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July 30, 2005

Owners face low sulfur fuel problems

Shipowners face a general decline in worldwide bunker quality and potential problems complying with the new sulfur oxide (SOx) emission limits set by MARPOL Annex VI, warns the North of England P&I club.

Mike Salthouse, a director of the club's FD&D department, says North of England has experienced a steady increase in the number of claims and enquiries relating to bunker quality during the past year.

"There is widespread concern about the general decline in bunker quality at many ports," he says. "Getting the right fuel at the right price will be a major challenge for vessel operators seeking to comply with the new emission standards."'

Annex VI came into force on May 19 2005 and, by the end of June, had been ratified by 25 countries representing 63% of world tonnage. It imposes a global cap of 4.5 percent sulfur content in bunkers and will impose a much more stringent limit of 1.5 percent in designated SOx emission control areas or "SECA's'." The first of these-- the Baltic--comes into existence on May 19, 2006 and the North Sea and English Channel SECA starts in autumn 2007.

"We anticipate problems with availability of the low-sulfur fuel required in the first SECA, both in quantity and geographically, and there is also likely to be a significant cost premium," says Tony Baker, manager of North of England's risk-management department.

The club is advising members to plan well ahead to obtain suitable bunkers. In a special supplement to the 60th issue of its loss-prevention newsletter Signals, North of England has also spelt out the precautions shipowners need to take when stemming bunkers --particularly the importance of obtaining a representative sample.

"All samples should be sealed and signed by the supplier and the ship's officer in charge of bunkering operations," says Baker. "Shipowners also need to ensure they obtain properly completed bunker delivery notes, which should include a signed declaration by the supplier that the sulfur content is less than 4.5 percent or 1.5 percent as required and that the fuel is within the specification defined in MARPOL Annex VI regulation 18."

Other issues covered in the supplement include compliance certification, record keeping, managing dual pipe and tank systems, blending with marine diesel, exhaust-scrubbing technology, charterparty issues and EU proposals to reduce sulfur limits further in European ports in 2010.

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