2020 transitional fuel clause imminent, says BIMCO

Shipping association BIMCO has said that its 2020 Bunker Clause working group was “pushing hard” to finish work on two key clauses addressing the IMO-mandated global switch to 0.5% sulphur content fuel from the beginning of 2020.

The “2020 Global Marine Fuel Sulphur Content Clause” – a general compliance provision – would be put forward for adoption by BIMCO’s Documentary Committee on November 13th. The drafting team has also prepared a first draft of a clause dealing with the transition to 0.5% sulphur content – the “2020 Transitional Fuel Clause”.

The 2020 Transitional Fuel Clause will be discussed by BIMCO’s Documentary Committee, also on November 13th.

BIMCO Head of Contracts and Clauses, Grant Hunter said that “the feedback provided by the Committee will be used to further refine the clause immediately afterwards. Furthermore, the sub-committee will ask the Documentary Committee to fast track the clause with the aim to issue the 2020 Global Marine Fuel Sulphur Content Clause and the 2020 Transitional Fuel Clause together as a package”.

At the core of the 2020 Global Marine Fuel Sulphur Content Clause is an obligation on owners and charterers to comply with the sulphur content requirements of MARPOL Annex VI. Fuels supplied by the charterers will have to meet not only the MARPOL Annex VI requirements, but also the specifications and grades set out in the charter party. Importantly, the charterers must also use bunker suppliers and barge operators who comply with MARPOL requirements throughout the supply chain.

BIMCO emphasized that owner and charter cooperation was essential in order to manage fuel supplies, and thus to minimize the amount of non-compliant fuel onboard ships on January 1st 2020. Any non-compliant fuel on board belonging to the charterers after that date would need to be discharged from the ship and disposed of at charterers’ risk, time and cost, at the latest by March 1st 2020 carriage ban date, or by the redelivery date – whichever comes first. It would be the owners’ responsibility to clean empty fuel tanks to prepare them to receive 0.5% sulphur content fuel.

BIMCO said that the clause emphasized the need for cooperation in planning and preparation to ensure a smooth as possible transition to the new low sulphur fuel.

A requirement to segregate fuels of different grades was a common provision in most time charter parties. However, there were concerns that new 0.5% sulphur content fuel might have compatibility issues, even between stems produced by the same oil company. To minimize the risk of incompatibility between stems of 0.5% sulphur fuel, the clause requires each supply of fuel to be kept separate – even if it is of the same grade and specification.

The drafting team met in London on Monday October 29th and were joined by representatives from INTERTANKO.  Hunter said that “we recognize the importance of trying to work together to produce clauses that both organizations can stand behind. We also believe that a diverse team is very important to ensure a broad perspective on all issues”.

The team is:

Peter Eckhardt, F Laeisz, Germany (Chairman);

Nicola Ioannou, Ocean Fleet, Greece; Dimitrios Los, Vontrados, Greece;

Daniel Chu, Navig8, UK;

Ann Shazell, Cargill Ocean Transportation, Switzerland;

Rob Crees, World Fuel Services, UK;

Tiejha Smyth, NEPIA, UK;

Paul Dean/Alessio Sbraga, HFW, UK.

INTERTANKO was represented by Michele White, general counsel, and Claire Georgeson, Commercial and Markets Manager. Technical guidance was provided by Lars Robert Pedersen, Deputy Secretary General for maritime technology and regulation at BIMCO.