Platts clarifies application of Dated Brent deviation, demurrage fallback mechanisms

Platts, part of S&P Global Commodity Insights, clarifies the application of its deviation and demurrage fallback mechanisms applied to CIF Rotterdam cargoes in the Platts Market on Close assessment process.

Platts clarifies that if no agreement can be reached between buyer and seller on demurrage and deviation costs that counterparties should use the lower of the fallback mechanism and the charter-party rate to determine reasonable costs.

The clarification aligns the application of the WTI Midland CIF Rotterdam deviation, demurrage and CIF BFOET demurrage fallback mechanisms with the application of the CIF BFOET deviation fallback mechanism.

The deviation and demurrage fallback calculations for WTI Midland and BFOET cargoes are detailed in the Europe and Africa Crude Oil Specifications Guide.

The buyer should not be harmed by vessels fixed ahead of the natural fixing window and any demurrage and deviation costs passed on to the buyer from the seller must be demonstrable.

Platts clarifies the following application of these pre-existing fallback mechanisms:

DEMURRAGE

For CIF Rotterdam BFOET cargoes, if no agreement can be reached between buyer and seller on demurrage costs, counterparties should use the lower of the average of Platts Aframax cross-UKC demurrage assessment [AMEDA00] for the period 10-12 days prior to the delivery laycan and the charter-party rate.

For CIF Rotterdam WTI Midland cargoes, if no agreement can be reached between buyer and seller on demurrage costs, counterparties should use the lower of Platts Aframax USGC demurrage assessment (ADERD00) for the period 22-27 days prior to the delivery laycan and the charter-party rate.

DEVIATION

For CIF Rotterdam WTI Midland cargoes, if no agreement can be reached between buyer and seller on deviation costs, counterparties should use the lower of the difference between the freight cost from the US Gulf Coast-Rotterdam versus the US Gulf Coast-actual discharge port within the fallback period of 22-27 days prior to the delivery laycan and the charter-party rate.

For example, for deviations to the Mediterranean, counterparties should use the lower of an average of the difference between Platts Worldscale assessments for US Gulf Coast-UK Continent (TDUCG00) versus US Gulf Coast-Mediterranean (TDUWS00) within the period 22-27 days prior to the delivery laycan and the charter-party rate.

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