SUBSCRIBER NOTE: Platts to update Russia Med diesel, gasoil netback calculations

S&P Global Platts will change the underlying assessments for its Russian diesel and gasoil export netbacks with effect from May 1, 2018. The change will bring the netbacks in line with the prevailing practice on the market.

The decision follows a proposal note sent on March 20, 2018.

For its Russian Med diesel and gasoil netbacks, S&P Global Platts currently uses the CIF Med gasoil 0.1% assessment, however the market practice had changed towards the use of the FOB Med 10ppm ULSD assessments irrespective of the sulfur content of the diesel exported from Russia. The netbacks were launched when Russia's domestic diesel specifications as well as export flows were predominantly geared towards higher sulfur gasoil.

However, over the past few years, following a large-scale refinery modernization, Russian refineries have moved increasingly to lower sulfur product and in 2016 Russia adopted 10 ppm diesel as the obligatory standard for domestic product sales. While many refineries continue to produce and export gasoil, contract prices increasingly reference 10 ppm assessments in the Mediterranean. Last year S&P Global Platts moved all its NWE diesel netbacks to reflect 10 ppm assessments in Northwest Europe.

S&P Global Platts therefore will use for all of its current diesel and gasoil netback calculations in the Mediterranean the Platts 10 ppm ULSD Fob Med assessment (AAWYY00).

The decision refers to the following assessments and respective codes:

Netbacks with a change to 10ppm ULSD Fob Med:

- Norsi via Novorossiisk AAXKA00 - Syzran via Novorossiisk AAXKI00 - Omsk via Novorossiisk AAWKQ00

The respective monthly averages and conversions will also be affected.

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