Platts proposes to amend Cinta, Widuri crude assessment methodology

In response to changing physical market conditions, S&P Global Platts proposes to amend the methodology for its assessments of Indonesia's Cinta and Widuri crude oil grades from July 1, 2020.

Platts' existing assessments for Cinta and Widuri reflect cargoes of the grade loading FOB and sold in the open market. However, Platts no longer observes sufficient spot information to sustain independent assessments for these oil grades.

Oil production from the Southeast Sumatra (SES) working area, which produces Cinta and Widuri crude, have fallen from a peak of around 244,000 b/d in July 1991 to around 27,000-28,000 b/d in 2019, according to data from Indonesia.

Exports of both crude oil grades have ceased following the expiry of operator CNOOC's SES production sharing contract in September 2018.

Oil produced from the SES working area, which is now operated by Pertamina's subsidiary PT Pertamina Hulu Energi Offshore Southeast Sumatra (PHE OSES), is domestically processed at Pertamina's refineries.

From July 1, 2020, Platts will calculate a daily value for Cinta and Widuri using a Market Parity Price or MPP model, instead of assessing the grade through its existing Market On Close assessment methodology. As a result of this change, Platts will no longer consider bids, offers and trades for spot cargoes of the grade. Platts will continue to report on any spot market transactions for these grades, but this information will not be used in the daily calculation of the MPP.

The MPP calculation for both the grades will be based on the grade's Gross Product Worth benchmarked to a reference basket of relevant crude grades that are actively traded in the regional spot market. These will initially include Russia's ESPO, Abu Dhabi's Murban and Malaysia's Kimanis. The three basket grades, Cinta, Widuri and their GPW will be normalized for delivery to Japan, accounting for freight and regional spot product prices.

The MPP model, which Platts also uses to assess certain illiquid crude oil grades from West Africa as well as Indonesian Minas crude and Mexico's Maya crude, will ensure that the assessment captures both the inherent refining value of the crude as well as the broader oil market demand-supply fundamentals reflected in the price of the reference basket.

To learn more about Platts Market Parity Price assessments, click on /content/dam/spglobal/ci/en/documents/platts/en/our-methodology/methodology-specifications/market-parity-prices.pdf

Platts will review the MPP models for Cinta and Widuri annually to ensure they continue to reflect prevailing market conditions and quality of the crude grades.

The Cinta and Widuri MPP assessments will be published under the existing code for Platts Cinta assessment (PCAAX00) and Widuri assessment (PCAFE00) in Platts Crude Oil Marketwire, Platts Oilgram Price Report and on Platts Global Alert on pages 1250, 2210, 2216, 2217 and 2244.

Alongside the change in the assessment methodology for Cinta and Widuri, Platts will also discontinue the following differentials assessments for the grade from July 1, 2020:

Assessment Code

Cinta differential to ICP PCAAY00

Cinta differential to Asian Dated Brent AAPBK00

Widuri differential to ICP PCAFF00

Widuri differential to Asian Dated Brent AAPBO00

Please send all comments or questions to Asia_Crude@spglobal.com and pricegroup@spglobal.com by March 30, 2020.

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.