Platts proposes DES West India standard terms for LNG MOC process

S&P Global Platts is proposing to define the trading terms considered to be typical for the publication of bids, offers and other transactional data for spot LNG cargoes reflected in its DES West India LNG price assessments with effect from September 2, 2019.

Platts is seeking feedback on this proposal by July 26, 2019.

These standard terms would apply to bids, offers and trades published by Platts in the Market on Close price assessment process. They do not change the specifications reflected in the DES West India assessments, which remain as published in Platts methodology & specification guide, available online here: https://www.spglobal.com/platts/plattscontent/_assets/_files/en/our-methodology/methodology-specifications/lngmethodology.pdf

STANDARD TERMS: Unless stated otherwise by a counterparty at the time of providing data for publication, the bids and offers provided for publication in the MOC should reflect these following standards, which Platts understands to be broadly typical in the spot market for cargoes delivered into India. Platts may publish bids, offers and trades for LNG cargoes that carry different terms and conditions, but may normalize these when considered in final, published assessments. Participants in the MOC process should clearly state in submitted bids or offers terms that differ from these standards.

DELIVERY WINDOW: The delivery period reflected by bids and offers should typically be three to five days long, with the buyer to narrow to a one- or two-day delivery window 30 days before the first day of the traded delivery window.

DISCHARGE LOCATION: Bids and offers should typically reflect delivery into West Indian ports, with buyer's option to nominate discharge port. Bids must be expressed with a specific discharge basis (or base) port. The location chosen sets the conditions for any potential counterparty considering trading. For transactions concluded and reported through the MOC process, buyers should nominate delivery port at least 30 days before the first day of the traded delivery window, or at the time of trade confirmation for more prompt delivery windows.

Buyers would retain the option to substitute delivery port within ports on the West Coast of India up to 15 days before the first day of the traded delivery window, subject to ship shore compatibility study (SSCS). Substitution of delivery locations to ports outside of the West coast India may be subject to normalization.

LOADING LOCATION: Platts would reflect bids, offers and trades where sellers have the option to nominate the loading port up to 30 days prior to the first day of the traded delivery window and may be substituted up to 15 days prior to the first day of the traded delivery window subject to Gross Heating Value (GHV) quality range reported in the trade. For cargoes for delivery at or less than 30 days from the date of assessment, sellers would have to state the load port explicitly.

QUALITY: Market participants should clearly state GHV specifications in bids and offers submitted for publication. Platts DES West India assessments reflect cargoes with a GHV of 1,000-1,150 Btu/Scf. Platts may normalize for quality specifications with different ranges.

QUANTITY: DES West India assessments would reflect quantity of 3.2 TBtu. Under this proposal, this volume would be subject to +/-5% operational tolerance, at the seller's option. For cargoes offered or bid for in a volume range (i.e. 3.1-3.4 TBtu +/-5%), the specific volume (i.e. 3.3 TBtu +/-5%) would have to be declared by the seller 30 days prior to delivery, and this declaration deadline would have to be stated in the offer or bid.

LNG VESSEL: Platts standards would continue to reflect published DES West India LNG vessel size range of 135,000-175,000 cubic meter. Sellers would nominate an LNG ship either 30 days prior to the first day of the traded delivery window, or at the time of trade confirmation for more prompt delivery window. For cargoes for delivery at or less than 30 days from the date of assessment, sellers should state the LNG vessel explicitly. Sellers may substitute delivery vessel up to 15 days prior to the first day of the traded delivery window, subject to SSCS.

Platts expects parties to be reasonable when exceptional circumstances require sellers to substitute vessels or buyers to substitute terminals beyond typical standards stated in Platts MOC guidelines. Companies must promptly communicate to their counterparties when such a substitution is required. And buyers or sellers should not unreasonably withhold substitutions or hamper the established delivery process.

Please send all feedback, comments and questions to platts_lng_moc@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.