Platts clarifies WTI Midland Freight Adjustment Factor

Platts, a part of S&P Global Commodity Insights, clarifies the calculation and publication of the WTI Midland Freight Adjustment Factor (FAF) that will be used in Dated Brent from May 2, 2023.

The WTI Midland Freight Adjustment Factor will be used to net a CIF Rotterdam WTI Midland indication back to an FOB North Sea-equivalent value in the Dated Brent assessment. From May 2, this assessment will be named North Sea-Rotterdam and published to PGA and PCR 1218.

This follows the decision note published March 28, and can be found here.

Calculation of the FAF

As previously announced, Platts will use a weighted average of the Brent, Forties, Oseberg, Ekofisk and Troll flat rates from their respective terminals to Rotterdam, to calculate the WTI Midland Freight Adjustment Factor.

The weightings will be:

Sullom Voe: 6%

Hound Point: 34%

Sture: 10%

Teesside: 31%

Mongstad: 19%

Please note, some flat rates have been revised since the publication of the decision note. Based on the above weightings and using the revised 2023 flat rates at the time of publication, the average flat rate used in the WTI Midland Freight Adjustment Factor calculation will be $6.87/mt.

The 10-day rolling average of the Platts Dirty Cross-UK/Continent 80,000 mt Worldscale freight assessment [TDUUW00] and the Rotterdam port fee will be applied to the average flat rate of $6.87/mt and multiplied by 80%.

For example, on April 14, 2023, with a 10-day rolling average of w176.75, a conversion factor of 7.8 and a Rotterdam port fee of 14 cents/b, the WTI Midland Freight Adjustment Factor would be $1.3574/b.

The Rotterdam port fee is typically updated annually and published by Platts in a subscriber note on the first working day of each calendar year.

Publication of the FAF

Platts currently publishes a WTI Midland Freight Adjustment Factor on a daily basis using the Scapa Flow flat rate. The code for this assessment is FSFRM00 and is named Scapa Flow-R'dam.

From May 2, 2023, Platts will publish the WTI Midland Freight Adjustment Factor for use in Dated Brent to the same code -- FSFRM00 -- however the name of the assessment will change to "North Sea-Rotterdam."

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. It will also be published in Crude Oil Marketwire.

For clarity, from May 2, 2023, the assessment "North Sea-Rotterdam" Freight Adjustment Factor [FSFRM00] published to PGA and PCR 1218, as well as in Crude Oil Marketwire, will be the value used to net CIF Rotterdam WTI Midland indications back to a FOB North Sea-equivalent value in the Dated Brent assessment.

Revision of Weightings

In the decision note published March 28, Platts referred to 2022 production volumes which formed the basis of the weightings for the flat rate average. Going forward, Platts will review the weighting percentages should significant and persistent instances of production volume changes occur.

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