SUBSCRIBER NOTE: Platts proposes to adjust 2016 European freight-based oil assessments

Following an extensive review, and with effect from January 4, 2016, Platts is proposing to include the Worldscale fixed differentials in its European freight-based oil assessments.

Previously Platts calculated its freight-derived cargo assessments by using $/mt Worldscale flat rates only. Through 2015 it has however become clearer that the fixed rate differentials are being applied -- either as a lump sum or as an additional WS cost.

These fixed differentials are based on the use of 0.1% sulfur fuels in the Baltic and North Sea ECA and currently the fixed differential published by Worldscale is $33.00 per mile of the voyage steamed within the zones for 2015.

Worldscale typically updates these differentials each calendar year, although in April 2015 it lowered the differential to take into account a narrowing of the price differential between 3.5% fuel oil and 0.1% fuel.

Platts would typically adjust its freight-based assessments at short notice should Worldscale revise them during the calendar year.

Platts wishes to clarify that this extends to all published freight-based oil assessments in Europe, including in refined oil products: ULSD 10 ppm FOB NWE Cargo, ULSD 10 ppm FOB NWE Le Havre Cargo, Diesel 10 ppm UK CIF, Diesel 10 ppm CIF NWE, Gasoil 0.1% FOB NWE Cargo, HSFO 3.5% FOB NWE Cargo, FOB MED naphtha and Jet FOB MED and FOB NWE.

In crude oil, assessments affected include; Urals (Ex-Baltic) and Urals (Primorsk).

As an example of the proposed methodology change, the ECA fixed rate differential applied to the ULSD 10 ppm (ARA) FOB assessment would be currently $1.75/mt based on the average of the mileage steaming costs from the loadports of Brofjorden, Porvoo, Slagen, Primorsk, Riga and Kaliningrad to Amsterdam-Rotterdam-Antwerp.

Platts also clarifies that for its LSFO 1% CIF NWE and CIF Med assessments that are typically derived as freight netbacks from the LSFO FOB NWE assessment, the fixed rate differentials will also be applied.

Platts tanker assessments will continue to not reflect additional costs associated with using low sulfur fuels in those ECA zones, as clarified in subscriber notes published by Platts in October and December 2014. Platts welcomes all comments and queries to europe_products@platts.com and pricegroup@platts.com. Please send comments and queries by August 31, 2015.

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.