (i.e. fine or other measure) States shall “take into account all relevant circumstances and the evidence presented to determine the
appropriate action to take, including not taking control measures” (per Regulation 18(2) (c) Annex VI).
At present, it is understood that oil companies are working on perfecting blends for compliant fuel. There remains a question mark as to what extent compliant fuels will be readily available, but fuel suppliers, who will each be looking to steal a march on their competitors, are apparently quietly confident in that regard.
Parties to MARPOL are encouraged to promote the availability of compliant fuels in accordance with Regulation 18.1, but Regulation 18.2 provides that ships should not be required to deviate or “unduly delay the voyage in order to achieve compliance”. However, not all countries with bunkering ports are signatories to MARPOL Annex VI, for example Algeria, Bahrain, Saudi Arabia, and Thailand (interestingly, the U.A.E. is also not a signatory to MARPOL Annex VI. Certain ports within it have taken the decision to comply, although this does not include Fujairah, even though local suppliers appear to have taken a commercial decision that they will comply.)
Where non-compliant fuels are all that is available then (taking into account the vessel’s trading patterns and with her safety being of paramount importance), it is possible that necessity will dictate a vessel is supplied with (and will likely have to burn), non- compliant fuel.
However, notwithstanding the terms of Regulation 18, that vessel would still be in breach of Regulation 14. A lack of available compliant fuel acts only as a mitigating factor which would be taken into account by the MARPOL state when deciding what action to take against the vessel for non-compliance. It will not necessarily excuse the breach.
The Report • March 2019 • Issue 87 | 29
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