Platts clarifies deemed B/L pricing, minimum volume, freight fallback mechanisms and quality performance for Dated Brent

Platts, part of S&P Global Commodity Insights, clarifies details around the following aspects of the Dated Brent methodology following queries from market participants and review of market practice:

- Deemed B/L pricing of CIF Rotterdam Dated Brent basket cargoes

- Minimum volumes that can be offered in the Market on Close assessment process for Dated Brent basket grades

- Deviation fallback mechanisms for WTI Midland CIF Rotterdam

- Demurrage fallback mechanisms for WTI Midland CIF Rotterdam

- Quality performance expectations

DEEMED B/L PRICING:

Platts clarifies that for assessment purposes, it views the deemed B/L for Forties, Ekofisk and WTI Midland to be one day ahead of the originally bid, offered or traded laycan. For Brent Blend, Oseberg and Troll, Platts views the deemed B/L to be two days ahead of the originally bid, offered or traded laycan.

Platts understands that market practice for pricing a traded CIF Rotterdam cargo is to use the deemed B/L relative to the narrowed three-day laycan.

MINIMUM VOLUME:

Platts clarifies that it publishes Dated Brent cargo bids and offers on a CIF Rotterdam basis [and STS Scapa flow basis for BFOET] with a minimum stated volume of 665,000 barrels and a volume tolerance of plus/minus 1%.

Offers of less than the standard 700,000 barrels plus/minus 1% must be clearly stated in the Terms, Quality and Conditions (TQC) of the indication.

Further details can be found in the following subscriber note published June 8, 2022:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/060822-platts-to-reflect-700000-barrel-cargo-sizes-in-dated-brent-cash-bfoe-from-june-2023

DEVIATION FALLBACK MECHANISM FOR WTI MIDLAND CIF ROTTERDAM

In its methodology, Platts states the following fallback mechanism for deviation:

If no agreement can be reached between buyer and seller on deviation costs, Platts expects counterparties to use the difference between the freight cost from the US Gulf Coast loading terminal of the original cargo-Rotterdam versus the US Gulf Coast loading terminal-actual discharge port.

Platts clarifies that an average of the assessments in the period 22-27 days prior to the delivery laycan should be used for the deviation fallback mechanism.

In the case of deviations to the Mediterranean, counterparties should use the Platts Worldscale assessments for US Gulf Coast-UK Continent (TDUCG00) and US Gulf Coast-Mediterranean (TDUWS00) to calculate the deviation costs unless mutually agreed otherwise.

DEMURRAGE FALLBACK MECHANISM FOR WTI MIDLAND CIF ROTTERDAM

In its methodology, Platts states the following fallback mechanism for demurrage:

If no agreement can be reached between buyer and seller on demurrage costs, counterparties should use Platts Aframax USGC demurrage assessment (ADERD00) for the period 22-27 days prior to the delivery laycan. The time period is equivalent to what Platts understands the typical USGC Aframax fixing period to be of 5-10 days prior to USGC loading, assuming a 17-day sailing time to Rotterdam.

Platts clarifies that an average of the assessments in the period 22-27 days prior to the delivery laycan should be used for the demurrage fallback mechanism.

QUALITY PERFORMANCE EXPECTATIONS

Platts will review patterns of performance, since adjustments due to quality issues should be extraordinary and not recurring events.

Participants intending to sell should not offer when there is a known and distinct possibility of cargoes not meeting Platts' globally applied WTI Midland specifications, which can be found here: https://www.spglobal.com/commodityinsights/plattscontent/_assets/_files/en/our-methodology/methodology-specifications/emea-crude-methodology.pdf

Please send all feedback, comments or questions 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 to the public upon request.