SUBSCRIBER NOTE: Platts updates proposal for ex-Primorsk Urals in CIF Augusta

Following a period of feedback, S&P Global Platts is refining its proposal to reflect bids and offers for 100,000 mt Urals cargoes, loading from the Baltic Sea port of Primorsk, in the CIF Augusta Urals assessment, starting from the assessment published January 2, 2020.

In a subscriber note published April 8, 2019, Platts proposed to reflect bids and offers for 100,000 mt cargoes loading from the port of Primorsk on a CIF/CFR Augusta basis in its Mediterranean Urals assessment.

For details on the initial components of that proposal, please see the subscriber note available here: https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/040819-pl atts-proposes-to-reflect-ex-primorsk-urals-indications-in-cif-augusta-urals-as sessment.

Platts is now further refining that earlier proposal to include details on how differing load dates would be reflected in the final assessment following the change.

Platts understands that cargoes from Primorsk typically arrive at Augusta 12 to 14 days after loading, whereas cargoes from Novorossiisk arrive at Augusta 6-8 days after loading.

However, during the winter period, journeys from Novorossiisk can be delayed by up to 20 days, attributed to reduced daylight hours causing congestion through the Turkish straits.

To account for these differences in delivery times, Platts proposes the following further amendments.

LOADING DATES: Platts proposes to reflect different base laycans during summer and winter periods.

Under this proposal, for assessments from the start of April to the end of September, Platts would continue to reflect Urals cargoes loading at Novorossiisk 10 days forward from the date of publication to 25 days forward.

For cargoes loading from Primorsk, load dates would be normalized for the purpose of assessment to equivalent Novorossiisk dates.

From the start of October to the end of March, Platts would reflect Urals cargoes loading at Primorsk 10 days forward from the date of publication to 25 days forward.

During this period, for cargoes loading from Novorossiisk, load dates would be normalized for the purpose of assessment to equivalent Primorsk dates.

Platts would review observed delays and may amend the base port for laycans outside of the seasonal calendar should the need arise.

LAYCAN NORMALIZATION: Ahead of the Platts Market on Close assessment process each publishing day, Platts would publish the observed delivery factor, representing the difference in delivery windows between the base ports of Novorossiisk and Primorsk.

During the summer, the observed delivery factor would represent how many days longer it would take a cargo from Primorsk to reach Augusta versus a cargo from Novorossiisk.

During the winter the ODF would represent how many days longer it would take a cargo from Novorossiisk to reach Augusta versus a cargo from Primorsk.

For the purposes of assessment, the ODF would be added to the published laycans of bids or offers to normalize them to base port dates.

For example, during the summer period, an ODF of four days would indicate delays of two days at the Turkish straits (based on a normal delivery difference of six days).

Therefore, an offer for a cargo loading from Primorsk July 5-10 would be considered for assessment purposes as representing value based on Novorossiisk dates of July 9-14.

During the winter period, an ODF of six days would indicate delays of 12 days at the Turkish straits.

Therefore, an offer for a cargo loading from Novorossiisk December 5-10 would be considered for assessment purposes as representing value based on Primorsk dates of December 11-16.

MARKET STRUCTURE: In applying the ODF to indications, Platts would account for the impact of market structure on published differentials.

Please send all comments on this further proposal by June 28, 2019 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.