SUBSCRIBER NOTE: Platts to launch LNG Ballast Rate assessments and freight updates

Following industry consultation, S&P Global Platts has decided to launch two new Ballast Rate assessments to value the return leg of journeys reflected in its current Asia Pacific and Atlantic LNG spot freight assessments.

Additionally, Platts will incorporate these new assessments and update several other components of its LNG netbacks and freight cost calculations, published in Platts LNG Daily and on Natural Gas Alert page 1025.

These new assessments and freight calculations will take effect from July 2, 2018.

NEW ASSESSMENTS: Platts will launch two new Ballast Rate assessments, one for the Asia Pacific basin and one for the Atlantic basin. Each Ballast Rate assessment will be published with the relevant Day Rate assessment and be expressed as a percentage of the Day Rate assessment for the relevant basin. These new assessments reflect the value typically charged by ship-owners to charterers to position vessels for a spot voyage. Ballast Rates, sometimes known as a "ballast bonus," will be assessed using all available data from the spot markets, including lump sum amounts.

BALLAST RATES IN FREIGHT CALCULATIONS: Platts will incorporate these new Ballast Rate assessments into its calculations for the return legs of freight route costs. The rates will replace the current practice of assuming round-trip economics at 100% of Day Rates for all voyages.

BOIL-OFF CALCULATION UPDATE: At the same time Platts will amend the basis of the boil-off calculation reflected in freight route costs. Under its revised approach, Platts will reflect the loaded volume of LNG in calculations, rather than the vessel's total capacity. Platts will also reflect a reduction in boil-off while in port. Currently the boil-off calculation is based on 100% of a vessel capacity at 165,000 cu m. Platts will reflect loaded volume only, or 98.5% of vessel capacity, and falls to 25% while in port, in its freight calculations.

UPDATED CONVERSION FACTOR: Platts will use a factor of 23.0 in its conversion of cubic meters to MMBtu for loaded LNG in its freight assessments and calculations. Platts currently uses a factor of 23.9, which reflects only rich quality LNG. This will ensure consistency with Platts' JKM physical LNG cargo assessment methodology, which was updated on November 1, 2017 to reflect cargoes with a calorific value within a range of 1,030-1,130 Btu/scf.

NEW PORT COSTS IN NETBACKS: Platts will add port costs to the total cost calculation for its netbacks. Platts will incorporate the port costs shown in the table below into the corresponding freight cost calculations:

Load port costs: Discharge port costs: Ras Laffan $120,000 Futtsu $120,000 Dampier $200,000 Guangdong $125,000 Point Fortin $60,000 Dahej $40,000 Bonny $900,000 Huelva $240,000 Arzew $160,000 Zeebrugge $130,000 Zeebrugge $130,000 Everett $300,000 Pampa Melchorita $200,000 Bahia Blanca $0 Sakhalin $70,000 Salvador Bahia $140,000 Huelva $240,000 Ain Sukhna $225,000 Hammerfest $200,000 Sabine Pass $190,000

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