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Gard: Bunker quality – do bunker suppliers have charterers over a barrel?

Singapore bunker fuel contamination reveals imbalance of recourse opportunities in bunker sale contracts between time charterers and other parties.

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Norwegian maritime insurance company Gard on Tuesday (10 May) published an insight to review the imbalance between the position of time charterer vis-à-vis vessel owners versus the charterer’s recourse opportunities under the bunker sale contract, following the contaminated bunker fuel situation at Singapore:

Charterer’s obligation to provide bunkers in compliance with charterparty specification

Time charterers supplying vessels with bunker fuel oil need to ensure that they meet the contractual specifications set out in the charterparty. This may include a general obligation to provide bunkers fit for purpose and suitable for burning in the main and auxiliary engines. 

The charterparty may also provide that the fuel complies with particular specifications or grades the most common of which is ISO:8217. There are various versions of this document and reference may be to a particular version or to the latest version at the time of supply. The latest dates from 2017and is due to be reviewed.  

All versions of ISO:8217 at Clause 5 contain a ’catch al’ provision to the effect that the bunkers do not contain any material in a concentration that is harmful to personnel, jeopardises the safety of the ship or adversely affects the performance of the machinery. 

Clause 5 is necessary because the specifications tested for would not catch material that should not be found in bunkers. For example, that is the case with chlorinated hydrocarbons recently found in HSFO bunkers supplied in Singapore. The compounds were only found by enhanced testing – GC-MS (gas chromatography – mass spectrometer).   

This catch all provision means that even if the bunkers supplied by a charterer test on spec under ISO:8217 Table 1 for distillates or Table 2 for residuals, the fuel can still be rejected if it contains any material that can render the fuel unsuitable or unsafe to use. 

Accordingly, owners have wide powers to reject bunkers and demand replacement. Owners can also recover damages flowing from the breach such as the costs of cleaning or even replacing the vessel’s parts/engines that may be damaged. This can be very expensive.   

There will, however, commonly be arguments about whether the bunkers caused the damage or if this was caused by pre-existing issues such as the owner’s failure to maintain the engines. 

If the owners choose to use the bunkers in the knowledge that it is off spec, there may be arguments that they have waived their right to make a claim (unless of course they have preserved their rights and/or obtained a suitably worded indemnity from the charterers.) 

Disputes over bunker quality can be time consuming and expensive, and the best solution is often for owners and charterers to take expert advice and seek a solution together.

Buyer beware – common limitations found in bunker sale contracts

Sellers’ terms often incorporate fixed (often low) limits on sellers’ liability, exclusions for certain types of loss (e.g. loss of time, profit, indirect or consequential loss), and short time bars for buyers’ claims. The contracts will also likely include choice of law and jurisdiction clauses. 

The most common law and jurisdiction clause chosen in charterparties is English law and London (LMAA) arbitration. However, bunkers supply contracts often adopt the law and jurisdiction of the place where the bunkers are being supplied. 

Global suppliers often select US law and jurisdiction because supply of bunkers creates a maritime lien on the vessel supplied. In many instances, the validity of the particular limitations in the contract can only be challenged within the law and jurisdiction specified.   

The time limits for notification of claims may be so short that it is difficult to obtain test results and notify the bunker suppliers in time. This problem is amplified where bunkers are unsuitable due to a substance that is not part of the standard testing. In those circumstances, the contamination is usually only discovered when using the bunkers. 

For example, the chlorinated organic compounds (COC)found in HFSO stemmed in Singapore in the first quarter of 2022 were only discovered when vessels began using the bunkers and experienced blackouts, loss of propulsion, high exhaust temperature deviation and excessive sludging in the fuel system. The discovery of the problem may be beyond the short time limit within the bunker sale contract to notify the seller of the claim.   

Thus, while the vessel owner has a right to require the charterer to remove bunkers that are harmful, the charterer as purchaser may be beyond the time limit to make quality claims against the seller. In some cases the courts may disregard the strict time limits but this may be an uphill battle.  

Establishing a claim 

Despite the one-sided contract limitations, reputable bunker providers may accept responsibility for replacement of bunkers that contain contaminants that negatively affect the operation of the vessel if the charterer, or owner, has evidence from advanced testing of the contaminant. 

That does not mean that the supplier will waive the contract limitations with respect to the loss of time and other consequential losses. 

However, these limitations may be challengeable depending on the jurisdiction. In any event it is recommended that a buyer carefully consider bunkers terms and conditions and if possible, negotiate elements such as time limits for notifying claims and caps on liability so that they are more realistic. 

This is probably only possible where buyers are able to establish a relationship with bunker suppliers as the latter often insist on contracting on their standard terms and conditions. Notwithstanding the difficulty of negotiating terms, it is wise to review terms in advance and contract with reputable suppliers that agree to replace non-conforming bunkers without a monetary cap.  

Conclusion

Owners will often have provisions in their charter parties allowing for bunkers to be rejected if they contain impurities that make them unsuitable for use in the vessel’s engines, even if those impurities do not show up in the initial standard tests. 

The bunkers may be usable despite being off-spec and the parties may negotiate the terms on which they are used. In those circumstances owners would be advised to obtain advice from a bunker expert and seek protection from the charterers against unforeseen damage. 

From the charterers’ point of view, if the bunkers they were supplied with were off spec their recourse against the suppliers may be limited by deadlines within which claims have to be made and by a low cap on recoverable claims. 

If engine problems develop when burning a new stem, and there are indications that the bunkers may be at fault, it is important for owners and charterers that the bunkers are tested as soon as possible using enhanced tests. Fortunately the Maritime and Port Authority of Singapore (MPA) was quick to investigate the source of the contaminants in HSFO and have no further reports of fuel containing high COC after 31 March.

Authors: 

  1. Kunbi Sowunmi, Senior Claims Adviser, Lawyer, New York
  2. Marie Kelly, Vice President, Defence Claims, London
  3. Siddharth Mahajan, Senior Loss Prevention Executive, Singapore

Related: Singapore: MPA investigation traces contaminated bunker fuel back to source at Port of Khor Fakkan
Related: Singapore bunker contamination different from earlier Houston cases
Related: MPA: Glencore and PetroChina supplied contaminated bunkers to about 200 ships in the Port of Singapore
Related: Singapore Shipping Association issues statement to members regarding recent contaminated HSFO bunker cases
Related: VPS provides update on bunker fuel contamination cases in Singapore
Related: Bureau Veritas answers questions on Chlorinated Compounds in HSFO from Singapore
Related: FuelTrust: Latest bunkering contamination at Singapore validates need for early warning system
Related: VPS identifies potential bunker fuel contamination crisis unfolding at Singapore
Related: Gard members and clients find chlorinated hydrocarbons in Singapore bunkers

 

Photo credit and source: Gard
Published: 11 May, 2022

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Alternative Fuels

Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

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Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Taiwanese shipping firm Yang Ming Marine Transport Corporation (Yang Ming) and South Korean shipbuilder Hanwha Ocean on Wednesday (2 September) signed a shipbuilding contract for six 13,000 TEU class LNG dual-fuel container vessels. 

The contract was signed by Dr. Chuck Tsai, Chairman of Yang Ming, and Mr. Charles Kim, CEO of Hanwha Ocean. The vessels are scheduled for delivery between 2028 and 2029. 

They will complement Yang Ming’s existing fleet of 10,000+ TEU vessels and serve as key vessels on East-West services, with deployment flexibility across trade lanes connecting Asia with the East and West Coasts of North America, South America, and the Mediterranean. 

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

“As Yang Ming transitions toward net-zero emissions, LNG provides a relatively mature and economically viable alternative fuel solution, capable of reducing greenhouse gas emissions by approximately 20%,” the company said. 

“At the same time, ammonia can serve as a carbon-free fuel by utilising converted LNG storage facilities, while offering relatively lower conversion costs and comparatively well-developed supply chains and infrastructure. The Ammonia Fuel Ready design will therefore provide Yang Ming with greater flexibility in responding to increasingly stringent international regulations on greenhouse gas emissions.”

In addition, the vessels will be equipped with Type B LNG fuel tanks with a design pressure of 1.0 bar to enhance the safety and efficiency of LNG operations, together with a range of energy-saving technologies, including Wind Shields, Rudder Bulbs, Pre-Swirl Stators, and Shore Power Systems. Smart ship technologies and cybersecurity protection features will also be incorporated to enhance operational efficiency, safety, and reliability while effectively reducing fuel consumption and greenhouse gas emissions.

Deliveries under Yang Ming’s next-generation fleet optimization plan commenced earlier this year. By 2030, a total of 24 new vessels are expected to enter service. 

This includes 18 LNG dual-fuel vessels—comprising five 15,500 TEU, seven 16,000 TEU, and the six 13,000 TEU vessels under this contract—alongside six 8,000 TEU methanol dual-fuel-ready ships. 

 

Photo credit: Yang Ming Marine Transport
Published: 4 September, 2026

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Alternative Fuels

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Both secured AiP for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

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LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Lloyd’s Register (LR) and the Marine Design and Research Institute of China (MARIC) on Thursday (3 September) have secured Approval in Principle (AiP) for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Announced at SMM 2026, the concept addresses one of the biggest investment challenges facing shipping today: the need to develop vessels and capabilities that can support a range of alternative fuel options and pathways as technologies, infrastructure and regulations evolve.

While LNG is already a mature fuel pathway, methanol and ammonia remain at an earlier stage of development, with questions around global fuel availability, infrastructure development, economics and long-term adoption.

The 114,000 DWT tanker concept has been designed as a product and crude oil carrier that can accommodate future conversion to LNG, methanol or ammonia as technologies, regulations and fuel supply chains mature. By incorporating conversion readiness at the design stage, the concept aims to reduce future retrofit complexity and provide owners with greater confidence when planning long-term fleet investments.

The design concept was reviewed against LR’s July 2026 class rules and regulations, including requirements relating to ships using gases and other low-flashpoint fuels, alongside relevant IACS Common Structural Rules for oil tankers. Final classification and statutory approval remain subject to full compliance with all applicable rules and regulations.

Theo Kourmpelis, Global Business Director for Tankers, Lloyd’s Register, said: “Shipowners are being asked to make major investment decisions today despite continued uncertainty around which fuels will dominate in the decades ahead. Alternative fuel solutions each offer potential pathways to compliance, but fuel infrastructure, regulation and economics continue to evolve at different speeds around the world.

“Designs that preserve flexibility will be critical in helping owners manage risk while preparing for multiple future scenarios.”

Si Nan, Marine & Offshore Marketing Department Vice Director, MARIC, said: “As the industry explores different decarbonisation pathways, shipowners need vessel designs that can adapt alongside technological and regulatory developments. This concept was developed specifically to provide greater fuel flexibility and long-term resilience, allowing owners to respond to changing market requirements without being locked into a single fuel strategy.

“Receiving Approval in Principle from Lloyd’s Register is an important milestone that validates the design concept and supports its future development.”

 

Photo credit: Lloyd’s Register
Published: 4 September, 2026

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Alternative Fuels

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.

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DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.

This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.

LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.

The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.

LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).

Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.

“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains. 

“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve. 

“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”

Screenshot 2026 09 04 at 12.29.26 PM Screenshot 2026 09 04 at 12.29.36 PM

 

Photo credit: DNV
Published: 4 September, 2026

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