LNG Fuel Quality Clause for Time Charter Parties
Overview
In 2021 BIMCO initiated a project to develop a suite of LNG fuel clauses for time charter parties. The number of LNG fuelled ships in operation is growing steadily and the suite reflects the need to have bespoke clauses in time charters for these ships.
The LNG clauses cover matters related to the LNG quality, delivery/redelivery, gas-freeing and cooling down and an operational clause. For dual-fuel ships the clauses are intended to be used together with the existing BIMCO bunker clauses for conventional fuel oils.
The current suite of LNG fuel clauses for use in time charter parties also consists of:
LNG Bunker Operational Clause for Time Charter Parties
LNG Fuel Gas freeing and Cool down Clause
LNG Fuel Quality Clause for Time Charter Parties
BACKGROUND
Quality issues with LNG fuel are very rare and therefore the clause focuses on the composition of the LNG fuel.
BIMCO LNG Fuel Quality Clause for Time Charter Parties
(a) The Charterers shall supply LNG fuel which is free of foreign matter, meets the requirement of the latest edition of ISO 23306 “Specification of liquefied natural gas as a fuel for marine applications” and the specifications below:
(i) minimum methane content, state percentage: _____;
(ii) maximum combined content of ethane, propane and butane, state percentage: _____;
(iii) maximum combined quantity of corrosives or other contaminants: _____;
(iv) minimum lower heating value: _____;
(v) methane number or Wobbe index: _____;
(vi) other specifications: ___________.
(b) The Charterers shall procure that the Owners are provided with a copy of the Bunker Delivery Note issued in accordance with the International Code of Safety for Ships using Gases or other Low-flashpoint Fuels (IGF Code).
(c) The Charterers shall be liable for any loss or damage to the Owners or the Vessel caused by the supply of LNG fuel which do not comply with subclause (a) above.
Drafting team
The BIMCO suite of LNG Fuel clauses has been developed with the invaluable assistance of owners, charterers, P&I clubs and legal experts. BIMCO is extremely grateful to the following individuals for working with us and their dedication to the project:
Ms Camilla Nyhus-Møller, Höegh LNG (Chairperson)
Gerben Dijkstra, Anthony Veder
Captain Iain Scally, NYK
Mr Chris Meyer, BHP
Ms Sarah Jane Thompson, BHP
Ms Charlotte Vandeville, Affinity
Mr Jonathan Gaylor, Affinity
Mr Michael Bird, Britannia
Mr Marcus Dodds, Watson Farley & Williams
BIMCO secretariat support was provided by Grant Hunter, Head of Contracts & Clauses and Nina Stuhrmann, Manager, Contracts & Clauses.
Explanatory notes
Guidance Notes
The following guidance notes are intended to provide some background to the thinking behind the BIMCO LNG Fuel Quality Clause for Time Charter Parties. These notes explain the scope of each provision and clarify how the clause is intended to operate and the way it allocates risk between the parties. If you have any questions about the clause that we have not answered in these notes, please contact us at contracts@bimco.org and we will be happy to assist.
Subclause (a) – The characteristics of LNG vary, and it is important that the charterers provide LNG which complies with the vessel engine’s specifications. If there was something in the specifications that the owners have not communicated to the charterers, then they should not be responsible for something they have not made been aware of.
If the owners need and wish to have extra parameters included, they should add them to the list under item (iv). The list represents the most commonly used parameters.
The clause does not address sampling procedures because there is no LNG equivalent to the MARPOL sample for LNG fuel and it is not common practice to take commercial samples.
This subclause addresses the composition of the LNG, determines that the LNG fuel must be free of foreign matters and meets the requirements of ISO Standard 23360.
The main issue for LNG fuel is sediment transfer which can cause damage to the engine when high pressure injectors are used.
The LNG fuel has to be free of “foreign matters” which could e.g. block fuel lines or injectors. Compounds/contaminants which are damaging, toxic or corrosive should be restricted to trace levels as set out in the subclause.
Item (v) refers to the methane number. There are different ways of calculating this number. We recommend referring to what standard it is based on, for example the engine manufacturer’s calculation number, a European standard or if possible, an ISO standard.
Where atmospheric tanks are used the temperature could be added under “other specifications” (item (vi)). In such cases it would be relevant for owners to require the fuel to be delivered below a certain temperature. This would be important for situations where the owners need to maintain their boil-off warranty. The temperature is not relevant for pressurised tanks.
Subclause (b) – This clause is self-explanatory.
Subclause (c) – The liability provision is not subject to a special time bar as often seen in conventional fuel oil clauses. Any claims for damages are subject to the applicable legislation on limitation. This is because there is no testing procedure. Owners have no means to establish the quality of the LNG and should not be subject to a strict time frame.
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