SUBSCRIBER NOTE: Platts reflecting Troll crude in Cash BFOE assessments

S&P Global Platts has added Norway's Troll to the basket of crudes reflected in its assessment for the value of Cash BFOE, starting from September 1, 2017. Platts has now begun publishing a January 2018 cash BFOE contract that reflects potential delivery of Troll, along with other existing BFOE grades.

A decision note was published on February 20, 2017, and is available here: https://www.platts.com/subscriber-notes-details/26666415. Platts Dated Brent assessments will include the value of dated Troll cargoes with effect from December 1, 2017, the first day when the Dated loading programs will begin to include January 2018 dated cargoes.

The addition of Troll has added a volume of deliverable crude potentially amounting to more than 200,000 b/d into the Brent complex, further underpinning the liquidity of physical Brent assessments.

TROLL: Platts is adding Norway's Troll to the basket of crudes reflected in its Dated Brent FOB North Sea and Dated Brent CIF Rotterdam assessments, as well as its Cash BFOE assessment, and all related assessments. Troll is a light sweet crude oil grade with a typical production of 10-15 cargoes of 600,000 barrels each month. As is the case with the existing BFOE grades, Troll loads on an FOB basis, from the Mongstad terminal in Norway. According to the grade's assay issued by operator Statoil, Troll has a typical gravity of 35.9 API degrees, sulfur of 0.19% wt and a total acid number of 0.70 mgKOH/g.

CASH BFOE: When this change is implemented, Platts will only consider in its assessment of cash Brent (BFOE) bids where the buyer is willing to accept nomination of Brent, Forties, Oseberg, Ekofisk or Troll crude by the seller upon physical performance of the trade. Typically, Troll cargoes are loaded under Statoil's terms and conditions. Platts reflects in its assessments cargoes loading within 1% plus or minus operational tolerance.

DATED BRENT: When this change is fully implemented, Platts Dated Brent assessments will reflect the most competitive value of physical Brent, Forties, Oseberg, Ekofisk and Troll (physical BFOE) on every single date of the assessment range, with the absolute values of both Oseberg and Ekofisk adjusted by the Quality Premium. In this way, Dated Brent can reflect any one, or more, of the five grades in the total basket across the assessment period. Platts also publishes CIF Rotterdam values for each of these grades, based on adjustments for freight and timing. The Dated Brent CIF Rotterdam assessment will reflect the most competitive value of the five grades for each delivery day.

CONSULTATION: Platts has widely engaged on these proposals with stakeholders representing a full range of market and industry participants in Europe and globally. Platts has received broad support for the addition of a new crude stream to the North Sea crude basket following the launch of a formal consultation opened by Platts on December 2, 2016. There was significant support for the addition of Troll, and less support for the addition of any other North Sea grades currently being produced.

The full consultation proposal can be reviewed at: http://www.platts.com/subscriber-notes-details/27722426

RATIONALE FOR CHANGE: While production among benchmark crude grades has stabilized in the past few years compared with previous expectations of heavy declines, Platts believes that the addition of Troll will provide additional volume to the Dated Brent complex, helping to ensure the continued robustness of the Dated Brent FOB benchmark.

QUALITY PREMIUM: Platts will continue to study the potential inclusion of a Quality Premium for Troll, and observe the performance of Troll in the benchmark as part of this continued review. A Quality Premium is paid by buyer to seller for the nomination and delivery of a significantly higher quality crude oil against a commitment. Platts noted support for the concept of a QP for Troll deliveries, and will continue to consult on the concept.

NOMENCLATURE: Platts has maintained the names of its benchmark assessments for the North Sea crude market, including BFOE and Dated Brent.

NORTH SEA BASKET: Troll will be added to the assessment called 'North Sea Basket' -- which is a straight average of the assessed values of the grades in the basket -- from January 2, 2018.

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.