Qatar revamps oil pricing mechanism; sets forward OSPs vs Platts Oman/Dubai

Singapore — Qatar on Monday announced a major revamp of its crude pricing formula, setting official selling prices, or OSPs, that reference benchmark Platts Oman and Dubai assessments.

State-owned Qatar Petroleum announced OSP for term supplies of Qatar Marine and Qatar Land crude grades for loading in March. The announcement marked the first time the Middle East producer has set OSPs prior to cargoes loading – in line with regional rivals such as Saudi Arabia and Iraq.

Previously, the company announced monthly OSPs as outright values the month after cargo loading.

The company set the March price differential for its Qatar Land and Qatar Marine grades at $2.40/b and $2.10/b over the average of Platts Oman/Dubai crude assessments.

The final outright price for both grades for March will be calculated by adding the differential to the average of the Platts front-month Dubai and Oman crude assessments priced in the month of March.

The company announced late December that it will switch to prospective pricing for its crude sales from February 2020 "to improve the overall competitiveness of Qatar Marine and Qatar Land, and allow existing and new customers to better align and compare the Qatari crude grades with other crude grades."

Early last week, the company had announced retroactive OSP for January loading cargoes of Qatar Marine and Qatar Land at $67.70/b and $67.20/b, respectively.

In March, the company is expected to announce OSPs for February and April loading cargoes. From April onwards the company would announce OSP for only the forward month.

The company started issuing indicative forward-looking price differentials last year, as it prepared to transition from a retrospective pricing methodology to a prospective one.

It last issued such indicative price differentials in January, setting Qatar Land at $3.80/b and Qatar Marine at $2.85/b.