SUBSCRIBER NOTE: Platts to begin assessing WTI Midland FOB Scapa Flow

S&P Global Platts will launch an assessment of WTI Midland FOB Scapa Flow that will be published in conjunction with its existing WTI Midland DAP basis Rotterdam assessments, starting March 2, 2020.

This assessment will be published as both an outright price and as a differential to Dated Brent for 600,000-barrel cargoes loading FOB from the ship-to-ship [STS] area at Scapa Flow 10 days forward from date of publication to one month ahead.

This follows a proposal note published December 4, the details of which can be found here:

https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/120419-platts-proposes-to-assess-wti-midland-fob-rotterdam

The proposal note was for an FOB Rotterdam basis, but during the feedback period Platts received market support for an FOB assessment of WTI Midland at the STS area at Scapa Flow.

The assessment will reflect bids, offers and trades for WTI Midland FOB Scapa Flow, as well as DAP Rotterdam adjusted for freight. Should a firm DAP Rotterdam offer for WTI Midland -- after adjusting for freight, port fees and sailing time -- be more competitive than a comparable bid for the grade on an FOB Scapa Flow basis, the DAP Rotterdam offer would take precedence in the final assessment of WTI Midland on the loading dates in question.

In the absence of prompt market information, Platts will assess WTI Midland FOB basis Scapa Flow as a differential to its existing DAP Rotterdam WTI Midland assessment, accounting for the difference in market structure, and deducting the cost of freight from Scapa Flow to Rotterdam using a freight adjustment factor.

PRICING BASIS: Platts will publish assessments for WTI FOB Scapa Flow as an outright price and as a spread to Dated Brent. Platts may publish bids and offers on an outright price basis, or as a differential to Cash BFOE or any commonly used pricing mechanism including ICE Brent futures.

VOLUME: The WTI FOB Scapa Flow assessment will reflect a typical Aframax cargo of 600,000 barrels with +/-1% operational tolerance at buyer's option.

OIL QUALITY: Platts standards for WTI Midland cargoes globally reflect crude originating from one of six pipelines along the US Gulf Coast: BridgeTex, Cactus, Cactus II, Longhorn, Midland-to-ECHO I and Midland-to-ECHO II. The origin pipelines referenced in the assessments may be expanded or modified over time to reflect market-accepted sources of Midland-quality crude shipped directly from the Permian Basin as Texas' crude oil infrastructure evolves.

TRADE TERMS: Counterparties in a trade reported during the MOC process are expected to perform basis typical bilateral trading and credit terms that have been applied and accepted by both counterparties in the open market.

Please send all 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.