Platts to calculate WTI Midland Freight Adjustment Factor in Dated Brent as a volume-weighted average

Platts, part of S&P Global Commodity Insights, will calculate the WTI Midland Freight Adjustment Factor (FAF), reflected in Dated Brent, as a weighted average based on relative 2022 production of Brent, Forties, Oseberg, Ekofisk and Troll.

The change will be effective May 2 when WTI Midland is included in the FOB (free on board) Dated Brent benchmark.

This follows a proposal note published Feb. 24:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/022423-platts-proposes-to-calculate-wti-midland-freight-adjustment-factor-in-dated-brent-as-a-volume-weighted-average

Platts announced in a decision note published June 8, 2022, that the value for an FOB equivalent cargo of WTI Midland in the North Sea will be derived by a calculation of an evenly weighted average of freight values for the five existing ports of Sullom Voe, Hound Point, Sture, Teesside, and Mongstad.

This subscriber note can be found here:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/060822-platts-to-reflect-wti-midland-in-dated-brent-cash-bfoe-from-june-2023

Following market feedback around the different freight rates from the five terminals, mainly regarding relatively higher costs at Sullom Voe, Platts will use the production volumes for 2022 to provide a weighted average.

Based on the 2022 production volumes, the weightings will be:

Sullom Voe: 6%

Hound Point: 34%

Sture: 10%

Teesside: 31%

Mongstad: 19%

Based on these weightings and using the revised 2023 flat rates, the average flat rate used in the WTI Midland Freight Adjustment Factor calculation will be $6.7996/mt.

Using the conversion factor of 7.80, in line with the existing Platts WTI Midland assessments, this will be equivalent to $0.8717/b.

The 10-day rolling average of the Platts Dirty Cross-UK/Continent 80,000 mt Worldscale freight assessment and Rotterdam port fee will be applied to the average flat rate of $6.7996/mt and multiplied by 80%.

The FAF will be published at 11 am London time ahead of the Platts Market on Close assessment process to pages PGA and PCR 1218.

Platts may review the weighting percentages should significant and persistent instances of production volume changes occur.

Please send all feedback and questions 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 feedback not marked as confidential available to the public upon request.