SUBSCRIBER NOTE: Platts to change laycan reflected in Russian ESPO crude assessments

S&P Global Platts will change the assessment laycan reflected in all assessments of Russia's East Siberian Pacific Ocean or ESPO crude oil effective January 2, 2019.

Platts will change the assessment laycan of its ESPO M1 and ESPO M2 to reflect cargoes loading two calendar months and three calendar months forward, respectively, from the month of publication. This change will apply to ESPO assessments at both the Asian close and European close.

For example, in January 2019, Platts ESPO M1 and ESPO M2 assessments will reflect cargoes loading FOB Kozmino in March and April, respectively.

The change follows extensive consultation with the industry, after Platts formally invited feedback on a proposal to amend the ESPO assessment laycan in a subscriber note published September 10, 2017: https://www.platts.com/subscriber-notes-details/27871024 Currently, the Platts ESPO M1 assessment reflects cargoes loading 15-45 days forward, and ESPO M2 reflects loadings 45-75 days from the date of publication.

The decision to amend the assessment laycans follows changes in the ESPO market since shipments first began in 2009.

Spot cargoes of ESPO crude in the past often traded on a relatively prompt basis, partly because of the loading port Kozmino's proximity to the major refining center in North Asia.

As spot volumes and acceptability of the grade grew, market dynamics in recent years have pushed trading activity in ESPO to align more closely with trading calendars of similar grades from Asia and the Middle East that typically trade for loading two months forward.

The change helps refiners better evaluate ESPO relative to other grades and secure cargoes early to fit their desired mix of feedstock.

Spot cargoes of ESPO crude, each typically 100,000 mt, now usually trade for loading FOB Kozmino basis two months forward as a differential to front-month Platts Dubai crude assessments. The benchmark Platts Dubai assessments also reflect cargoes loading two calendar months forward.

From January 2019, Platts ESPO M1 assessments will align with the Platts front-line Dubai crude assessments month while ESPO M2 will align with second-line Dubai crude assessments. The change will also align the ESPO M1 assessment with front-month Platts assessments for other Far East Russian crude grades such as Sokol and Sakhalin Blend.

At the Asian close, alongside the ESPO M1 (AARWF00) outright assessment, the ESPO M1 Diff to Dubai (AARCN00) will reflect value for cargoes two calendar months forward. Similarly, ESPO M2 (AAWFE00) and ESPO M2 Diff to Dubai (AAWFG00) will reflect cargoes loading three calendar months forward. At the European close, the outright ESPO FOB Kozmino (AARWD00) and ESPO M1 Diff to Fwd Dated Brent (AARWE00) will reflect value for cargoes two calendar months forward.

Please send all comments, feedback and questions to asia_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.