SUBSCRIBER NOTE: Platts launches FOB Black Sea, CIF Med VGO assessments

In line with changing trade flows of high sulfur vacuum gasoil (HSVGO) and low sulfur vacuum gasoil (LSVGO) in Europe, S&P Global Platts has launched assessments of VGO for the developing Black Sea and Mediterranean markets, starting January 2, 2018.

This follows a decision published on July 10, 2017: https://www.platts.com/subscriber-notes-details/26769345

Platts now publishes both HSVGO and LSVGO assessments of FOB Black Sea (basis a basket of Black Sea ports) cargoes, and CIF Mediterranean (basis Malta) cargoes.

Oil loading in the Mediterranean may also be reflected in the assessment where relevant, but will be normalized back to the Platts basket of ports. Platts considers CIF Mediterranean (basis Malta) and FOB Black Sea as related markets and will assess FOB Black Sea VGO as a freight netback from the CIF Mediterranean (basis Malta) assessment. As part of this change, Platts will publish bids and offers for VGO cargoes CIF Mediterranean (basis Malta).

As noted previously, Platts believes that the currently assessed VGO cargo specifications and sizes in NWE are broadly relevant to the Mediterranean market. The two specifications of CIF Mediterranean VGO to be assessed are as follows, with freight netback FOB Black Sea assessments reflecting the same specifications.

HSVGO: sulfur: 2.00% max; Density: 0.92 kg/l max; Metals: Iron 2 ppm max, Sodium 2 ppm max, Nickel 1 ppm max, Copper 1 ppm max, Vanadium 1ppm max; CCR: 0.5% max; Nitrogen: 1700 ppm max; Pour point: 45 degrees Celsius max; Flashpoint: 100 degrees Celsius min; Aniline: 75 degrees Celsius min; Asphaltenes: 700ppm max; Tan: 0.5 mg KOH/g max

LSVGO: sulfur: 0.80% max; Density: 0.92 kg/l max; Metals: Iron 2 ppm max; Sodium 2 ppm max; Nickel 1 ppm max; Copper 1 ppm max; Vanadium 1ppm max; CCR: 0.5% max; Nitrogen: 1500 ppm max; Pour point: 45 degrees Celsius max; Flashpoint: 100 degrees Celsius min; Aniline: 80 degrees Celsius min; Asphaltenes: 700ppm max; Tan: 0.5 mg KOH/g max.

These specifications are in line with the specifications assessed for VGO in NWE, with the exception that LSVGO in the Black Sea and Mediterranean will be assessed with a maximum sulfur level of 0.80% rather than 0.60% as assessed in NWE. This reflects Platts understanding that a higher sulfur level is typical in Mediterranean deliveries.

Platts will continue to consider other merchantable HSVGO and LSVGO specifications in its assessment process, and may normalize to the published standard specifications.

Platts VGO cargo assessments in NWE currently reflect a 15,000-35,000 mt range, normalized to 30,000 mt. FOB VGO assessments currently include larger cargo sizes when the arbitrage route to the US is open.

The change is part of a suite of amendments to Platts assessments of VGO, which also includes the rebasing of the FOB NWE assessment to a FOB Baltic Sea assessment.

Platts currently publishes all European feedstocks assessments as outright price values in US dollars per metric ton, and this will also remain the case following the change. Platts had originally proposed to also publish differentials to front month ICE Brent Futures in US dollars per barrel.

Please send all comments to europe_products@spglobal.com and pricegroup@spglobal.com.

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Platts will consider all comments received and will make those not marked as confidential available upon request.