IBIA raises awareness of sulphur compliance verification challenges at IMO
On January 17 this year, IBIA put on a lunchtime presentation in the main hall at the headquarters of the International Maritime Organization (IMO) for delegations attending the fourth session of the Sub-Committee on Pollution Prevention and Response (PPR 4).
IBIA took this opportunity to again explain some of the challenges we have seen, and which could intensify in 2020, with respect to verifying compliance to applicable MARPOL sulphur limits.
The objective was to raise awareness of the current differences between commercial and statutory approaches to verifying sulphur content in marine fuels and the problems resulting from the difference in procedures. This is causing uncertainty among ship operators who fear falling foul of MARPOL Annex VI sulphur limits, while confusion about the different approaches often results in friction between bunker suppliers and ship charterers and owners.
The 0.50% sulphur limit in MARPOL Annex VI Reg. 14 will no doubt cause much greater scrutiny on ship compliance with sulphur limits than we see today because of its global application. Currently, sulphur inspections are focused on ships and suppliers in countries with emission control areas (ECAs). In addition, European Union (EU) sulphur inspection requirements, which include the testing of fuel samples, apply across the EU, not just in countries bordering ECAs.
IBIA has highlighted several times, in presentations at various fora, that the 0.50% sulphur limit will probably see much more use of blending to meet the sulphur specifications than we see for fuels meeting the current 3.50% and 0.10% sulphur limits. Suppliers will probably blend close to the 0.50% sulphur limit to be able to offer a competitively priced product while also protecting their profit margins. This may increase the risks of potential sulphur ‘off-specs’, in line with what was observed from 2006 until the end of 2014 with the 1.50% and 1.00% ECA sulphur limits, which were largely met by low sulphur fuel oil (LSFO) blends. There is, however, a misalignment between what is considered an ‘off-spec’ fuel in normal commercial practice, and the statutory approach under MARPOL Annex VI as to whether the fuel is considered to meet the regulatory limit.
So what is the issue? Let’s take an example and look at a fuel ordered to the current 0.10% upper sulphur limit in ECAs. Under commercial contracts, if the ship sends a bunker sample for testing, a single test result up to 0.11% will be considered as meeting the specification in accordance with ISO 4259 principles for test interpretation. When the ECA sulphur limit was 1.00%, a single test result up to 1.06% would have been considered as meeting a 1.00% sulphur specification under ISO 4259 principles which provides the industry with a statistical 95% confidence formula for any fuel test parameter. However, the sulphur verification procedure described in Appendix VI to MARPOL Annex VI for the MARPOL sample would consider a final test result at 1.01% as non-compliant against a 1.00% sulphur limit and 0.11% as non-compliant against a 0.10% sulphur limit
A ship which has a sulphur test result indicating potential non-compliance may lodge a ‘Note of Protest’ (NOP) with its flag state with a copy of the bunker delivery note (BDN), and the analysis report, though there is no explicit MARPOL requirement for the ship to do so. The vast majority of such sulphur NOPs, historically over 80%, tend to be for fuels with sulphur test results falling within the 95% confidence limits, meaning the ship has no case for a commercial claim against the supplier. Only a test of the MARPOL sample, which is reserved only for statutory compliance verification testing by port State control officers (PSCO), would prove whether or not the fuel supplied to the ship is compliant. It makes for an uncomfortable situation for the ship owner/operator who has flagged up a potential, though not proven, MARPOL non-compliance, leaving them anxious about potential enforcement action.
The number of sulphur NOPs reported by flag states to the IMO dropped by about 80% from 2014 to 2015, and bunker suppliers saw an equal, if not greater, drop in the number of sulphur disputes with owners from 2014 to 2015. The reason was simple: the 1.00% ECA sulphur limit was largely met by using LSFO which was blended to reduce the sulphur content. By contrast, the 0.10% ECA sulphur limit in 2015 was by and large met by using marine gasoil (MGO) which for the most part comes from a product pool that tends to be well within the upper 0.10% sulphur limit. The 0.50% sulphur limit in 2020 is expected to reintroduce blending from a wide source of refinery streams on a much larger scale than what was seen to meet demand for LSFOs for the ECAs prior to 2015. Hence, the number of ships’ own fuel quality programme test results that are marginally above the MARPOL limit, but within confidence limits (up to 0.53% sulphur for a fuel ordered to a 0.50% upper limit) and the associated sulphur NOPs could reach unprecedented levels. These NOPs do not prove non-compliance, they merely indicate that the fuel delivered to the ship may be non-compliant.
As PPR 4 was due to discuss how to achieve uniform and smooth implementation of the 0.50% sulphur limit in 2020, IBIA sought to inform IMO delegations about the challenges surrounding sulphur compliance checks as this should also be considered.
IBIA invited Tim Wilson, Principal Specialist on fuels at Lloyd’s Register, to do the presentation and worked closely with him on the content. Also supporting the preparation of the presentation and attending was another marine fuel quality expert, IBIA board member John Stirling, who worked at DNV Petroleum Services for more than two decades before he joined the Marine Technical group at World Fuel Services. Both Wilson and Stirling are active members of the ISO 8217 development committee and the CIMAC working group on heavy fuel oil.
Wilson opened the presentation by saying that the MARPOL regulation’s focus fuel sulphur content means that, when the global limit drops to 0.50%, all bunkers will come under greater scrutiny. “I am sure you will agree therefore that processes should be clear, robust and uniform whichever port the ship might visit. We will see that there is some level of uncertainty that we need to be mindful of.”
Fuel sulphur verification process
Correct sulphur content determination is dependent on a number of factors, all equally important, Wilson said. The required elements are a representative fuel sample, supporting paper work (e.g. correctly filled in sample bottle labels and BDN), and analysis performed using standard test methods in a duly accredited laboratory. The final element is the interpretation of the test results. If all these steps are not rigorously followed and aligned, it is possible that a ship, or indeed a supplier under inspection, may be wrongly penalised for non-compliance, he noted.
Most of these elements are well aligned between commercial and statutory practice, but there are some key differences. The commercial sample can be drawn from either end of the bunker hose but is mostly provided by the supplier from the barge cargo tank outlet manifold. IMO guidelines say the MARPOL sample should be drawn from the ship’s bunker inlet manifold, but practices vary. Fundamentally, the main principle for both the commercial and the MARPOL sample is that all parties present during the sampling agree that the sample is representative of the fuel as bunkered, whether it was drawn on the barge or at the ship’s manifold.
Appendix VI in MARPOL Annex VI refers, in a footnote, to the ISO 8754 test method for sulphur, and for the most part both statutory and commercial samples are tested using this ISO method in appropriately accredited laboratories.
The ISO 8754 test method refers to ISO 4259 for test interpretation, but while this is observed with regards to commercial test results, the sulphur verification procedure for the MARPOL sample specified in Appendix VI in MARPOL Annex VI is different.
Recently approved IMO guidelines for PSC inspectors to draw so-called in-use samples are aligned with ISO 3170 methods, but the sulphur test verification principles have yet to be clearly defined.
Test result analysis facts
Having outlined the broad picture of the elements in the sulphur verification process, Wilson’s presentation on behalf of IBIA drilled down deeper into the main problem area, namely the difference in approach to verifying sulphur content.
The fact is that no test method can measure absolute/true value with 100% certainty, and the accuracy and precision differ between test methods. Given that there will be variability between test results, even from identical samples tested in the same laboratory, this raises the issue of when an individual test result indicates that a fuel oil has, or has not, met a particular specification requirement.
In the case of marine fuel oils, these are typically ordered and supplied against the ISO 8217 “Petroleum Products – Specifications of Marine Fuels” which refers to ISO 4259 “Petroleum Products – Determination and Application of Precision Data in Relation to Methods of Test” for the interpretation of test results, Wilson explained. ISO 4259 provides the industry with a scientific and statistically proven 95% confidence formula to work with in any form of measurement, i.e. it recognises the test method’s limitations with regards to its accuracy. It is defined as 0.59 x R where R stands for Reproducibility, indicating the variation in test results when tests are conducted on the same sample, using the same test method, but in different laboratories.
The approach in MARPOL Annex VI, by contrast, seeks to determine the impossible. i.e. the ‘true value’ of the sulphur content in the MARPOL sample, Wilson said. It does this by calling for the average of two test results performed in the same laboratory to meet the limit exactly or be below to be deemed compliant. If the average of the first two results exceeds the limit but the result does not exceed the limit +0.59 x R, a further two tests should be performed in a different laboratory on the same sample. The average of all four must be below or meet the limit exactly to be deemed compliant.
The Appendix VI to MARPOL approach not only fails in the task of measuring the ‘true value’, but by not adhering to the ISO 4259 process for assessing test results it can also result in a fuel oil being found non-compliant, in accordance with Annex VI when both the supplier’s and receiver’s test results meet the specification limit, where that is defined as a MARPOL Annex VI Regulation 14 sulphur value.
Wilson pointed to a CIMAC paper on sulphur test interpretation which has examples on this and noted that the MARPOL approach is confusing to the shipping industry which is used to the ISO 8217 standard and its associated ISO 4259 approach to test result interpretation.
Wilson highlighted another unfortunate side-effect of this discrepancy, which sees ship operators, based on a single test result from their test programme, having the dilemma that they believe they are required to issue NOPs even if the test result is within 95% confidence limits, which is not the case. The ship owner is not required to test the sulphur content of fuel supplied to their vessels, so some chose to not test the sulphur content even when they have other quality tests done, and rely only on the sulphur content recorded by the supplier in the BDN. Although this resolves one dilemma for the ship, it can create other problems if the sulphur content on the BDN is understated, putting the ship at risk of non-compliance. Additionally, if all shipping companies adopted this approach it would also mean less data will be made available to monitor the overall sulphur compliance situation.
Why application of ISO 4259 should suffice
IBIA has in the past proposed to the IMO to align the sulphur verification procedure in MARPOL Annex VI with ISO 4259, to provide a more uniform, robust and reliable system. It has, however been resisted because of suspicion among member states that bunker suppliers would then be tempted to blend either exactly to the sulphur limit or even marginally above because of the “error margin” afforded under the 95% confidence limit.
Wilson explained to PPR 4 that there is an important distinction in the application of the testing boundary even in commercial application using ISO 4259, with different approaches for the supplier and for the recipient as to whether a specification limit has been met.
Applying ISO 4259, the recipient (ship) can only consider that a maximum specified limit value has been exceeded if their test result exceeds the limit plus 0.59R, or 95% confidence. For the supplier, with a single test result, the approach is that in the case of a maximum specification limit, the specification limit has been met, with 95% confidence, if the test result is less than or equal to the specification limit minus 0.59R.
What this means is that if a supplier’s retained sample is tested, that test result must not exceed a maximum limit at all. They do not have the ‘luxury’ of applying the limit plus 0.59R.
If a supplier is using a blend target equal to the specified limit, there would be as many test results above the specified limit as below (50/50 chance), meaning that, for the supplier to be 95% confident that they do not exceed the limit, the supplier should blend to the limit minus 0.59R.
These principles should suffice to ensure suppliers are careful not to blend too close to the sulphur limit, but in a competitive market place some may be tempted to blend to the actual limit rather than the limit minus 0.59R.
The question is: what harm would that do? As long as the sulphur test results fall within the 95% confidence limits, the regulation’s intended benefits of reducing harmful sulphur emissions are achieved. By and large, authorities in reality do not seek to crack down hard on marginal infractions, though practices with regards to penalising sulphur limit exceedances will vary between countries, as we have already seen in countries checking ships for ECA compliance.
Wilson, in his summary, highlighted that sulphur inspection authorities need to be mindful of the current differences between commercial and statutory approaches, and to understand that all test methods use 4259 to define the confidence testing boundary.
He also repeated that NOPs currently include reports of ships’ single test results where the sulphur limit exceedance is within 95% confidence limits, suggesting perhaps changing this practice to only report single test results exceeding the limit plus 0.59R. Including NOPs testing within the limit plus 0.59R only causes anxiety for the ship owner about potentially being non-compliant but gives them no commercial case against the supplier.
Moreover, Wilson said it might be preferable if the sulphur test method (ISO 8754) was defined in the body of MARPOL Annex VI text, not just in a footnote.
The key point to understand, Wilson said, is that inconsistency in testing procedures could result in wrong indictments of ships and/or suppliers.
A CIMAC guide issued in 2014 recommended that the existing Appendix VI procedure should be replaced by the ISO 4259 approach for the MARPOL sample, and that the ISO 4259 approach should also apply to tests on in-use fuel samples. Aligning the commercial and statutory approach would resolve the problems discussed above, as indeed IBIA argued in its proposal to the IMO’s Marine Environment Protection Committee (MEPC 68) in 2015.
As that proposal was resisted, IBIA is mindful that achieving the desired amendment to the existing regulation would require a new proposal with significant support from member states. By doing a presentation at PPR 4, however, which is a sub-committee to MEPC, IBIA has again raised awareness of how the discrepancies between the regulation and commercial practices are causing a lot of pain for no gain. This will hopefully help member states understand the issues and take a common sense approach when it comes to enforcement of MARPOL sulphur limits.
Please contact IBIA’s IMO Representative, Unni Einemo if you want to comment on this subject: firstname.lastname@example.org