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Thursday, 02 January 20
SULPHUR 2020 COMPENDIUM - HOW ARE INDIVIDUAL PORT STATES EXPECTED TO REACT? - STANDARD CLUB
 KNOWLEDGE TO ELEVATE
With the new sulphur limits soon to be in force, Standard Club has been investigating the ways in which certain jurisdictions are expected to react to violations.
We contacted our local correspondents from a variety of different ports, including Brazil, China, Denmark, Norway, Panama, Spain and Sweden, to build a compilation of what we believe is useful and practical knowledge for dealing with future sulphur claims.
We asked our correspondents the following series of questions:
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Will compliant bunkers be available in your jurisdiction?
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Which government body or organisation issues fines for sulphur violations?
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What is the estimated potential value of fines?
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Is there a possibility of criminal action for sulphur violations?
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Can a ship be detained for violations? If so, will a club LOU be accepted to secure its release?
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Is it possible to appeal fines?
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What contingency measures are available for ships carrying non-compliant fuel?
The answers to these questions are as follows. If you have questions about any of these jurisdictions, or any jurisdictions which are not listed below, please contact your usual claims handler at the club for further assistance.
Brazil
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Compliant bunkers will be available in Salvador, Sao Luis, Belem and Macapa.
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Fines may be issued by the ANP, IBAMA (the Environmental Authority) or the Harbour Master´s Office at each port.
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The estimated potential fines range from BRL 5,000 to BRL 2,000,000.
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There is a possibility of criminal action for sulphur violations in Brazil.
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A ship may be detained for sulphur violations until it is proved that there are bunkers within specification on board. Acceptance of a club LOU will depend on each individual case.
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It is possible to appeal fines.
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In the event of non-compliance, the Authorities will need to verify that the off-spec bunkers have been segregated on board.
China
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Compliant bunkers should be available in China. However, members should check with local agents and the port authority before calling to confirm availability.
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The local marine authority (the MSA) issues fines for sulphur violations.
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According to the PRC Air Pollution Prevention and Control Law, shipowners may face administrative penalties ranging from RMB10,000 to RMB100,000.
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While this is unlikely, there is a possibility for criminal action in the event of serious violations.
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Ships can be detained, depending on the seriousness of the violation. It is not known whether a club LOU would be accepted.
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Appeals of fines are unlikely to be successful if a violation has in fact occurred. However, owners may apply for a review of the fine if they suspect that the administrative procedures have been incorrectly applied (i.e. there has been no violation).
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From 1 January 2020 if a ship is unable to obtain compliant bunkers she should submit a FONAR to the MSA before entering Chinese waters. From 1 March 2020 if a ship is carrying non-compliant bunkers in Chinese waters they can discharge the non-compliant bunkers, or (subject to MSA approval) retain the non-compliant bunkers on board after providing a letter of commitment not to use these bunkers in Chinese waters.
Denmark
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Compliant bunkers will be available in Denmark.
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The Port State Control and the police both administer fines for sulphur violations.
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Fines for non-compliance can range from DKK 30,000 to DKK 300,000.
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Criminal action may in some cases be brought for non-compliance. Fines are imposed by the police, following penalty proceedings and public court hearings. In cases of gross negligence, or of continuous violation of the sulphur cap, there is the possibility of imprisonment for up to two years.
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A ship can be detained until it has taken the necessary steps to ensure compliance with the sulphur content regulations. Club LOUs will not be accepted to secure release of the ship.
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Fines can be appealed through the usual judicial channels (at the Court of Appeal and potentially at the Supreme Court).
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If the ship is not compliant with the sulphur regulations, it will be asked by officials to demonstrate that it has taken adequate steps to be compliant. The owner will have to demonstrate that they have established procedures on board the ship to ensure compliance. The owner will also have to provide documentation showing their attempts to obtain compliant bunkers.
Norway
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Compliant bunkers will be available in Norway.
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The Norwegian Maritime Authority (Sjøfartsdirektoratet) issues fines for violations.
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The lowest possible fine is around NOK 79,886. Fines are typically around NOK 250,000, although this figure may be higher depending on the degree of negligence and/or guilt.
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Criminal action may be brought for violations.
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Arrest of the ship for violation of the sulphur limits is possible.
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It is possible to appeal fines to the Norwegian Ministry of Climate and Environment.
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In the event of non-compliance, compliant bunkers are available so that the non-compliant bunkers can be replaced.
Panama
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Compliant bunkers will be available in Panama.
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Fines will be administered by the Panama Maritime Authority (PMA) and the Panama Canal Authority (PCA).
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The PMA and PCA will calculate fines based on the perceived seriousness of the violation. To date, there have been no known fines by the PMA or PCA, so it is difficult to say how they will deal with these incidents.
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Currently there have not been any known criminal proceedings relating to sulphur violations.
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A ship can be detained by both the PMA and PCA for violations, although this is seen to be unlikely. The PMA has in the past been vague regarding club LOU’s but the PCA regularly accepts them for other issues.
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Administrative fines are generally unappealable.
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There are limited options for ships to debunker non-compliant fuel at Panama.
Spain
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Compliant bunkers will be available in Spain.
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The Spanish Central Government Authority issues fines for sulphur violations. The Harbour Master’s office belongs to Merchant Marine General Management, which itself belongs to the Government Ministry in charge of public work.
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There is no set figure for fines. Fines are usually around EUR 22,000 although they could be as high as EUR 180,000. In case of wilful actions, the fine could be as high as EUR 600,000. The Harbour Master will ask for a guarantee to permit the ship to sail (club LOUs are not accepted).
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In theory there is a possibility of criminal action, but only if the use of off-spec bunkers was deliberate.
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A ship can be detained for sulphur violations. In such a case, a club LOU will not be accepted. Authorities will only accept a cash deposit, a bond or a bank security issued by a Spanish Insurer or Bank.
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It is possible to appeal fines, but success is unlikely.
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Any non-compliant bunkers on board will be banned, even if not in use, and similar sanctions will be imposed unless the ship has a scrubber in good operational condition. In addition to the sampling of storage tanks, evidence of tank cleaning and a bunker delivery note will also be required on board.
Sweden
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Compliant bunkers will be available in Sweden.
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The Coast Guard will issue fines for sulphur violations.
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The estimated value of fines is still under discussion. However, there is a risk that fines may be high value to deter non-compliance with the sulphur limits.
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There are not expected to be any criminal repercussions for non-compliance, only fines.
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In very extreme cases, ships can be detained for sulphur violations. It is difficult to predict whether the authorities will accept a club LOU in this situation.
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It is possible to appeal fines.
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In the event of non-compliance, there are many well established bunker operators in the region who can handle non-compliant bunkers.
Source: Standard Club
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- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Planning Commission, India
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
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