SUBSCRIBER NOTE: Platts extends North Sea MOC process to Dated Brent CIF Rotterdam

S&P Global Platts has begun publishing bids, offers and trades in the Platts Market on Close assessment process for all cargoes of physical Dated Brent component grades delivered basis Rotterdam between 12 days and one month ahead of the date of publication, from September 1, 2017. These indications are also now reflected in the Dated Brent CIF Rotterdam assessment.

Platts now publishes Dated Brent CIF Rotterdam as both an outright and a differential price, based on the most competitive grade of Brent, Forties, Oseberg and Ekofisk delivered to Rotterdam for each day of the assessment. Platts also now publishes assessments on both an outright and differential basis for all four component crude grades. In the absence of any bids, offers or trades, Platts assesses each grade CIF basis Rotterdam on the basis of freight and other market indicators.

Platts continues to assess FOB Dated Brent on the basis of bids, offers and trades seen in the MOC for that market, as well as other market information already published by Platts.

BIDS: Platts reflects bids basis Rotterdam for a five-day or greater delivery window. Other reasonable delivery ports within NWE may be nominated, with the buyer covering all reasonable incremental delivery costs. Platts does not publish CIF Rotterdam bids containing STS options. All available charterparty options, including STS options, should be passed on to the buyer. All requests beyond these should be passed on by the seller to the shipowner. The performing vessel must meet the vetting conditions of a reasonable buyer and the physical limitations of port, eg draft, beam, etc.

FREIGHT AND DEVIATION: Platts guidelines maintain that buyers requesting deviation should not be harmed by higher freight rates stemming from vessels chartered earlier than the "natural fixing window" for a given delivery range. Using industry feedback, Platts has determined that the natural fixing window is between 7 and 21 days prior to the first date of delivery. If no mutual agreement is reached for freight deviation costs, Platts expects counterparties to use the average of the cross-North Sea 100,000 mt Aframax assessment as published in Platts Dirty Tankerwire 10 to 12 publishing days prior to the first day of the original delivery window. The lower of either the charterparty or the natural fixing window should be used to determine any reasonable cost of deviation.

DEMURRAGE: Platts guidelines maintain that buyers should not be harmed by demurrage costs incurred by the vessel charterer outside of typical market rates and practices prevailing at the time of the natural fixing window. Demurrage should be relevant to the first day of the originally bid delivery date range.

OFFERS: Platts reflects CIF offers for a delivery window of five days or fewer. Offers with longer laycans may be published but the counterpart must narrow the laycan to five days at the time of trade. Seven calendar days prior to the first day of the five-day range, the seller must nominate the three day delivery window and specify the performing vessel. Offers may be made with a named or unnamed ship. If a seller offers with a named vessel, then a buyer can buy subject to vetting approval and if rejected, the deal will not be finalized. For assessment purposes, editors will review the quality of the vessel to determine if it should be considered in the assessment process. For an unnamed ship, the seller has the responsibility to meet the reasonable vetting requirements of a typical market participant in that region. The seller is entitled to substitute the vessel with another meeting or exceeding the same approvals at any reasonable time before delivery of the cargo. The buyer should not be financially harmed by the seller's choice to substitute a vessel.

PRICING BASIS AND TERMS: Platts publishes bids and offers based on 2-1-2 pricing around COD as standard. Platts understands that the BFOE grades also trade using alternative pricing terms, including 'deemed bill of lading' (using standardized theoretical loading dates based on journey time). Platts would publish bids and offers using reasonable alternative pricing bases, but will calculate these indications back to 2-1-2 around COD, in order to ensure consistency between the grades. Market indications reflecting alternative pricing terms, such as 0+5 after bill of lading, may be included in the Platts MOC assessment process for Dated Brent CIF Rotterdam, but will be normalized back to the 2-1-2 standard for assessment purposes.

OPERATIONAL TOLERANCE: Platts reflects bids, offers and trades for 600,000 barrel CIF basis Rotterdam BFOE cargoes with an operational tolerance of 1%, in the seller's option, as well as fixed volume cargoes of between 594,000-606,000 barrels. Operational tolerance would be determined by volume at the loading port rather than at the delivery port. Platts would expect that any disputes arising from volume loss or "clingage" in the transfer of crude from loading terminal to discharge port would be settled according to accepted market practice.

OIL FROM STORAGE: Oil sourced from land-based storage other than the original loading terminal should not be offered or delivered into the CIF basis Rotterdam Dated Brent MOC.

QUALITY PREMIUMS AND DE-ESCALATOR: Any delivered cargoes of Oseberg and Ekofisk should reflect the quality premiums at time of original loading. Similarly, any delivered cargoes of Forties will reflect the de-escalator at time of original loading, rather than time of delivery.

Platts first proposed to reflect MOC information in CIF Rotterdam on December 19, 2016. The original subscriber note can be found here: https://www.platts.com/subscriber-notes-details/21381985

A decision note was published on July 3 and is available here: https://www.platts.com/subscriber-notes-details/26763880.

Platts first proposed the creation of additional instruments to be used in the calculation of CIF Rotterdam, as well as proposals around operational tolerance and pricing in a note published August 7. This note is available here: https://www.platts.com/subscriber-notes-details/26784071.

Platts has published an FAQ guide on Dated Brent CIF Rotterdam, available here: https://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpe cs/FAQ-Dated-Brent-CIF-Rotterdam.pdf.

Please send all further comments 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.