Platts proposes to use volume for CIF Rotterdam, FOB STS Scapa Flow crude oil

After a period of market feedback, S&P Global Platts is proposing to amend the volume guidelines for its Dated Brent cost, insurance and freight (CIF) Rotterdam and Free On Board (FOB) ship-to-ship (STS) Scapa Flow crude oil assessments.

This proposal is in line with the ongoing formal consultation by Platts regarding the inclusion of WTI Midland crude in its Dated Brent benchmark, and all related assessments.

The feedback deadline for the consultation has been extended to Feb. 12, 2021.

This proposal adds further detail to the consultation.

Platts published the formal consultation note on Dec. 3, 2020, which 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

Platts is proposing to remove the mother/daughter vessel restrictions on FOB STS and CIF Rotterdam cargo offers in its Dated Brent Market on Close assessment process.

Instead, Platts would reflect a minimum volume that could be offered in the Platts MOC.

In practice, this would extend the number of cargoes that could be offered to granddaughter vessels and beyond, provided that the cargoes on offer meet the minimum volume requirements and continue to reflect standard cargo quality.

Platts currently publishes 600,000 barrel CIF Rotterdam and STS BFOET cargo offers in the MOC, with an operational tolerance plus or minus 1%.

Under this proposal, Platts would continue to reflect 600,000 barrel cargoes in its assessments, but would publish CIF Rotterdam and STS offers for smaller cargoes.

Those offers may be subject to normalization for the purposes of the assessment. Platts is proposing to reflect cargoes with a minimum stated volume of 580,000 barrels with an operational tolerance of plus/minus 1%.

The original FOB cargo would be expected to have loaded 600,000 barrels plus/minus 1% at one of the five terminals supplying physical BFOET crude oil, and the quality of the supplied crude oil must be congruent with the quality recorded at the time of its original FOB loading.

Platts is seeking feedback on reasonable minimum deliverable volume limits and any potential quality considerations associated with additional instances of STS operations.

This proposal follows market feedback indicating that end-user volume flexibility is greater than 1% around 600,000 barrels, and that standard market practices already exist in order to settle volume losses beyond previously-agreed limits.

WTI MIDLAND VOLUMES: Platts is also reiterating that its WTI Midland delivered assessments into Augusta and Rotterdam continue to reflect cargoes of 500,000-700,000 barrels.

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

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.