SUBSCRIBER NOTE: Platts to amend basis of FOB NWE VGO assessments, retain names

In line with changing trade flows of high sulfur vacuum gasoil (HSVGO) and low sulfur vacuum gasoil (LSVGO) in Europe, S&P Global Platts confirms it will amend the basis of its FOB NWE VGO assessments to FOB Baltic, starting January 2, 2018.

This follows a proposal published on June 2, 2017: https://www.platts.com/subscriber-notes-details/21918272

Platts currently publishes HSVGO and LSVGO assessments for cargoes CIF NWE Basis ARA, and cargoes FOB NWE. While the name FOB NWE will be retained, this latter assessment will be re-based to the value of FOB cargoes of VGO loading in the Baltic. Platts had originally proposed to rename the assessments as FOB Baltic. This is aligned with conventions for similar assessments for ULSD and fuel oil, which are labelled as FOB NWE and are assessed basis FOB Baltic ports.

The basket of Baltic Sea ports for both HSVGO and LSVGO is as follows: St Petersburg, Ust-Luga, Vysotsk, Sillamae and Tallinn. Oil loading elsewhere in Northern Europe will continue to be reflected in the FOB Baltic assessment, but will be normalized back to the Platts basket of ports.

Platts will consider CIF NWE (basis Rotterdam) and FOB Baltic as related markets which are frequently linked by freight costs. Platts will continue to accept bids and offers for cargoes of VGO on both a CIF and FOB basis in northern Europe.

The change is part of a suite of amendments to Platts assessments of VGO, which also includes the launch of FOB Black Sea and CIF Mediterranean assessments for both LSVGO and HSVGO.

Platts believes that the currently assessed VGO cargo sizes and specifications remain fully reflective of the market in NWE. Platts VGO cargo assessments currently reflect a 15-35kt range, normalized to 30kt. FOB assessments also include cargoes up to 55kt in size when the arbitrage route to the US is open.

Platts VGO cargoes CIF NWE Basis ARA assessments will remain unaffected by these changes. Platts currently publishes all European feedstocks assessments as outright price values in US dollars per metric ton, and this will also remain the case following the change. Platts had originally proposed to also publish differentials to front month ICE Brent Futures in US dollars per barrel.

Please send all comments to europe_products@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.