Platts proposes to update AG-Asia freight netback calculations for refined products

Platts, part of S&P Global Commodity Insights, is proposing to update its base rate calculations for clean freight netback assessments between the Arab Gulf and Asia for gasoline, naphtha, jet fuel/kerosene and gasoil with effect from Jan. 3, 2023, to reflect more closely market conventions.

Under the proposed change, Platts would first multiply the daily freight spot assessment expressed as a Worldscale rate to the corresponding flat rate, and then add any additional port charges and/or fixed differentials separately.

This differs from current calculations where the flat rates and additional port charges and/or fixed differentials are added together to form the base rate, which is then multiplied by the daily freight spot assessment to produce the final freight netback value.

An example of the proposed change to the freight netback calculation would be based on the following Arab Gulf to Japan naphtha calculation:

Flat rate calculations for AG to Japan:

Quoin Island to Chiba/Yokohama flat rate

B) Average of the following:

Jubail/Mina Al Ahmadi to Quoin Island flat rate

Mina Al Ahmadi/Ras Tanura to Quoin Island flat rate

Ruwais/Mina Abdulla to Quoin Island flat rate

AG to Japan = total of A and B

Average of fixed differentials applied at relevant ports, in this instance at Jubail and Ras Tanura, across the three routes.

Formula: Freight = (Spot WS x 55 / 52.50 x (A+B)) + C

The actual freight applied to derive the netback fluctuates daily based on changes to Platts freight assessments, as published in Platts Clean Tankerwire, applied against the respective annual basis rates.

The affected freight netback assessments are published in Platts Asia-Pacific/Arab Gulf Marketscan, on Platts Global Alert page 902, Platts Refined Product Alert page 902, Platts Tanker Alert pages 2910, 2911, Platts Shipping Alert pages 352, 353 as well as in the Platts price database under the codes below:

Clean Tanker East of Suez

From AG to Singapore

Code MAvg

Mogas AAPOC00 AAPOC03

Kerosene AAPOI00 AAPOI03

Gasoil AAPOL00 AAPOL03

From AG to Japan

Code MAvg

Naphtha AAPOG00 AAPOG03

Naphtha-LR2 AAPOH00 AAPOH03

The following netback assessments would be affected by the proposed change:

Assessments Code MAvg

Gasoline 92 RON Unl FOB Arab Gulf Cargo AAGJA00 AAGJA03

Gasoline 95 RON Unl FOB Arab Gulf Cargo AAICY00 AAICZ00

Naphtha FOB Arab Gulf Cargo PAAAA00 PAAAA03

Naphtha LR2 FOB Arab Gulf Cargo AAIDA00 AAIDB00

Jet Kero FOB Arab Gulf Cargo PJAAA00 PJAAA03

Gasoil 0.001% S (10 ppm) FOB Arab Gulf Cargo AAIDT00 AAIDT03

Gasoil 0.005% S (50 ppm) FOB Arab Gulf Cargo AASGJ00 AASGJ03

Gasoil 0.05% S (500 ppm) FOB Arab Gulf Cargo AAFEZ00 AAFFG00

Gasoil 0.25% S (2500 ppm) FOB Arab Gulf Cargo AACUA00 AACUB00

Gasoil FOB Arab Gulf Cargo POAAT00 POAAT03

For further details on the oil products netback methodology, please refer to the Asia Pacific and Middle East Refined Oil Products Guide: http://plts.co/rp4t50CTHmv. Please send comments and questions to asia_products@spglobal.com and pricegroup@spglobal.com by Aug. 31, 2022. 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.