FEATURE: Why Has No-one Named the Source of the Latest Houston Bunker Contamination?

The most recent case of bunker contamination in Houston has raised once again the inevitable questions about marine fuel quality and what shipowners can do to protect themselves against lifting bad bunkers.

In this latest incident a number of testing agencies identified the source of the contamination as a single supplier.

But exactly who that supplier is has not been revealed. At least not publicly.

Ship & Bunker has received a number of comments from readers who were frustrated by this very fact.

"It's not enough for a rumour mill to work, someone needs to speak out," one subscriber said.

So who can, and indeed should, be naming names when these cases of bad bunkers arise?

The Fuel Testing Agencies?

Perhaps the most common group that readers feel should be revealing the source of contaminated bunkers are the testing agencies. After all, they are the ones who first identify the issues and alert the industry.

However, all the testing agencies we spoke to explained why it was not their place to do that.

"We are in a way like doctors in charge of patients' health. Clients count on us to keep their information confidential," Ananth Srinivasan, Vice President at Houston-based testing agency V-TIC Services Inc told Ship & Bunker.

Bill Stamtopoulos, Global Business Development Director, Bureau Veritas (BV), explained that even if they wanted to 'name names' they likely do not have the legal grounds to do so.

"Some legal people highlight that if the bunker transaction is based on the supplier's T&Cs, then unless an official BDN barge's sample is tested revealing the same findings, then you do not have any grounds to reveal the suppliers' name," he explained.

"In case that Charterers supply the fuel, and the CP Clause states BIMCO terms or sampling at receiving vessel's manifold, then the official samples are the ship's one, but they are applicable to the Owners – Charterers business relationship."

The confidentiality and legal considerations were also echoed by VPS, who were the first to issue a public bunker alert on the latest Houston contamination case.

"In any VPS Bunker Alert or Press Release, we never disclose the name of the supplier, or suppliers. The full details of our testing of marine fuels is confidential, between our specific customers and VPS.," Steve Bee, Group Commercial & Business Development Director, told Ship & Bunker.

"Of course, our customers who are directly affected by a contaminated fuel know who the supplier/s and barge/s are. In addition, such cases can lead to claims and legal processes between supplier/s and receivers of the fuel, therefore it is not our place to publicly name any potentially involved party, in advance of any such legal processes."

Industry Bodies?

Bunker industry bodies such as the International Bunker Industry Association (IBIA) and Marine Fuels Alliance (MFA) are another source that readers felt should speak out.

MFA Executive Officer, Anthony Mollet, said that it was not their place directly to name any sources of contaminated bunkers as it was outside of their remit to independently verify such allegations.

That said, the MFA says it is working with its members to guard against such incidents in other ways.

"Cases such as this latest one in Houston reaffirm the MFA's work to help provide companies with access to 'early warning systems'. It should become part of standard daily operational procedure and process," he said.

"In our Focus Areas, we are discussing with supplier-members and expert industry Partners to collaborate and utilise their easy-to-access links that flag major issues across the supply chain. We are heightening awareness that information is available and how it can be obtained."

"We also want the MFA to be somewhere members can turn to quickly to ask questions, receive technical guidance and even discuss with our legal partners suitable wording and clauses to insert at the time of sudden off spec fuels in a port or region. This is part of our overall Risk Management approach that we are offering assistance with."

IBIA voiced a similar view, and clarified that they have not directly been presented with the names of any specific company or companies involved in the recent Houston 'bad bunkers' case.

"It is unlikely that we will, given the legal and financial risks of releasing such details to third parties," IBIA Director Unni Einemo said.

"It would require a party with relevant evidence to go on record, like the MPA did in Singapore after investigating last year's cases of fuels contaminated with chlorinated hydrocarbons.

"It was very helpful for a local authority to take this proactive approach, and we would encourage relevant authorities in Houston to do the same."

The Port Authorities?

IBIA are not alone in believing that the Port Authorities are the ones best placed to not only name names in cases of contaminated bunkers. but also take other steps to protect buyers.

"In our circular we have expressed our wish that US Port Authorities identify the origin of the blend components," said BV's Stamtopoulos.

"I would also add that they should ensure there is clarity and traceability on the supply chain as well as adequate quality control among fuel suppliers. This should include firm actions for the offenders."

In Singapore's HSFO contamination case of February-March 2022, the Maritime and Port Authority was able to name Glencore as the original supplier of the contaminated fuel -- and PetroChina as another supplier to which Glencore had sold on some of the product -- in April 2022.

The MPA subsequently suspended Glencore's bunker supplier licence for two months for continuing to supply the fuel for just over a week after learning of the contamination. It took no further action against PetroChina, which had promptly stopped deliveries of the contaminated fuel after discovering the problem.

But market participants hoping for similar consequences in this latest Houton case are likely to be disappointed. The MPA holds unique power among port authorities over its marine fuel sellers, both by being a national authority and by managing Singapore's bunker supplier licensing system.

Authorities that oversee most other marine fuel markets, including Houston, have a much more restricted remit when it comes to marine fuel operation and are unlikely to be able to respond to a similar case in the same way.

For Houston specifically it is understood that the USCG and the Army Corp of Engineers control the port of Houston, while the Houston Port Authority, branded as Port Houston, is the federal sponsor and owns eight public container terminals. In total there are over 200 terminals in Houston.

It remains unclear whether any authorities in Houston will feel able to point a finger at whatever they see as the likely origin of this latest contamination, but it should be noted that no-one made an official comment during a major contamination case in 2018 that affected some 200 vessels.

The Houston Port Authority has been contacted by Ship & Bunker on the issue and said it is unable to provide a comment on the matter.

The Media?

Some readers have asked if Ship & Bunker can name the source of the contamination. 

While we are aware of the market chatter, and some readers have directly shared their take on who they believe to be behind the problem, the truth of the situation remains unclear.

Ultimately, the consequences of a publication naming a company it beleived was responsible for contamination without official evidence would be severe, both in terms of reputational damage to the unfairly named party and - quite rightly - legal fallout for the publisher of the article. 

"We do not report gossip," added Martyn Lasek, managing director of Ship & Bunker.

"It is very important that people can trust what they read in our pages.

"If a supplier feels able to come forward and wants to publically identify itself as having supplied contaminated fuel, or as with the 2022 case in Singapore there is official comment on the matter, then these are examples of when we can report such information.

"But unverified allegations can not, and should not, be brought to light without evidence to back them."

What Should Bunker Buyers Do to Protect Themselves?

In the absence of publically avaialble information on sources of comtaamination, fuel testing agencies remain the first line of defence against burning bad bunkers. This applies to both testing fuel, and paying attention to bunker alerts issued to their cusotmers and published in relevant media such as Ship & Bunker. 

"For ships that have, or are planning to lift bunkers in areas during a time when contaminated fuels were or are known to be supplied, it is strongly recommended to get a solid overview of the quality of the fuel prior to using it by allowing time for tests going beyond routine ISO 8217 quality tests," said IBIA's Einemo.

"Ship operators that decide to use fuels from the affected areas without this precaution should pay close attention to fuel oil system components, in particular fuel pumps and filters to act quickly if there are signs of problems. They should further consult technical managers/chief engineers within their own company and/or from other technical service providers, including bunker suppliers.

"It is likely that some questions may be raised about previous bunker fuels carried on vessels and the on-board fuel management procedures, hence shipowners would be well advised to carefully document procedures and retain all relevant fuel samples, including system samples taken if/when a problem occurs.

"We would like to add that all suppliers selling product to meet ISO 8217 have a duty to test product cargoes in advance, and we call on the industry to observe the advisory in IBIA's "Best practice guidance for suppliers for assuring the quality of bunkers delivered to ships", in particular the sections dealing with quality control in the production of bunkers and the subsequent supply chain."

MFA's Mollet, meanwhile, stressed the importance of buyers knowing what was happening in a port prior to the bunkers being lifted. 

"In the case of fuel alerts, we have SGS and Amspec on board and will invite them to join a new Technical Consultancy Team in the MFA. We recognise what all fuel testing agencies can offer in terms of alerts and deep-dives in to fuel specification issues," he told Ship & Bunker.

"But equally important for an owner and bunker buyer is to know what is happening in a port prior to fixing a new bunker stem. Similarly, bunker companies buying cargoes need to be fully aware of any local contamination issues before entering contracts and starting to sell volume to their clients."

To that end, even if sources of contamination are not known publicaly, stakeholders in the marine fuel supply chain will seek to protect both customers and themselves by identifyying potential sources of bad bunkers off the record.

Indeed, some would argue this is a case where buyers' use of an intermediarty such as a broker or trader is an advantage.

"There will be chatter in the market about which supplier(s) delivered these fuels, so informal networks may be helpful," Einemo added.

"Fuel testing agencies might provide verbal information to their customers."