SUBSCRIBER NOTE: Platts reflects ex-Primorsk Urals crude cargoes in CIF Augusta

Following a period of feedback, S&P Global Platts now reflects bids and offers for 100,000 mt Urals cargoes, loading from the Baltic Sea port of Primorsk, in the CIF Augusta Urals assessment, effective January 2, 2020.

This follows a decision note published July 4, which is available here:

https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/070419-platts-to-reflect-ex-primorsk-urals-crude-cargoes-in-cif-augusta

Further information on the Observed Delivery Factor, or ODF, can be found in a clarification note published December 24:

https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/122419-platts-to-launch-odf-assessment-for-urals-cif-augusta-methodology-change

Under this change, Platts now publishes bids and offers for 100,000 mt cargoes loading from the port of Primorsk on a CIF/CFR Augusta basis in the Platts Market on Close assessment process, which are then reflected in the final Mediterranean Urals assessment. That assessment continues to also reflect Urals indications for ex-Novorossiisk cargoes on a CIF/CFR Augusta basis.

Urals indications for ex-Novorossiisk cargoes on a CIF Rotterdam basis are not included under this change. The methodology for the CIF Rotterdam assessment remains unchanged.

ASSESSMENT SIZE: Platts has widened the assessment volume for the CIF Augusta Urals assessment from 80,000 mt to 80,000-100,000 mt, with the assessment determined by factoring in both cargo sizes. Platts continues to reflect bids and offers of 140,000 mt cargoes, but these indications are normalized back to an 80,000-100,000 mt standard.

OFFERS: Platts reflects 100,000 mt offers of cargoes loading from the Baltic Sea port of Primorsk on a CIF Augusta basis and continues to reflect offers of 80,000 mt cargoes loading from Novorossiisk.

BIDS: Platts continues to publish bids of 80,000 mt. In addition, Platts publishes bids for 100,000 mt and 80,000/100,000 mt. Any cargoes hitting these 80,000/100,000 mt bids could be sourced from either the Baltic or Black Sea in the seller's option. Bids for 80,000 mt cargoes would not be supplied with 100,000 mt cargoes, and bids for 100,000 mt cargoes would not be supplied with 80,000 mt cargoes, unless changed through mutual agreement with the buyer. Nomination of cargo and vessel on 80,000/100,000 mt trades will be seven calendar days prior to the first day of the laycan in line with existing Urals nomination methodology.

Platts understands that cargoes from Primorsk typically arrive at Augusta 12 to 14 days after loading, whereas cargoes from Novorossiisk arrive at Augusta 6-8 days after loading.

However, during the winter period, journeys from Novorossiisk can be delayed by up to 20 days, attributed to reduced daylight hours causing congestion through the Turkish straits.

To account for these differences in delivery times, this change includes the following:

LOADING DATES: Platts reflects different base laycans during summer and winter periods. For assessments from the start of April to the end of September, Platts continues to reflect Urals cargoes loading at Novorossiisk 10 days forward from the date of publication to 25 days forward.

For cargoes loading from Primorsk, load dates are normalized for the purpose of assessment to equivalent Novorossiisk dates.

From the start of October to the end of March, Platts reflects Urals cargoes loading at Primorsk 10 days forward from the date of publication to 25 days forward.

During this period, for cargoes loading from Novorossiisk, load dates are normalized for the purpose of assessment to equivalent Primorsk dates.

Platts will review observed delays and may amend the base port for laycans outside of the seasonal calendar should the need arise.

LAYCAN NORMALIZATION: Ahead of the Platts Market on Close assessment process each publishing day, Platts publishes the ODF, representing the difference in delivery windows between the base ports of Novroossiisk and Primorsk under the below code:

Observed Delivery Factor AODFA00

The ODF is made available in advance of the Market on Close process via Platts Global Alert, and is published in both Crude Oil Marketwire and on PGA page 1220.

During the summer, the observed delivery factor will represent how many days longer it would take a cargo from Primorsk to reach Augusta versus a cargo from Novorossiisk.

During the winter the ODF will represent how many days longer it will take a cargo from Novorossiisk to reach Augusta versus a cargo from Primorsk.

For the purposes of assessment, the ODF will be added to the published laycans of bids or offers to normalize them to base port dates.

For example, during the summer period, an ODF of four days would indicate delays of two days at the Turkish straits (based on a normal delivery difference of six days).

Therefore, an offer for a cargo loading from Primorsk July 5-10 would be considered for assessment purposes as representing value based on Novorossiisk dates of July 9-14.

During the winter period, an ODF of six days would indicate delays of 12 days at the Turkish straits.

Therefore, an offer for a cargo loading from Novorossiisk December 5-10 would be considered for assessment purposes as representing value based on Primorsk dates of December 11-16.

MARKET STRUCTURE: In applying the ODF to indications, Platts will account for the impact of market structure on published differentials.

FINAL ASSESSMENT: Platts assessments for Urals CIF Augusta will then reflect the most competitive value between the different cargo sizes on a CIF Augusta basis. For example, if an offer for 80,000 mt crosses a bid for 100,000 mt then the offer would prevail in the final assessment.

PREVIOUSLY-LOADED OIL: This change will continue to allow sellers to hit bids with previously loaded oil, provided the buyer is not harmed by the seller's decision to do so. Existing methodology around previously-loaded oil will continue to apply.

PART-CARGOES: Part-cargoes are not covered under this proposal. All indications reflected in the Platts Market on Close assessment process will continue to be full cargoes.

BLACK SEA OPTIONS: From January 2, 2020, bids for 80,000 mt cargoes CIF basis Augusta may include requests for Black Sea options. Any indications that include a Black Sea option request may be subject to normalization back to the 80,000/100,000 mt CIF basis Augusta standard.

Please send all further feedback and comments to europe_crude@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing.

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