Platts to reflect WTI Midland in Dated Brent, Cash BFOE from July 2022 deliveries, amend Brent assessments to delivered basis

Following extensive market consultation, S&P Global Platts confirms that it will reflect cargoes of WTI Midland crude oil in its Dated Brent crude oil benchmark, with effect from July 2022 cargo deliveries. This inclusion will extend across Dated Brent and its related components, including Cash BFOE (Brent/Ninian Blend, Forties, Oseberg, Ekofisk, Troll and WTI Midland). In addition, Platts will amend these assessments to reflect values for cargoes delivered into Northwest Europe, CIF basis Rotterdam.

CONSULTATION: Since launching a formal consultation on Dec. 3, 2020, Platts has found widespread support for the inclusion of WTI Midland in Dated Brent, Cash BFOE and all related assessments. Together with Brent/Ninian, Forties, Oseberg, Ekofisk, and Troll, the combined flow of light sweet crude including WTI Midland into the Northwest European market routinely exceeds 1.3 million barrels/day, a healthy volume of fungible crude oil grades for a robust benchmark. Platts has also received feedback supporting simplified assessments that will more effectively and efficiently reflect these flows into Northwest Europe.

Since October 2019, Platts has incorporated delivered Brent/Ninian, Forties, Oseberg, Ekofisk, and Troll cargoes that have been bid, offered and traded on a CIF Rotterdam basis into the Dated Brent benchmark. These delivered volumes now regularly help to define the assessment. Both the inclusion of WTI Midland and a move to a fully-delivered benchmark will better reflect the modern fundamentals of the European crude oil market.

TIMING OF IMPLEMENTATION: Platts will include WTI Midland cargoes in the Dated Brent assessment from cargo delivery periods starting July 1, 2022. Such cargoes could be bid or offered in the Platts Market on Close assessment process from June 1, 2022, with the associated July Cash BFOE value assessed from March 1, 2022. In its proposal of Dec. 3, 2020, Platts proposed reflecting WTI Midland in Dated Brent from March 2022. After consultation with market participants, Platts has deferred this implementation.

DATED BRENT: As part of this change, Platts will amend Dated Brent to reflect the bids, offers and transactions for the most competitive grade of Brent/Ninian Blend, Forties, Oseberg, Ekofisk, Troll and WTI Midland, on a delivered basis for laycans commencing July 1, 2022. Platts will continue to reflect Oseberg, Ekofisk and Troll after adjustment on a quality premium basis.

Platts will not initially apply a quality premium to WTI Midland but will review the applicability of that mechanism to the grade after inclusion.

CASH BFOE: As part of this change, Platts will reflect bids, offers and transactions of Cash BFOE where the buyer is willing to accept a cargo of delivered Brent/Ninian, Forties, Oseberg, Ekofisk, Troll, or WTI Midland on a delivered basis from July 2022.

Currently, trading in the forward Cash BFOE market is typically governed by the Shell UK 1990 (SUKO 90) terms, which refer to cargoes being delivered on a free-on-board basis. Platts is aware that a new set of trading terms will be required to underpin Cash BFOE deals on a delivered basis and will institute an industry working group to define the core contractual terms.

DELIVERED CARGOES FOR INCLUSION. Platts will only reflect WTI Midland cargoes in its Brent assessments that will be performed on vessels previously publicly declared at the time of loading as containing a deliverable cargo. Platts had previously proposed a virtual loading program for FOB loadings at Scapa Flow, with a monthly limit on cargoes assessed as part of the benchmark. After consultation with the industry, that proposal has been discontinued.

VOLUME: As per current Platts guidelines in Brent assessments, Platts will reflect cargoes in the assessment process on a basis of 600,000 barrels, with a tolerance of 1%. In keeping with the move to a delivered basis, tolerance will be in the seller's option. Platts announced Feb. 19, 2021 new guidelines around minimum deliverable volume in physical Dated Brent cargoes, which can be found at:

https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/021921-platts-to-replace-vessel-guidelines-with-volume-for-cif-rotterdam-fob-sts-scapa-flow-crude-oil

INDUSTRY WORKING GROUP SESSIONS: Platts will host a series of online workshops from March to May, 2021, for key stakeholders and MOC participants to define key terms in the forward Cash BFOE assessment. These will include, but not be limited to, trading terms, volume, and shipping. The schedule and details for these workshops will be released in subsequent subscriber notes, with the first session being held online on March 3, 2021.

DELIVERED EUROPE WTI MIDLAND: Platts currently assesses cargoes of WTI Midland for delivery DAP basis Rotterdam 20-60 days after date of publication. In line with other grades already in the Dated Brent benchmark, Platts will also launch an assessment of WTI Midland on a CIF Rotterdam basis 12 days to month-ahead on July 1, 2021.

WTI GRADE: WTI Midland is a light sweet crude oil with a typical average monthly export volume of 1.078 million barrels per day during 2020, of which around 443,000 b/d arrived in Europe. WTI Midland is typically sold into Europe on a delivered basis. Platts published a note on its global WTI Midland specifications Aug. 3, 2020 which is available here:

https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/080320-platts-to-implement-comprehensive-platts-wti-midland-specifications

The original proposal subscriber note associated with this change 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

The guidelines in this subscriber note supersede the previous proposals on a virtual loading program and the freight adjustment factor as published in the following subscriber notes, which are now considered closed:

https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/012821-platts-clarifies-detail-on-proposed-wti-midland-fob-scapa-flow-loading-program

https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/012821-platts-proposes-implementing-60-freight-adjustment-factor-on-wti-midland-fob-scapa-flow-crude-oil-assessment

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