Tag Archives: fuel oil

Libya: Turkish Tanker and Crew Seized Off Zwara, Possibly Linked to Ongoing Fuel Smuggling

A small Turkish tanker has been seized by armed men in Zuwara and the eleven crew members taken prisoner.

The MV Haci Telli from the Turkish port of Tuzla is reported to have docked in Zuwara six days ago. The eight-year old, 2,800 tonne vessel was taken over and the crew arrested yesterday. One source said that the owners of the tanker owed $433,000 for past oil shipments.

Because of the limited and damaged capacity of Libya’s refineries, large quantities of refined petroleum product have to be imported. No exact figures are ever released.

If it is correct that the Haci Telli has been detained over an unpaid debt, then the vessel would appear to have picked up a cargo from Libya for sale somewhere else.

It is being suggested that the crew and the vessel have been arrested over a product smuggling deal that had gone wrong. The vessel’s next destination was shown on the FleetMon website as Malta.

Source: Libya Herald 2.3.2017

Greek Courts rejects the claims by physical suppliers against Owners in OW related disputes

WORTH READING BY ALL THOSE INVOLVED IN BUNKERS (BUYERS OR SELLERS):

After the financial collapse of OW Bunker Group on November 7, 2014, numerous claims by physical suppliers in risk to remain unpaid due to their counterparty’s bankruptcy, have been brought in different jurisdictions worldwide. Consequently, Owners and Charterers are currently exposed to competing claims for unpaid bunkers both by OWB or their assignees ING and by physical suppliers, with the possibility of arrests. Our firm recently handled claims brought by the physical supplier SEKA against the Owners of the vessels CE/BREEZE and PANAGIA ARMATA in personam (since maritime liens and subsequent in rem proceedings are not recognized under Greek law) and the judgments –which are believed to be the first- found in favor of Owners.

Facts

In October 2014, Owners instructed the Piraeus office of OW Malta to provide the vessels with certain quantities of bunkers and OW Malta confirmed the order which resulted to a contract for the sale of the agreed bunkers, through the exchange of the relative documents (sale confirmation and invoice coupled with OW standard terms and conditions). Since OW Malta operated as a trader and did not possess physical premises for the storage of bunkers, it instructed SEKA to physically supply the agreed bunkers to the said vessels. The purchase of the bunkers was completed through the respective exchange of documents (purchase confirmation, bunker sale confirmation and invoice together with SEKA’s standard terms and conditions which did not include a retention of title clause). Following OW’s filing for bankruptcy, SEKA asked for direct payment of the price from Owners, by forwarding them the relevant invoice addressed to the Owners and/or Managers and/or Charterers and/or Master and/or OW Malta.

Arguments

SEKA’s case against Owners is that it supplied bunkers to the vessels under a contract entered into through the Owners’ authorized agent, OW Malta. The basis of this argument lies in the fact that SEKA’s invoices are addressed both to OW Malta and the Owners and that SEKA’s standard terms identify as jointly and severally liable for the payment both the party that gave the order and the one for whose the benefit the order was made.

SEKA also supports that even if OW was not an authorized agent of the Owners to conclude the bunker sale agreement, both the vessel port agents who contacted SEKA for the arrangements of the supply and the chief engineer who signed the Bunker Delivery Receipt (BDR) in so doing, acted as agents for the purchase of the bunkers binding the Owners.

The Owners’ primary basis for disputing liability was that no contract has ever been concluded between them and SEKA directly. The contracts for the bunkers were separate and distinct as between Owners and OW Malta and OW and SEKA. OW was a separate legal entity that contracted on its own name and for its own account operating as a fuel trader giving credit to buyers. Owners also contended that a unilateral identification of their liability against SEKA in SEKA’s invoice or its standard terms is not binding on them, since they were notified later -SEKA’s invoice has been sent to them after OW bankruptcy- and they have not accepted these terms since they were not party to the contract between OW and SEKA.

Furthermore, in compliance with ING’s request, acting as assignee of OW entities, Owners have already paid the OW invoice price for the bunkers supplied to their vessels directly to ING, having OW’s consent.
Owners further argued that simple signing of the BDR by their chief engineer as well as their agent’s actions for the bunker supply are not enough to prove the conclusion of a contract on behalf of the Owners.

Finally, Owners in support of their above arguments mentioned that OW Bunker deliveries involved a variety of physical bunker suppliers operating in Greece and therefore they were not aware of the physical supplier that would provide the bunkers at the agreed date (i.e. SEKA, EKO or others).

Piraeus First Instance Court Decision

The claims were brought in security measures proceedings and the judgments have been handed down on December 2015 for CE BREEZE and January 2016 for PANAGIA ARMATA. The judge rejected SEKA’s case and found in favor of Owners. Particularly, the court held that in the said case two separate and distinct agreements have been made, one between OW Malta and Owners and another one between OW Malta and SEKA. In arriving at its decision, the court appears to have taken into consideration that these two contracts include different terms as to the purchase price, credit period, jurisdiction and applicable law and the mere sending of the invoice to the Owners or the signing of the BDR by the chief engineer does not establish liability of the Owners. The court also held that OW did not act as agent of the Owners and had no authority to enter into an agreement on their behalf, but as a separate entity acting in its own name.

Conclusion

This decision is in line with the longstanding recognition of privity of contract by Greek case law and protects Owners from unexpected exposures to physical suppliers’ demands for payment, especially in cases where they have already paid off the price either to OW or ING. Hearings in the merits of the case are expected to take place this year, where a binding authority will be issued. However, considering other jurisdictions as well (see the Valero decision of the United States District Court for the Eastern District of Louisiana, Belgian court case) such claims (either on a maritime lien basis in rem or in personam proceedings) will hardly succeed due to the absence of contractual relationship between Owners and physical suppliers. Meanwhile, the shipping industry remains on hold for the RES COGITANS outcome, the hearing of which in the Supreme Court tοοκ place in late March 2016.

Source: HSN & Karmela Mavrochi, Partner, Costas Georgopoulos & Partners. Attorneys-at-law) 6.4.2016

 

No wonder the Bunkers business is a total mess: Fuel Supplier is Denied Maritime Lien Against Vessel in Fallout from O.W. Bunker’s Bankruptcy –

On February 8, 2016, in Valero Marketing & Supply Co. v. M/V ALMI SUN, the United States District Court for the Eastern District of Louisiana held that a bunker fuel supplier did not have a maritime lien against the vessel to which it supplied bunkers based on the relationship between the supplier, the intermediary contractor, and the vessel. Valero is one of the multitude of cases arising from unpaid bunker invoices due to the bankruptcy of O.W. Bunker USA and its foreign affiliates in the fall of 2014. Similar cases are pending across the country in which both fuel suppliers and various O.W. Bunker affiliates, through their alleged assignee, ING Bank, are seeking payments from vessels for previously-supplied fuel. Some of the vessel owners have preemptively filed interpleader actions in which they have deposited the value of the fuel into the registry of the court in an attempt to prevent double payment for the fuel. Others have had their vessels seized and are proceeding as defendants in a limited capacity on behalf of their vessel. Valero represents the latter scenario.

In Valero, the owner of the M/V ALMI SUN contracted with O.W. Bunker Malta to supply fuel to the vessel. O.W. Bunker Malta, through O.W. Bunker USA, contracted with Valero to supply the bunker fuel in Corpus Christi, Texas. Valero subsequently supplied 200 metric tons of marine bunker fuel to the vessel worth $124,388.24. O.W. Bunker never paid Valero for the fuel and the vessel never paid O.W. Bunker for the fuel. Valero sued the vessel in rem, and her owner made a limited appearance in the case to defend Valero’s lien claim.

The vessel owner filed a motion for summary judgment seeking dismissal of Valero’s claim based on the argument that Valero did not have a maritime lien against the vessel. In holding that Valero did not have a maritime lien against the M/V ALMI SUN, the court first reiterated that there are three requirements for the formation of a maritime lien for necessaries, which attaches as an operation of law and not by contract. The three requirements are: 1) the party provided necessaries, as defined by the Commercial Instruments and Maritime Liens Act (“CIMLA”) and related jurisprudence; 2) the necessaries were provided to a vessel; and 3) the claimant provided the necessaries on the order of the owner or a person authorized by the owner. The first two elements were clearly satisfied in this case and not in dispute. It was the third element that was at issue in Valero and that remains at issue in the other pending cases.

The court held that Valero did not provide necessaries on the order of the owner or a person authorized by the owner because the owner did not specifically direct O.W. Bunker to hire Valero, as is required for a maritime lien to attach in the United States Court of Appeals for the Fifth Circuit pursuant to Lake Charles Stevedores, Inc. v. M/V PROFESSOR VLADMIR POPOV, 199 F.3d 220 (5th Cir. 1999). The district court was similarly not persuaded by Valero’s argument that it had a maritime lien based on the shipowner’s ratification of the selection of Valero to provide the bunkers. Valero argued that the fact that the shipowner and master knew the bunker fuel would be supplied by a domestic company and were notified that it would be Valero, that the master was given instructions to coordinate with the supplier (Valero), and that the ship’s agent and Valero’s agent ultimately coordinated the supply of bunkers shows that the shipowner ratified the selection of Valero as the fuel supplier and ratified its maritime lien. The district court rejected Valero’s ratification argument, reasoning that the Fifth Circuit rejected the same argument based on similar facts in Lake Charles Stevedores because the shipowner had not selected the supplier.

Finally, the court rejected Valero’s argument that O.W. Bunker Malta could not have a maritime lien because it is a foreign company and CIMLA was enacted to protect American suppliers. The court agreed with Valero’s assessment of the purpose of CIMLA to generally protect American suppliers but stated that it could not overlook the third requirement of CIMLA, that the necessaries be provided on the order of the owner or a person authorized by the owner, simply because O.W. Bunker Malta is a foreign company and Valero is domestic. The court granted the shipowner’s motion for summary judgment and dismissed Valero’s claims with prejudice. The appellate period has not yet run on the court’s judgment, and it is anticipated that the fuel supplier will appeal to the Fifth Circuit.

The district court’s dismissal of the fuel supplier’s lien claim in Valero marks the first dismissal with prejudice by any court in the country of a physical supplier’s lien claim arising out of the O.W. Bunker fallout. Other courts have denied summary judgments filed by both vessel owner interests and fuel suppliers, but to date, no other court has held that a physical supplier did not establish a maritime lien in the myriad of O.W. Bunker litigation. This decision may lead to similar results in the other pending cases around the country. The significance of the decision is that it prevents the shipowners from being subject to potential double payment for the bunkers to its contractual counterparty and the physical supplier (like Valero). Additionally, it likely relegates the physical suppliers to pursue claims in the O.W. Bunker bankruptcy litigation instead of circumventing bankruptcy to directly pursue shipowners.

Source: Jones Walke LLP/HSN

World Bank Flagship Report: The yearly Global Economic Prospects (Published Jan 6, 2016)

 

Here is the full 286-pages PDF report. Happy reading (and thanks to the World Bank) :

World Bank – Global Economic Prospects – January 2016

For those interested only in the MENA region, here is the 31-pages PDF report covering the region ( Libya showing over 35% growth in 2016 ? ..In as much as one hopes so, this is wishful thinking to say the least !!!)

– World Bank – Global Economic Prospects -January 2016-MENA

 

 

 

OW Bunker Collapse: Comprehensive Report on “How and Why” it happened !

 

Here is the 401-pages comprehensive report on the collapse of OW Bunker – a major scandal in the maritime industry that has changed the bunker business of ever !.. Just click the name to open the PDF file.

Our thanks to Halling-Overgaard – Sølvkær Olesen – Henriksen, Advocates, Aarhus, Denmark (http://www.fhplaw.dk)

OW Bunker

 

INTERTANKO: Committee launches bunker surcharge clauses for ECA

Rising bunker prices due to rising oil prices and volatility in global politics can have a dramatic effect on trade as they fluctuate not just day to day, but also port to port. Bunker fuel costs today form the largest part of owners’ expenses, being anything from 40-60% of the overall operating costs of a ship.

The tightening of regulations in Emission Control Areas (ECAs) requiring the use of low sulphur content fuels not only carries with it the risk of fines, detentions and disputes, but further adds to owners’ operating costs. The first ECA in effect was the Baltic in 2006 followed by the North Sea in 2007.

A stricter emission allowance down from 1.5 % to 1.0 % was introduced in 2010. The US, Canada and the Caribbean followed suit in 2012 and 2014.

MARPOL Annex VI, requiring a maximum sulphur content in fuel oil within ECAs of just 0.10 % by weight (down from 1.0%) comes into force in January 2015. Certain states such as California have already introduced legislation to enforce this. More regulation will certainly follow.
From 2015, owners may face escalating fuel costs in the EU, North America and Caribbean and any other ECA designated areas as ultra-low sulphur fuel carries a premium (today) of about USD 200-300 over regular bunker fuel prices. There is also a potential for increased demand in low sulphur fuels from January 2015, together with questions whether levels of supply will meet demand forecasts. These issues may also affect the predictability of pricing when freight rates are being fixed.
In order to minimise the risk of bunker volatility for Members, and to take account of increasingly onerous regulations on emissions, INTERTANKO has developed a bunker surcharge clause.
The clause addresses any additional bunker costs when trading in an Emissions Control Area (ECA) – INTERTANKO MARPOL Annex VI Clause for Voyage Chartering in Emission Control Areas.
The clause has also been adapted for use in the parcel trades – INTERTANKO MARPOL Annex VI Clause for Voyage Chartering in Emission Control Areas (Parcel trades).
These clauses are designed to assist Members in recouping actual amounts paid for bunkers, thereby avoiding disputes with charterers over bunker prices and minimising risk associated with price volatility.
MARPOL Annex VI Clauses for Voyage Chartering in Emission Control Areas

(i) Worldscale formula
Where an owner fixes using Worldscale, there is no need for a bunker adjustment clause to cover the additional costs of low sulphur fuel used in an ECA.
These extra bunker costs are not yet included in the flat rate but are today compensated by fixed differentials set out in the Worldscale book (using 2014 rates) as follows:
The WS differentials, $x.xx per mile are covering the extra bunker costs used by the standard Worldscale tanker within the ECA for bunkers with max 1.0%/0.1% sulphur content when calculated on a roundtrip basis. The calculations are based on bunker prices given in preamble part A (Explanatory notes)/4 (Basis for calculations)/(d) (Bunker prices).
ECA diff equals Bunker diff * Bunker consumption per day standard ship/speed* 24
ECA diff. Baltic & N Sea 2014 ($665.39 – $632.44) * 55/ (14.5 * 24) = $ 5.21
ECA diff. N Am 2014 ($713.11 – $632.44) * 55/(14.5 * 24) = $12.21
ECA diff. California 2014 ($1058.00 – $632.44) * 55 /(14.5 * 24) = $67.26
Members should note that the Worldscale Association recently announced its fixed rate differentials for 2015. The figure set for bunkers with max 0.1% sulphur content – Baltic and North Sea ECA and European in-port bunker allowances will be $920.75/mt. Low sulphur fuels for the North American ECA & Caribbean ECA and in-port bunker allowances will be $1028.02. Baltic and North Sea ECA miles will attract a fixed differential of $48.35, while North American ECA miles will be compensated by a fixed differential of $65.31.
The bunker prices Worldscale will use for calculating other 2015 Worldscale flat rates will be $614.81/mt.

(ii) Lumpsum or USD/tonne basis
Not all INTERTANKO Members fix using Worldscale. Given the tighter ECA requirements from 2015, INTERTANKO has developed two clauses to accommodate the ECA differentials when fixing outside of Worldscale on lumpsum or USD/tonne basis. The first clause is for use in CPP/dirty trades; the second has been adapted for use in parcel trades. These clauses provide for each trade a pragmatic way to calculate the bunker surcharge element for trading in an ECA.
To achieve maximum certainty at fixing and reimbursement of additional ECA costs, the mechanism of the CPP/dirty trades clause is based on actual consumption. Time within the ECA can be taken from the Master’s statements (as it would be with a deviation or call at an interim port) and the additional bunker costs can then be invoiced and paid without deduction. Charterers should be in a position to make this calculation and pay the bunker surcharge together with freight. Timings within the ECA will be clear from the Master’s statements as they will coincide with a fuel switch when entering the ECA and will end in the ECA port at ‘hoses off’.
The reference prices for fuel used in the first clause are those available prior to loading on ‘first in first out’ basis, again a formula that is familiar to our Members when calculating bunkers consumed for deviation or interim port calls. This can easily be adapted if Members are more used to using ‘bunkers last stemmed’ or if a reference point from Platts is preferable. The parcel trade version shows how a reference to Platts might work. Either way, the fuel oil reference prices used can be tracked in supporting invoices so that any additional charge can be verified by charterers.
Owners and charterers must therefore agree the following values prior to fixing:
Cs = Daily consumption at Sea
Cp = Daily consumption at Port
This is in our view unavoidable given the major bunker cost differential in trading in an ECA area. These figures may vary owner to owner but figures for the same ship type should be comparable and therefore capable of agreement.
Note that there would be no additional compensation for owners who have opted to use scrubbers or other alternatives to low sulphur fuel to satisfy the ECA requirements.
INTERTANKO MARPOL Annex VI Clause for Voyage Chartering in Emission Control Areas
1. Owners warrant that the Vessel shall comply with the requirements of MARPOL Annex VI Prevention of Air Pollution from Ships, Regulation 14 “Sulphur Oxides (SOx) and Particular Matter”.
2. The Parties agree that should Charterers require the Vessel to operate in any of the Emission Control Areas (ECAs) (as designated under MARPOL Annex VI) then Charterers shall compensate Owners for any additional bunker costs arising from all periods of operation in any ECA in accordance with the formula below:
(X – Y) * [(Cs * Ds) + (Cp * Dp)] = ECA Bunker Surcharge
Where:
X = Price of low sulphur marine gas oil
Y = Price of IFO 380 centistokes
Cp = Daily consumption at Port
Cs = Daily consumption at Sea
Dp = Actual Days at Port within ECA, calculated from NOR to last hose disconnected according to Master’s statement
Ds = Actual Days at Sea within ECA according to Master’s statement
3. The fuel oil reference prices X and Y in clause 2 above shall be prices actually paid on a ‘first in, first out’ basis supported by Owners’ paid invoices.
4. The ECA Bunker Surcharge shall be invoiced and paid without deduction no later than payment of freight.
Additional wording for Parcel Trades
Additional wording is required for use in the parcel trades. In consultation with Members engaged in the parcel trades, INTERTANKO established that the use of actual figures may over complicate the calculation of the ECA Bunker Surcharge. This could require for example a calculation to be made of cargo handled at a particular berth within an ECA with the share of the total cargo on board varying from port to port and even from berth to berth.
In order to achieve certainty at the outset and an early reimbursement of the ECA Bunker Surcharge in the parcel trades, the parcel trade version therefore uses estimated figures. This means there is no need to wait to conduct a complicated calculation for each parcel based on the Master’s time and consumption statements as the ECA Bunker Surcharge will be pre-agreed on estimates.
This may mean that the reimbursement of fuel costs to Owners will not be 100% accurate in each case as it is based on a theoretical voyage based on estimates. However the Committee felt that the degree of variance would be outweighed by the ability to achieve prompt payment of the surcharge along with freight rather than await a complex calculation and risk late payment. From Charterers’ perspective this approach will provide a certain lumpsum cost rather than risk exposure to a varying amount. Note that this approach based on pre-agreed estimates could also be used in the CPP/Dirty trades if preferred.
Again owners and charterers must agree the values (Cp, Cs, Dp and Ds) prior to fixing. (NB Cs and Cp may be a single pair of numbers or a series of pairs if different ship types with different consumptions can be nominated under the CoA). Several port-brackets (Cp * Dpn) may be used and added into the algorithm, one each for every port or berth where P1 is first berth, P2 is second berth etc., if the prorated values are different.
INTERTANKO MARPOL Annex VI Clause for Voyage Chartering in Emission Control Areas (Parcel trades)
1. Owners warrant that the vessel will comply with the requirements of MARPOL Annex VI Prevention of Air Pollution from Ships, Regulation 14 “Sulphur Oxides (SOx) and Particular Matter”.
2. The parties agree that should Charterers require the vessel to operate in any of the Emission Control Areas (ECAs) (as designated under MARPOL Annex VI) then Charterers shall compensate Owners for any additional bunker costs arising from all periods of operation in that ECA in accordance with the formula below:
(X – Y) * [(Cs * Ds) + (Cp * Dp1) + (Cp *Dp2)] =ECA Bunker Surcharge
Where:
X = Price of low sulphur marine gas oil
Y = Price of IFO 380 centistokes
Cp = Daily consumption at Port
Cs = Daily consumption at Sea
Dp = Estimated Days at Port within ECA, calculated from NOR to last hose disconnected * Estimated share of the cargo to be handled at that berth.
Ds = Estimated Days at Sea within ECA * Estimated share of the cargo onboard
3. The fuel oil reference prices X and Y in clause 2 above shall be a composite of delivered prices at Houston, Rotterdam and Singapore of IFO 380 cSt and Marine gasoil quoted by Platts Bunkerwire on the first B/L date, or the first subsequent listed day if prices are not listed on that day.
4. The ECA Bunker Surcharge shall be invoiced and paid without deduction no later than payment of freight.
In summary
Either way, via the Worldscale formula or the INTERTANKO MARPOL Annex VI clauses for Voyage Chartering in Emission Control Areas, an owner who trades in and out of an ECA area can be properly compensated for the additional costs from the use of low sulphur fuels mandated by MARPOL Annex VI/ the EU Sulphur Directive. This is imperative now as e.g. a vessel at berth in an EU port for over two hours is already required by the EU Sulphur Directive to use 0.10% sulphur content fuel. It will become more important in January 2015 and beyond as sulphur emission regulations continue to tighten. Owners are therefore encouraged to begin negotiations with charterers to ensure a proper distribution of risk and cost that the new requirements will bring.

Intertanko/Hellenic Shipping News