SUBSCRIBER NOTE: Platts proposes amending basis of FOB NWE VGO assessments

In line with changing trade flows of high sulfur vacuum gasoil (HSVGO) and low sulfur vacuum gasoil (LSVGO) in Europe, S&P Global Platts proposes to amend the basis of its FOB NWE VGO assessments to FOB Baltic, starting January 2, 2018.

Platts currently publishes HSVGO and LSVGO assessments for cargoes CIF NWE Basis ARA, and cargoes FOB NWE. Under the proposed change, cargoes FOB NWE would be renamed cargoes FOB Baltic (basis a basket of Baltic Sea ports), with the assessment being based on the value of FOB cargoes of VGO loading in the Baltic.

The proposed basket of Baltic Sea ports for both HSVGO and LSVGO is as follows: St. Petersburg, Ust Luga, Vysotsk, Sillamae and Tallinn.

Platts VGO cargoes CIF NWE Basis ARA assessments would remain unaffected by this change.

As part of this change, the assessments would be renamed as HSVGO FOB Baltic and LSVGO FOB Baltic. Oil loading elsewhere in Northern Europe would continue to be reflected in the FOB Baltic assessment, but would be normalized back to the Platts basket of ports.

Platts proposes to consider CIF NWE (basis Rotterdam) and FOB Baltic as related markets which are frequently linked by freight costs.

Platts believes that the currently assessed VGO cargo sizes and specifications remain fully reflective of the market in NWE. Platts VGO cargo assessments currently reflect a 15-35kt range, normalized to 30kt. FOB assessments also include cargoes up to 55kt in size when the arbitrage route to the US is open.

Platts currently publishes all European feedstocks assessments as outright price values in US dollars per metric ton. Platts proposes to supplement these for cargoes FOB Baltic and CIF NWE by also publishing differentials to front month ICE Brent Futures in US dollars per barrel, in line with the way VGO is typically traded in Europe.

Following this proposed amendment, Platts would publish the following differentials and outright price assessments for both HSVGO and LSVGO: * CIF NWE (basis ARA) cargoes * FOB Baltic cargoes

The proposed change is part of a suite of proposed changes to Platts assessments of VGO, which also include the launch of FOB Black Sea and CIF Mediterranean assessments for both LSVGO and HSVGO, and the discontinuation of barge assessments for both LSVGO and HSVGO in Europe.

Platts is requesting feedback on all aspects of this proposal. Please send all comments by June 23, 2017, 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 comments not marked as confidential available upon request.