Platts proposes implementing 60% freight adjustment factor on WTI Midland FOB Scapa Flow crude oil assessment

Following a period of review and consultation, S&P Global Platts is proposing to reduce the freight adjustment factor used in its WTI Midland Free On Board (FOB) ship-to-ship (STS) basis Scapa Flow assessment to a factor of 60%, from the current 80%.

The change would be effective concurrent to Platts current formal consultation regarding the inclusion of WTI Midland crude in its Dated Brent benchmark, and all related assessments.

Platts has extended the deadline for feedback on this consultation to Feb. 12.

This proposal adds further detail to this consultation.

Platts published the formal consultation note Dec. 3, 2020, and it is available here:

https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/120320-sampp-global-platts-opens-consultation-on-inclusion-of-wti-midland-crude-in-dated-brent

Under this proposal, Platts would continue to adjust delivered Rotterdam WTI Midland bids and offers for sailing time, port fees and freight back to a FOB Scapa Flow basis, but the factor applied to the applicable freight rate would be 60%.

During its market consultation regarding the potential addition of WTI Midland to Dated Brent, Platts has noted support for the idea of a reduced freight adjustment factor in order to facilitate a smoother introduction of the grade into the benchmark.

Bids and offers within the Platts Market on Close assessment process on a FOB Scapa Flow basis, and nominations of WTI Midland into Cash BFOE on a FOB Scapa Flow basis would not be subject to a freight adjustment factor.

The change would apply for the first year after the addition of WTI Midland to Dated Brent but would be subject to review as necessary.

Platts publishes a 10-day rolling freight average the day before each day's Market on Close assessment process, to ensure the freight factor is fully known before the assessment process begins.

For WTI Midland FOB Scapa Flow, this is based on its 10 previous assessments of the Dirty Cross-UK Continent 80,000 mt Worldscale freight assessment [TDUUW00] applied to the Scapa Flow-Rotterdam Worldscale flat rate.

The FAF which applies to the WTI Midland FOB basis Scapa Flow assessment is published under the code FSFRM00.

This proposal note is being published alongside two additional proposal notes:

SUBSCRIBER NOTE: Platts clarifies detail on proposed WTI Midland FOB Scapa Flow loading program

SUBSCRIBER NOTE: Platts proposes to amend volume guidelines for CIF Rotterdam, FOB STS Scapa Flow crude oil assessments

Please send all comments to europe_crude@spglobal.com and pricegroup@spglobal.com by Feb. 12.

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