Platts extends consultation period on European ESPO, Siberian Light, Urals crude oil assessments

Platts, part of S&P Global Commodity Insights, is extending the consultation period on its European oil assessments that reflect the spot value of Russian crude and crude exports from Russian ports.

These assessed grades include Urals loading from the Russian ports of Primorsk and Ust-Luga in the Baltic Sea; Siberian Light and Urals, both of which can load from the port of Novorossiisk in the Black Sea and Eastern Siberian Pacific Oil (ESPO) loading from Kozmino.

The consultation was launched June 22 and the subscriber note is available here:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/062222-platts-opens-consultation-on-european-crude-oil-assessments-that-reflect-russian-crude-exports-from-russian-ports

Platts understands that European Union sanctions (Council Decision CFSP 2022/884 published June 3, 2022) will impact the merchantability of these grades in European markets to various degrees.

The sanctions package imposes a complete import ban on all seaborne Russian crude oil to the European Union from Dec. 5, 2022, with spot market transactions and execution of existing contracts to be permitted for six months until then. It will also impose a ban on EU operators insuring and financing the shipping of oil from Russia to third countries.

The sanctions package includes a provision (Council Decision CFSP 2022/884 section 13) in compliance with the principle of the freedom of transit. This section states that the prohibitions should not apply to crude oil where Russia is the exporter of record but the origin of the crude is identified as a third state.

As part of the consultation process so far, Platts has received widespread support for continuing to reflect delivered Urals prices into Rotterdam and Augusta under its existing cost, insurance and freight (CIF) assessment codes beyond the implementation of sanctions. The increasing relevance of free on board (FOB) Baltic and FOB Black Sea values reflecting export arbitrage flows to China and India has also been referenced as a factor which could necessitate the continuation of existing FOB assessment codes as standalone assessments, rather than netback calculations from the CIF assessments.

Platts continues to seek feedback on its ESPO, Siberian Light, physical Urals and Urals CFD assessments in the context of the future trading environment in Europe. It is also seeking further feedback on the spot market for Kazakh-origin Urals cargoes.

During the first phase of the consultation, Platts received extensive feedback regarding its CPC Blend assessments and the impact of the sanctions announcement on spot trading activity in that market moving forward. Platts has subsequently published a proposal note which can be found here:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes

Further guidance on sanctions and embargoed material in Platts price assessment processes can be found here:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/030222-further-guidance-on-sanctions-embargoed-material-in-s-p-global-commodity-insights-platts-price-assessment-processes

This consultation relates to the following Platts assessments:

These assessments appear on Platts Global Alert and Platts Crude Alert pages 1210, 1220, 1221, 1224, 1617; in Crude Oil Marketwire and Oilgram Price Report; as well as in the Platts price database under the codes above.

Please send all feedback, comments or questions by Aug. 31, 2022, 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 upon request.