keeps you connected across the coal world

Submit Your Articles
We welcome article submissions from experts in the areas of coal, mining, shipping, etc.

To Submit your article please click here.

International Energy Events

WTI Crude Oil

BRENT Crude Oil

Search News
Latest CoalNews Headlines
Tuesday, 09 June 20

Regardless of whether a buyer purchases fuel directly from physical suppliers or via brokers or traders and whether sale is under a global framework agreement or ad hoc on a port by port basis, a common feature is that the seller’s terms generally prevail.
On 1 January 2020, the lower sulphur limit imposed pursuant to IMO 2020 regulations came into effect. The new regulations have been written about extensively by Gard and others in the shipping and insurance industries.  However, the terms upon which bunkers are purchased is perhaps not given the consideration it deserves
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), short time bars for buyers’ claims, and evidential and law and jurisdiction clauses in sellers' favour. There have been moves to try and work towards standard bunker purchase contracts with BIMCO introducing BIMCO Bunker Purchase Terms in 2015 which were updated in 2018. These contracts are more balanced than typical sellers' standard terms, and representatives from owners, charterers and bunker companies were all involved in the drafting process.
From a commercial bargaining perspective, it may be easier to negotiate more balanced terms if they are agreed in advance as part of a worldwide framework agreement to buy bunkers from a single or small number of sellers.
Taking the BIMCO Terms as a starting point buyers may try to negotiate on some of the following checklist key items:
Bunker supply contracts – key issues checklist
Due diligence with respect to the seller: considermarket reputation and financial standing of sellers, in terms of financial standing and insurance position (see below) and involvement in previous supply issues. 
Are they also a physical supplier or only an intermediary? 
How do they verify the quality of the fuel supplied? 
What are their supply chain quality management procedures?
Due diligence with respect to the fuel: consider what information you need about the fuel and its origin.  Are there any special parameters regarding storage, handling, treatment and use of the fuel on board? Do you require specific information in the Certificate of Quality?
Helpful Joint Industry Guidance is available on the supply and use of 0.50%-sulphur fuel:
Fuel specification: the contract should identify the correct specification of the fuel - for example by expressly stating the relevant ISO specification. For residual fuels, the most widely used specification is ISO 8217 Table 2.  The Table 2 specification for sulphur content is stated as per “statutory requirements” and, since 1 January 2020, the global MARPOL sulphur limit is 0.50% with lower limits set for SECAs. ISO 8217 is periodically revised and the industry guidance recommends the most recent version, ISO 8217 2017. Check whether the fuel specified in your bunker supply terms complies with IMO 2020 and that this also accords with charterparty requirements so it is back-to-back. A further point to consider adding is an express term that the fuel is free of contaminants, is fit for purpose and complies with MARPOL. 
Sampling and quality testing: the contract should specify the agreed sampling and quality testing regime, including for sulphur content. Ideally, a sample from each of the bunker supplier and the vessel should be analysed as opposed to only the supplier's sample.  Again, insofar as possible, sampling and testing requirements need to match the charterparty so the buyer is not exposed to different test standards. Ideally, the sampling process should be set out in detail in the contract together with the agreed analysis regime that is to be used. Consideration should also be given as to whether preferred accredited labs for testing should be identified in the contract. In the event there is a dispute about the quality or characteristic of the particular stem, inability to agree to a lab for testing may complicate and delay resolution. 
Quality claims time bar: the contract should ideally include a quality claim time bar that allows sufficient time for quality testing to be performed, taking into consideration that testing might need to take place at an accredited lab located at a place other than the place of supply. In our experience, bunker contract time bars are normally far too short, especially given that bunkers may not be immediately used (for example bunker test results may be required under the charter before the bunkers are in fact used) and even when used promptly problems may not manifest themselves immediately. We have seen cases where the bunker recourse claim against the supplier is time barred before the bunkers have been used. It is recommended to link any time bar to 14 days after use of the bunkers or alternatively to have a much longer time bar period, for example 45 days.
Limitation of liability: standard bunker supply contracts usually include a low mutual limitation of liability figure (usually one or at most two times the invoiced value of the fuel). Consider negotiating increased limitation of liability sums to reflect the fact that losses arising from loading or consumption of off-specification fuel can be very high in value. It is suggested that at least twice the value of the fuel or more should be targeted where possible. An alternative option is to include reference to both a specific amount and at least twice the value of the fuel provision, with the highest of the two applying. Lastly, make sure that any limitation agreed applies mutually to both parties (rather than just the sellers).
The "OW Bunkers" issue: if buying direct from a physical supplier there is less risk, but if purchasing via a broker or trader there is a risk they may not have paid their counterpart for the bunkers which could, in the event of their insolvency, lead to competing payment demands and the risk for the buyer of having to pay twice.  It is sensible to include provisions under which the sellers warrant they have paid for the bunkers and the buyer has a right to request evidence from the sellers that they have paid any third parties for the bunkers before the buyer is required to pay the sellers' invoice, such that if no evidence is provided the buyer may withhold payment/hold sellers in breach.
It is further prudent to include a term that in the event of bankruptcy of the sellers, the buyer will be entitled to withhold payment for the fuel until the relevant court/tribunal determines whether sellers or the physical suppliers or any third parties have a claim directly against the buyer/vessel. If there is such a determination, the contract can also provide that payment to a party other than sellers for the fuel, as determined by the relevant court/tribunal, shall be deemed to subordinate the claim to the rightful party in order to safeguard the buyer from having to pay more than one party (and more than once!) for the fuel.
Consider also making the contract subject to the Sale of Goods Act 1979, so as to make the contract a contract of sale (thus bringing in the Act's protection so far as fitness for purpose and quality are concerned, and the requirement that the Sellers also have good title to the fuel at the time of sale to the buyer).  
Insurance: sellers should ideally have insurance in place and should be required to produce evidence of this. Such insurance may for example include credit, professional indemnity and product liability insurance.
Local rules and regulations: most standard term contracts incorporate local rules and regulations into the bunker supply contracts. Local rules and regulations can bring about surprises that the parties to the contract might not be aware of at the time of contracting. Consideration is accordingly recommended to be given to the exclusion of local rules and regulations either in their entirety or to limit their applicability to fuel sampling only.
Uniform bunker supply terms: ideally the same supply terms should be used across the board with all suppliers so as to have certainty over the risk allocation and to avoid the use of ad hoc supplier friendly terms. In effect, have a framework agreement/standard terms agreed with major suppliers.
Lien: try and avoid provisions that give the sellers a lien over the vessel or any rights of action against third parties (e.g. the owner if the charterer is the buyer) as this can cause serious issues under the charterparty. A further point to consider, is to add an express provision that the sellers must hold the buyer harmless and indemnify the buyer in the event that a third party asserts a lien or encumbrance on the vessel in relation to the fuel purchased from the sellers. Similarly, a clause can also be included by which the sellers warrant that no third party has any right to claim against the buyer in relation to the fuel, or exercise any right of lien, charge, encumbrance or arrest over the vessel or any sister vessels in respect of the fuel. Lastly, consider including a provision that if such a claim nevertheless arises, the sellers shall co-operate to allow interpleader proceedings. See also our comments on the OW Bunkers issue above.
Exclusions: consider whether you wish to exclude indirect or consequential loss (as this could extend to loss of time). Be careful of broad term exclusions that are usually found in bespoke sellers' contracts. Make sure that any exclusions apply mutually to both contractual parties if they are agreed.
Law and Jurisdiction: avoid the application of US law (due to maritime lien rights) and agree on a neutral law/jurisdiction that is not necessarily the sellers' choice.
These suggestions come from our experience in disputes and litigation involving bunker quality. It is important for buyers to understand the consequences of accepting sellers' terms and well worth the effort to attempt to negotiate a more balanced contract. Even when the terms are not negotiable, risks can be mitigated by exercising due diligence before selecting the seller.
We thank HFW solicitors, Rory Butler and Louise Lazarou for their contribution to Gard Insight. Gard publishes articles, alerts and circulars concerning the MARPOL 2020 low sulphur requirements that are available on the Gard website including topics such as residual fuel specifications and testing for sulphur content, stability and compatibility of very low sulphur fuel oils,  preparing crew for port state inspections and limitations on P&I cover for non-compliance.    

by Rory Butler, Partner, and Louise Lazarou, Senior Associate
Holman Fenwick Willan 
Source: GARD

If you believe an article violates your rights or the rights of others, please contact us.

Recent News

Wednesday, 09 June 21
“Counter cyclical investments.” usually take place by investing in a “bad” market at the point that ensures that the acquir ...

Saturday, 05 June 21
KOMIPO INVITED 5600 NAR COAL OFFERS FOR THREE YEARS SUPPLY; 520,000 MT PER YEAR Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of  Bituminous Coal to be used a ...

Saturday, 05 June 21
Fossil gas and nuclear investments risk locking in costly, outdated infrastructure for the long-term   The United States has spent the ...

Friday, 04 June 21
Coal capacity additions face major stranded asset risk Much of India’s 33 gigawatts (GW) of coal-fired power capacity currently under co ...

Thursday, 03 June 21
JUNE HBA IS HITTING ABOVE $100 AND SETTLED AT ITS HIGHEST SINCE OCTOBER 2020 The Indonesia coal price reference for June 2021 settles at US$ 100.33 per ton FOB vessel.    The Indonesia coal pr ...

   1 2 3 4 5   
Showing 11 to 15 news of total 6321
News by Category
Popular News
Total Members : 27,459
User ID
Remember Me
By logging on you accept our TERMS OF USE.
Forgot Password
Our Members Are From ...

  • Pipit Mutiara Jaya. PT, Indonesia
  • Barasentosa Lestari - Indonesia
  • Formosa Plastics Group - Taiwan
  • Binh Thuan Hamico - Vietnam
  • Ceylon Electricity Board - Sri Lanka
  • WorleyParsons
  • San Jose City I Power Corp, Philippines
  • Dong Bac Coal Mineral Investment Coporation - Vietnam
  • Ind-Barath Power Infra Limited - India
  • Coaltrans Conferences
  • IOL Indonesia
  • Thailand Anthracite
  • TNB Fuel Sdn Bhd - Malaysia
  • Bhatia International Limited - India
  • Altura Mining Limited, Indonesia
  • Makarim & Taira - Indonesia
  • Sical Logistics Limited - India
  • Jindal Steel & Power Ltd - India
  • Ministry of Finance - Indonesia
  • Ambuja Cements Ltd - India
  • Arch Coal - USA
  • Thiess Contractors Indonesia
  • London Commodity Brokers - England
  • Borneo Indobara - Indonesia
  • Meralco Power Generation, Philippines
  • Sinarmas Energy and Mining - Indonesia
  • PetroVietnam
  • Bangkok Bank PCL
  • Petrosea - Indonesia
  • IBC Asia (S) Pte Ltd
  • Maruti Cements - India
  • Cardiff University - UK
  • Planning Commission, India
  • Lafarge - France
  • McKinsey & Co - India
  • SASOL - South Africa
  • Gresik Semen - Indonesia
  • Anglo American - United Kingdom
  • Asian Development Bank
  • BRS Brokers - Singapore
  • TANGEDCO India
  • Cebu Energy, Philippines
  • Essar Steel Hazira Ltd - India
  • Goldman Sachs - Singapore
  • Edison Trading Spa - Italy
  • Xstrata Coal
  • Energy Link Ltd, New Zealand
  • Pinang Coal Indonesia
  • GB Group - China
  • VISA Power Limited - India
  • EMO - The Netherlands
  • Coalindo Energy - Indonesia
  • Tata Power - India
  • Mitsubishi Corporation
  • Coastal Gujarat Power Limited - India
  • Asmin Koalindo Tuhup - Indonesia
  • Oldendorff Carriers - Singapore
  • Manunggal Multi Energi - Indonesia
  • The State Trading Corporation of India Ltd
  • The India Cements Ltd
  • CIMB Investment Bank - Malaysia
  • Posco Energy - South Korea
  • GVK Power & Infra Limited - India
  • Mitra SK Pvt Ltd - India
  • Indorama - Singapore
  • PetroVietnam Power Coal Import and Supply Company
  • Sojitz Corporation - Japan
  • Arutmin Indonesia
  • Orica Australia Pty. Ltd.
  • Shenhua Group - China
  • SMC Global Power, Philippines
  • Panama Canal Authority
  • Karaikal Port Pvt Ltd - India
  • Attock Cement Pakistan Limited
  • World Bank
  • Kideco Jaya Agung - Indonesia
  • Energy Development Corp, Philippines
  • Alfred C Toepfer International GmbH - Germany
  • Bhushan Steel Limited - India
  • Bharathi Cement Corporation - India
  • bp singapore
  • Central Electricity Authority - India
  • ICICI Bank Limited - India
  • globalCOAL - UK
  • Filglen & Citicon Mining (HK) Ltd - Hong Kong
  • ETA - Dubai
  • Malco - India
  • Iligan Light & Power Inc, Philippines
  • Carbofer General Trading SA - India
  • Sucofindo - Indonesia
  • Electricity Authority, New Zealand
  • Infraline Energy - India
  • Tanito Harum - Indonesia
  • Chettinad Cement Corporation Ltd - India
  • Chamber of Mines of South Africa
  • Surastha Cement
  • Sree Jayajothi Cements Limited - India
  • Aditya Birla Group - India
  • Uttam Galva Steels Limited - India
  • Metalloyd Limited - United Kingdom
  • Kartika Selabumi Mining - Indonesia
  • Indogreen Group - Indonesia
  • Xindia Steels Limited - India
  • Indian Oil Corporation Limited
  • Ernst & Young Pvt. Ltd.
  • Price Waterhouse Coopers - Russia
  • Kobexindo Tractors - Indoneisa
  • Bank of China, Malaysia
  • U S Energy Resources
  • EIA - United States
  • Adaro Indonesia
  • SRK Consulting
  • Freeport Indonesia
  • Indonesian Coal Mining Association
  • Asia Pacific Energy Resources Ventures Inc, Philippines
  • Russian Coal LLC
  • Bangladesh Power Developement Board
  • Grasim Industreis Ltd - India
  • KOWEPO - South Korea
  • Gujarat Mineral Development Corp Ltd - India
  • Central Java Power - Indonesia
  • Maybank - Singapore
  • OCBC - Singapore
  • Ministry of Mines - Canada
  • Parry Sugars Refinery, India
  • Permata Bank - Indonesia
  • RBS Sempra - UK
  • Cemex - Philippines
  • Larsen & Toubro Limited - India
  • Indian Energy Exchange, India
  • Berau Coal - Indonesia
  • CCIC - Indonesia
  • Sarangani Energy Corporation, Philippines
  • Mintek Dendrill Indonesia
  • Semirara Mining Corp, Philippines
  • Interocean Group of Companies - India
  • Merrill Lynch Bank
  • Karbindo Abesyapradhi - Indoneisa
  • Bukit Asam (Persero) Tbk - Indonesia
  • International Coal Ventures Pvt Ltd - India
  • Britmindo - Indonesia
  • Renaissance Capital - South Africa
  • Cigading International Bulk Terminal - Indonesia
  • Runge Indonesia
  • Humpuss - Indonesia
  • Samsung - South Korea
  • SUEK AG - Indonesia
  • Maersk Broker
  • World Coal - UK
  • Coeclerici Indonesia
  • Moodys - Singapore
  • Petrochimia International Co. Ltd.- Taiwan
  • SN Aboitiz Power Inc, Philippines
  • Aboitiz Power Corporation - Philippines
  • DBS Bank - Singapore
  • Indian School of Mines
  • Thai Mozambique Logistica
  • Adani Power Ltd - India
  • Platts
  • Intertek Mineral Services - Indonesia
  • Savvy Resources Ltd - HongKong
  • Directorate General of MIneral and Coal - Indonesia
  • Bukit Makmur.PT - Indonesia
  • Gupta Coal India Ltd
  • Eastern Energy - Thailand
  • New Zealand Coal & Carbon
  • Madhucon Powers Ltd - India
  • Bhoruka Overseas - Indonesia
  • Power Finance Corporation Ltd., India
  • Offshore Bulk Terminal Pte Ltd, Singapore
  • Africa Commodities Group - South Africa
  • Rio Tinto Coal - Australia
  • Trasteel International SA, Italy
  • IEA Clean Coal Centre - UK
  • Shree Cement - India
  • Sindya Power Generating Company Private Ltd
  • Electricity Generating Authority of Thailand
  • ING Bank NV - Singapore
  • Reliance Power - India
  • Sakthi Sugars Limited - India
  • Agrawal Coal Company - India
  • Siam City Cement - Thailand
  • MS Steel International - UAE
  • Merrill Lynch Commodities Europe
  • Holcim Trading Pte Ltd - Singapore
  • Indo Tambangraya Megah - Indonesia
  • Cement Manufacturers Association - India
  • Latin American Coal - Colombia
  • Coal and Oil Company - UAE
  • Minerals Council of Australia
  • Bahari Cakrawala Sebuku - Indonesia
  • The Treasury - Australian Government
  • Riau Bara Harum - Indonesia
  • NTPC Limited - India
  • Indika Energy - Indonesia
  • Coal India Limited
  • Vitol - Bahrain
  • Bank of Tokyo Mitsubishi UFJ Ltd
  • Kepco SPC Power Corporation, Philippines
  • Heidelberg Cement - Germany
  • Mechel - Russia
  • MEC Coal - Indonesia
  • UBS Singapore
  • Kapuas Tunggal Persada - Indonesia
  • Rashtriya Ispat Nigam Limited - India
  • Truba Alam Manunggal Engineering.Tbk - Indonesia
  • TNPL - India
  • PNOC Exploration Corporation - Philippines
  • White Energy Company Limited
  • Bukit Baiduri Energy - Indonesia
  • Deloitte Consulting - India
  • Inspectorate - India
  • Kalimantan Lumbung Energi - Indonesia
  • Coal Orbis AG
  • Indonesia Power. PT
  • LBH Netherlands Bv - Netherlands
  • Port Waratah Coal Services - Australia
  • Mercuria Energy - Indonesia
  • GAC Shipping (India) Pvt Ltd
  • Fearnleys - India
  • Star Paper Mills Limited - India
  • Semirara Mining and Power Corporation, Philippines
  • Straits Asia Resources Limited - Singapore
  • Miang Besar Coal Terminal - Indonesia
  • Bank of America
  • GHCL Limited - India
  • Clarksons - UK
  • Australian Commodity Traders Exchange
  • Global Business Power Corporation, Philippines
  • Toyota Tsusho Corporation, Japan
  • TRAFIGURA, South Korea
  • Commonwealth Bank - Australia
  • Videocon Industries ltd - India
  • Economic Council, Georgia
  • Kohat Cement Company Ltd. - Pakistan
  • Romanian Commodities Exchange
  • Billiton Holdings Pty Ltd - Australia
  • PowerSource Philippines DevCo
  • CESC Limited - India
  • Tamil Nadu electricity Board
  • Cosco
  • Malabar Cements Ltd - India
  • Mjunction Services Limited - India
  • PTC India Limited - India
  • CNBM International Corporation - China
  • Jorong Barutama Greston.PT - Indonesia
  • SMG Consultants - Indonesia
  • Gujarat Sidhee Cement - India
  • The University of Queensland
  • Vedanta Resources Plc - India
  • Deutsche Bank - India
  • Thermax Limited - India
  • GN Power Mariveles Coal Plant, Philippines
  • Dr Ramakrishna Prasad Power Pvt Ltd - India
  • Eastern Coal Council - USA
  • Banpu Public Company Limited - Thailand
  • Salva Resources Pvt Ltd - India
  • European Bulk Services B.V. - Netherlands
  • Thriveni
  • Marubeni Corporation - India
  • Parliament of New Zealand
  • IHS Mccloskey Coal Group - USA
  • OPG Power Generation Pvt Ltd - India
  • Baramulti Group, Indonesia
  • AsiaOL BioFuels Corp., Philippines
  • Lanco Infratech Ltd - India
  • Barclays Capital - USA
  • Ministry of Transport, Egypt
  • Global Coal Blending Company Limited - Australia
  • BNP Paribas - Singapore
  • Independent Power Producers Association of India
  • Maharashtra Electricity Regulatory Commission - India
  • Gujarat Electricity Regulatory Commission - India
  • Rudhra Energy - India
  • GNFC Limited - India
  • Ince & co LLP
  • Vizag Seaport Private Limited - India
  • Simpson Spence & Young - Indonesia
  • CoalTek, United States
  • Wilmar Investment Holdings
  • KPCL - India
  • Noble Europe Ltd - UK
  • Argus Media - Singapore
  • PLN - Indonesia
  • Jatenergy - Australia
  • Vale Mozambique
  • J M Baxi & Co - India
  • Peabody Energy - USA
  • Qatrana Cement - Jordan
  • Global Green Power PLC Corporation, Philippines
  • JPMorgan - India
  • Platou - Singapore
  • Singapore Mercantile Exchange
  • Bulk Trading Sa - Switzerland
  • Georgia Ports Authority, United States
  • UOB Asia (HK) Ltd
  • South Luzon Thermal Energy Corporation
  • Cargill India Pvt Ltd
  • ANZ Bank - Australia
  • Therma Luzon, Inc, Philippines
  • Glencore India Pvt. Ltd
  • Thomson Reuters GRC
  • Standard Chartered Bank - UAE
  • Timah Investasi Mineral - Indoneisa
  • JPower - Japan
  • Antam Resourcindo - Indonesia
  • Kumho Petrochemical, South Korea
  • Credit Suisse - India
  • KPMG - USA
  • Petron Corporation, Philippines
  • Jaiprakash Power Ventures ltd
  • Maheswari Brothers Coal Limited - India
  • Meenaskhi Energy Private Limited - India
  • Dalmia Cement Bharat India
  • Samtan Co., Ltd - South Korea
  • Asia Cement - Taiwan
  • Total Coal South Africa
  • Mercator Lines Limited - India
  • Neyveli Lignite Corporation Ltd, - India
  • Bayan Resources Tbk. - Indonesia
  • Kaltim Prima Coal - Indonesia
  • Vijayanagar Sugar Pvt Ltd - India
  • KEPCO - South Korea
  • Kobe Steel Ltd - Japan
  • Japan Coal Energy Center
  • Idemitsu - Japan
  • India Bulls Power Limited - India
  • Pendopo Energi Batubara - Indonesia
  • GMR Energy Limited - India
  • Enel Italy
  • Medco Energi Mining Internasional
  • Globalindo Alam Lestari - Indonesia
  • TeaM Sual Corporation - Philippines
  • Australian Coal Association
  • ASAPP Information Group - India
  • NALCO India
  • Krishnapatnam Port Company Ltd. - India
  • Wood Mackenzie - Singapore
  • Orica Mining Services - Indonesia
  • IMC Shipping - Singapore
  • Tata Chemicals Ltd - India
  • Geoservices-GeoAssay Lab
  • ACC Limited - India
  • Core Mineral Indonesia
  • SGS (Thailand) Limited
  • McConnell Dowell - Australia
  • Mitsui
  • Directorate Of Revenue Intelligence - India
  • Inco-Indonesia
  • HSBC - Hong Kong
  • APGENCO India
  • Leighton Contractors Pty Ltd - Australia
  • PLN Batubara - Indonesia
  • Siam City Cement PLC, Thailand