Model Bunker Clause - Alternative Fuel (LNG)

18 April 2023

The ‘Bunker clause - Alternative fuel (LNG)’ is a comprehensive, standalone clause which covers the carriage of both bunkers:

• Conventional fuel oil and;
• Alternative fuel - LNG.

It can be used for all vessels using fuel oil and LNG as a fuel. It does not apply to LNG carriers where cargo is used as fuel.

INTERTANKO had previously developed an ‘LNG Bunker clause’ which only covers the use of LNG (as Fuel).

Brief explanation of the clauses

The ‘Bunker Clause - Alternative Fuel (LNG)’ has been developed using the relevant clauses of SHELLTIME4 (Clauses 15, 24 & 29) and can be used as a standalone bunker clause within the charterparty. It contains:

• Clause 1. Bunkers at Delivery and Redelivery

This clause mainly provides:

• Delivery and redelivery regime for both bunkers i.e., Conventional fuel oil and LNG fuel.
• Quantity, pricing, condition of the LNG fuel tank etc., on delivery / redelivery. 
• A defined equivalency between Btu and Joules for conversions.
  
  

• Clause 2. Detailed Description and Performance
  This clause mainly provides:

• A dual-fuel consumption warranty table for consumption ‘At sea’ and ‘In idle / In port’.
• Consumptions when vessel is using LNG as fuel, and when using only fuel oil.
• An equation for conversion of conventional fuel oil consumption to LNG fuel equivalent when both fuel oil and LNG are in use. 
• Use of boil-off gas for LNG bunker tank pressure management.
  
  
• Clause 3. Grades of Fuels
  This clause mainly provides:

• Sub clauses on the quality of fuels for both conventional fuel oil and LNG fuel, including for use in emission control areas.
• Provisions for samplings and non-compliant fuel.
  
  
• Rider Clauses
  There are two rider clauses:

• Rider Clause 1: addresses compatibility issues with LNG fuelling facilities. These issues may become less relevant as more generic systems develop but this still seems appropriate for now. 
• Rider Clause 2: addresses gas-freeing and cool-down requirements and allocates risk/costs for them. This also addresses the need to run-down the quantity of LNG fuel onboard prior to planned/ unplanned maintenance or surveys. 

 When using the clause consider the following:

• Items in [brackets] can be delete / used as appropriate.
• The terminology used in the clause is as below:
• Gas fuel: LNG as fuel
• Fuel Oil: Conventional Fuel oil (HFO, VLSFO etc.)
• Bunker: Includes LNG fuel, Conventional fuel oil, or any other fuel type.

 

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INTERTANKO Model ‘Bunker Clause − Alternative Fuel (LNG)

1. Bunkers at Delivery and Redelivery

1. The Vessel shall be delivered by Owners to Charterers with its LNG fuel tanks [containing a volume of LNG fuel] [ of ____ cubic metres, +/- 10%] [cooled down ready to load LNG fuel] [warm and inerted, ready for gassing-up][warm and under LNG gas vapour ready for cooling down prior to loading LNG fuel] [cooled down and in inerted condition] [subject to atmospheric conditions] [and its fuel oil tanks containing ___ +/- 10% metric tonnes of [VLSFO][LSMGO]].
   
   
2. The Vessel shall be redelivered by Charterers to Owners with its LNG fuel tanks [containing a volume of LNG fuel] [ of ____ cubic metres, +/- 10%] [cooled down ready to load LNG fuel] [warm and inerted, ready for gassing-up] [warm and under LNG gas vapour ready for cooling down prior to loading LNG fuel] [cooled down and in inerted condition] [subject to atmospheric conditions] [and its fuel oil tanks containing ___ +/- 10% metric tonnes of [VLSFO][LSMGO]].
   
   
3. Charterers shall accept and pay for all LNG fuel and fuel oil on board at the time of delivery, and Owners shall on redelivery (whether it occurs at the end of the charter or on the earlier termination of this charter) accept and pay for all LNG fuel and fuel oil remaining on board, at the price actually paid (per MMBtu and metric tonne, respectively), on a “first-in-first-out” basis. Such prices are to be supported by paid invoices.
   
   
4. Vessel to be delivered to and redelivered from the charter with, at least, a quantity of LNG fuel and/or fuel oil on board sufficient to reach the nearest main bunkering port (for LNG fuel or fuel oil), while complying with all the emission requirements. Notwithstanding anything contained in this charter all LNG fuel and fuel oil on board the Vessel shall, throughout the duration of this charter, remain the property of Charterers and can only be purchased on the terms specified in the charter at the end of the charter period or, if earlier, at the termination of the charter.
   
   
5. If the Vessel is delivered or redelivered with a quantity of LNG fuel or fuel oil in excess of any quantity that may be stipulated at sub-Clauses (a) or (b) above, the price payable for such excess quantity shall be the lowest of the price(s) paid by Owners (in the case of sub-Clause (a)) or the Charterers (in the case of sub-Clause (b)) for such excess quantity.
   
   
6. For the purposes of sub-Clauses (c) and (d) above, where quality of LNG fuel is expressed in Joules (by mass or volume) the cited lower calorific (heating) value shall be applicable and 1 British thermal unit (Btu) shall be deemed equal to 1,055.06 Joules.

2. Detailed Description and Performance
a. Owners guarantee that the speed and consumption of the Vessel at sea is as follows:

Note:

• • • • All consumers are Dual Fuel: Column (1) & (2) applies, unless all consumers in Fuel Oil only mode, in which case column (4) applies. If ‘gas only’ mode not used, clause 2(h) applies.
      • Some consumers are Dual Fuel: Column (1), (2) and (3) apply, unless all consumers in Fuel Oil only mode, in which case column (4) applies. If ‘gas only' mode not used for the DF consumers, clause 2(h) applies.
      • Any under performance in any operation /mode will be compensated by any over performance in any operation /mode in any performance evaluation period on terms to be agreed.

 

b. Owners guarantee that the consumption of the Vessel in idle and or in port is as follows:

Note:

• • • All consumers are Dual Fuel: Column (1) & (2) applies, unless all consumers in Fuel Oil only mode, in which case column (4) applies. If ‘gas only’ mode not used, clause 2(h) applies.
    • Some consumers are Dual Fuel: Column (1), (2) and (3) apply, unless all consumers in Fuel Oil only mode, in which case column (4) applies. If ‘gas only' mode not used for the DF consumers, clause 2(h) applies.
    • Any under performance in any operation /mode will be compensated by any over performance in any operation /mode in any performance evaluation period on terms to be agreed.

 

c. The Vessel’s actual consumption for LNG fuel in metric tonnes is calculated basis the density stated in the relevant bunker delivery note.

Actual consumption in tonnes/day of LNG fuel = LNG fuel consumed (m3) x density of LNG fuel (kg/m3)
                                                                                                                                       1000

If for any reason the relevant bunker delivery note is not available, the density of LNG fuel for the purpose of this calculation only shall be assumed to be [●] kg/m3.

d. The column for the “(1) Maximum Daily Pilot Fuel Consumption (Fuel Oil)” only includes consumption of fuel oil as pilot fuel for the main engine(s) and generator(s) (if applicable);

e. The column for “(2) Maximum Daily Fuel Consumption (LNG fuel)” includes LNG fuel consumption of the main engine(s), generator(s), boiler(s), and any other gas equipment, excluding any pilot fuel consumption.

f. The column for “(3) Maximum Fuel Oil Required to Be Consumed When in Gas Mode (excluding pilot fuel oil consumption)” includes fuel oil consumption of engine(s), generator(s), boiler(s) and any other equipment not capable to use LNG as fuel by its design.

g. The column for “(4) Maximum Daily Fuel Consumption (Fuel Oil)” includes fuel oil consumption of the main engine(s), generator(s), boiler(s), and other equipment.

h. When dual fuel capable equipment are NOT running on ‘gas only’ mode the quantity of fuel oil consumed (i.e. LNG and fuel oil) is calculated as follows:

Tonnes fuel oil consumed = Equivalent tonnes of LNG fuel x lower calorific (heating) value of LNG fuel
                                                                                                                lower calorific (heating) value of fuel oil

For the purposes of the above formula: the lower calorific (heating) value of LNG fuel shall be that stated in the relevant bunker delivery note; and the lower calorific (heating) value of fuel oil shall be deemed to be [42,700] kJ/kg.”; unless any other lower calorific (heating) value is documented.

i. Subject to the provisions of this charter, Owners will have free use of all LNG fuel for tank pressure management. Except when otherwise required, pursuant to Charterers’ orders, Owners shall exercise due diligence to minimise any venting, steam dumping, or other consumption of boil off gas during periods of low fuel demand.

3. Grades of Fuels
a. Charterers shall supply fuel oils that are compliant with applicable laws (including Annex VI of MARPOL) and the latest Edition of ISO 8217. If fuel oils meeting the latest Edition of ISO 8217 are not available at the place of bunkering on the date of supply, fuel oils that are compliant with the next most recent Edition of ISO 8217 as are available at such place and time shall be supplied.  Such fuel oils shall be of the following grades:    

i. residual fuel of [●] or [●]; and
ii. distillate fuel of [●] or [●],

(as per table 2 and table 1, respectively, of the relevant Edition of ISO 8217) or the closest equivalent grade if any such grades are not referred to in the relevant Edition of ISO 8217 and with a maximum sulphur content in compliance with applicable laws (including Annex VI of MARPOL). The selection of the grades of fuel oil to be supplied is at the Charterers' discretion, provided that such grades as are supplied comply with the minimum requirements of this Clause 3. 

b. Charterers shall supply LNG fuel which is free of contaminants or foreign matter, meets the requirement of the latest edition of [ISO 23306 ‘Specification of Liquified Natural Gas as a fuel for marine applications’] and meets the below specifications:

i. minimum methane content [80] per cent.;
ii. maximum combined quantity of corrosives or other contaminants [●];
iii. minimum lower calorific (heating) value [●]; and
iv. methane number [70] as measured in accordance with [the latest Edition of ISO 23306] [the engine maker’s specification].
v. [Wobbe Number [70]]

c. Whenever LNG fuel is supplied to the Vessel, Charterers shall procure that 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).

d. If Charterers trade the Vessel into an emission control area (“ECA”)as defined in Annex VI of MARPOL or as may be imposed by any supranational, national, regional or local governmental authorities, then Charterers shall supply bunker(s) that are compliant with sub-Clauses (a) and (b), for fuel oil and LNG fuel respectively, which will satisfy the ECA requirements, sufficient for the Vessel's needs during any periods while in the restricted area and for the periods needed for fuel change over before and after. In turn, Owners warrant that in the event the Vessel trades in an ECA the Vessel:

i. shall comply with [Regulations 13, 14 and 18 of] Annex VI of MARPOL and with the requirements of the ECA;
ii. is able to consume bunker(s) of the required sulphur content when ordered by the Charterers to trade within the ECA; and
iii. will maintain any warranted segregated storage for low sulphur fuel oil.

e. If Charterers trade the Vessel into any area other than an ECA where there is a restriction in force as to the quality of bunkers that the Vessel can use, and the use of LNG fuel is not an option (for reasons other than as a result of a breach of the provisions of this charter by the Owners), Charterers shall supply bunkers of a quality that meets this restriction and the requirements of sub-Clause (a) during any periods while the Vessel is in the restricted area and the periods needed for fuel change over times before and after.

f. Charterers and Owners shall have the right to appoint an independent inspector to take samples of any bunker(s) supplied to the Vessel to establish compliance with the requirements of this Clause 3.

g. Owners shall have the right, at each transfer of Fuel Oil to the Vessel, to arrange for and retain properly sealed and identified samples of each grade of bunkers transferred and shall hold the same. Such samples shall be taken at the Vessel’s manifold and in accordance with IMO’s bunker sampling guidelines MEPC.182(59) and ISO 13739 and any amendments thereto. Should any dispute arise as to the quality of bunkers under this Charter, Owners and Charterers are promptly to agree on an independent surveying firm specialising in bunker analysis to attend the Vessel and analyse the sample(s) retained onboard. If the analysis shows that the bunkers as transferred were outside the permitted tolerances for the relevant specification or are otherwise unsuitable for use by the Vessel, Charterers shall as soon as reasonably practical, arrange for replacement or remedy, as applicable and in the meantime the Owners will not be obliged to burn the defective bunkers.  All time, costs and expenses including cost of surveys, spare parts and deviation of the vessel , incurred in accordance with this sub-Clause (g) will be for Charterers' account, unless the analysis confirms that the bunkers supplied were within specification or suitable for the vessel, in which case all time, costs and expenses incurred in relation to surveys carried out in accordance with this sub-Clause (g) will be for Owners' account.

h. If Owners require the Vessel to be supplied with more expensive bunkers than those proposed and permitted (under this Clause 3), to be supplied by Charterers or for the Vessel to consume fuel oil (other than as pilot fuel) in any proportion where the Charterers' instructions are to consume LNG fuel, Owners shall be liable for the extra cost thereof.

i. Owners shall be responsible for the conduct of all fuel transfer operations as if performed for their own account and shall agree to and comply with the requirements of the vessel engaged to transfer fuel to or from the Vessel, except where in the reasonable judgement of the master of the Vessel the safety of the transfer operation is in doubt.

j. Subject to sub-Clauses (d) and (e) above, Charterers shall have the right to direct which fuel(s) shall be used by the Vessel at any particular time provided these instructions are in accordance with international, national or local requirements and subject to suitable change-over periods.

Rider Clauses
1. LNG fuelling operations

a. At the date of delivery of the Vessel under this charter it shall be compatible with the LNG fuelling facilities listed at [insert reference to a schedule of “Compatible Facilities”] for the purposes of receiving LNG fuel.
Note: The intention of the above clause is not to list all the facilities but to provide a sufficient list to indicate the capability of the vessel for carrying out bunkering operations in similar facilities

b. If after delivery of the Vessel:

i. there are changes to the configuration of any Compatible Facilities, or if Charterers request the Vessel to receive LNG fuel at any other LNG fuelling facility, then any steps required to ascertain the Vessel’s compatibility shall be undertaken by Owners at Charterers’ time and expense.

ii. a modification to the Vessel or the carriage of additional equipment is necessary to restore or maintain compatibility with any Compatible Facilities or to make the Vessel compatible with any other LNG fuelling facilities (“Compatibility Modification”), Charterers may request that Owners implement such Compatibility Modification at [Charterers’ time (unless implemented during a periodical dry-docking or a period when the Vessel is otherwise off-hire) and expense] [both Owners’ & Charterers’ time (unless implemented during a periodical dry-docking or a period when the Vessel is otherwise off-hire) and expense] [Charterers’ time (unless implemented during a periodical dry-docking or a period when the Vessel is otherwise off-hire) and both Owners’ & Charterers’ expense]. The implementation of a Compatibility Modification shall always be subject to Owners’ prior consent which shall not be unreasonably withheld or delayed.  Any steps required after completion of the Compatibility Modification to ascertain whether the Vessel remains compatible with any other Compatible Facilities shall be undertaken by Owners at Charterers’ time and expense.  Any additional equipment provided by Charterers shall remain their property and shall be removed by Charterers at their time and expense prior to redelivery.

iii. notwithstanding sub-Clause (ii) above, if any changes to the laws or requirements of the Vessel’s flag state necessitate a modification to the Vessel or the carriage of additional equipment to maintain the Vessel’s compatibility with Compatible Facilities then this shall be undertaken by Owners at their time and expense.

c. Owners and Charterers agree that LNG fuelling operations during the period of this charter shall be conducted in compliance with any applicable local, regional or national laws or regulations, and the recommendations and guidelines of the Society for Gas as a Marine Fuel (“SGMF”) and the latest Edition of ISO 20519.

d. Where an LNG fuelling operation is conducted by ship-to-ship transfer, Charterers guarantee that the LNG fuel supply vessel shall comply with any applicable local, regional or national laws or regulations, and the recommendations and guidelines of SGMF and the Society of International Gas Tankers and Terminal Operators (“SIGTTO”).

e. Charterers shall have the right to have an observer present during any LNG fuelling operations at their cost and risk. The attendance of Charterers’ observer shall not interfere with or delay the working of the Vessel or the LNG fuelling operations. The exercise or non-exercise of this right by Charterers shall not reduce the obligations of Owners in respect of the LNG fuelling operations.

f. Subject to any restrictions of local, regional or national laws or regulations and provided that Charterers have obtained any necessary permissions, licence or other confirmation from any applicable authority, LNG fuelling operations may take place during cargo operations with Owners’ prior agreement, which shall not be unreasonably withheld.

2. LNG gas-freeing and cool-down

1. If the Vessel is required at any place to gas-free her LNG fuel tank(s) for any purposes (including without limitation for inspection, surveying, drydocking, maintenance or repair) then subject to reasonable prior notice being given by Owners to Charterers, Charterers shall accommodate any requests from Owners for the volume of LNG fuel remaining onboard: (i) to be consumed preferentially to bunkers; and/or (ii) (if applicable) consolidated between the Vessel’s LNG fuel tanks, and for any future supply of LNG fuel and fuel oil to be adjusted such that the Vessel shall have sufficient fuel(s) to allow it to safely reach such place with all pumpable quantities of LNG fuel consumed (or consolidated if applicable) prior to arrival at such place.
2. Provided that a requirement to gas-free and/or inert the Vessel’s LNG fuel tank(s) does not arise from or in connection with either: (i) the orders of the Charterers; or (ii) any breach of this charter by the Charterers, the expense of any inerting and/or gas-freeing of the LNG fuel tank(s) and any LNG fuel consumed or otherwise lost for the purpose of such inerting and/or gas-freeing shall be for the Owners’ account. If the Vessel is then returned to Charterers’ service with LNG fuel tank(s) not gassed-up and cooled-down, the Vessel shall be off-hire during any time lost by gassing-up and cooling-down the LNG fuel tank(s) ready to load LNG fuel at the next loading of LNG fuel.
3. If the requirement to inert and/or gas-free the Vessel’s LNG fuel tank(s) arises from or in connection with either: (i) the orders of the Charterers; or (ii) any breach of the charter by the Charterers, then for the purposes of sub-Clause (b) the expenses described therein shall be for the Charterers’ account and the Vessel shall not be off-hire.
4. If at any time during the period of this charter the Vessel is required to gas-up or cool-down its LNG fuel tank(s), on Owners’ request, Charterers shall supply any LNG fuel and inert gas needed for such purposes.  The cost of supplying such LNG fuel and inert gas shall be for Charterers’ account except where the need arises either: (i) in the circumstances described in sub-Clause (b); or (ii) as a result of a breach of the charter by the Owners and/or fault on the part of the Owners that prevented the Vessel from conducting LNG fuelling operations when required by Charterers to do so, and in which case the cost of supplying such LNG fuel and inert gas shall be for Owners’ account.

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