SUBSCRIBER NOTE: Platts to update calorific value in JKM LNG specs, maintain location basis

Following extended and broad feedback to proposals to update the quality and location reflected in the specifications underpinning the JKM assessment for LNG delivered in Asia, S&P Global Platts confirms that it will update its methodology to include a heating value range with effect from November 1, 2017.

Platts JKM (market database code AAOVQ00) is the LNG benchmark price for spot physical cargoes referenced in contracts both in Northeast Asia and globally.

Platts will maintain the location basis reflected in JKM presently, which is to reflect the value for spot transactions of LNG for delivery into Japan, South Korea, Taiwan and mainland China. The JKM assessment will continue to reflect cargoes delivered into all four locations.

QUALITY: On June 21, 2017, Platts proposed normalizing the quality of JKM to a calorific value of 1,075 Btu/scf.

Platts received broad support for greater clarity in calorific values of LNG reflected in the assessment.

Feedback clearly indicated that a range of rich and lean LNG with varying calorific values is commonly delivered through spot transactions into Japan, Korea, China and Taiwan.

Reflecting this feedback, Platts will update the JKM assessment methodology to clarify that the assessment reflects cargoes with a calorific value within a range of 1030-1130 Btu/scf.

Information regarding value for cargoes outside of the stated range, such as ultra-lean or super-rich, will be considered and may be normalized in the assessment process.

Quality differentials, when they are observed, will be published in daily commentaries and rationales. Platts' original proposal can be found here: https://www.platts.com/subscriber-notes-details/26752915. LOCATION: On June 21, 2017, Platts proposed normalizing the basis location reflected in the JKM to Tokyo Bay, potentially using freight deviation costs to relate values in other ports to Tokyo Bay.

Market participants reported that there are typically minimal or no price difference between cargoes delivered to various destinations at the time of trade in the spot market, hence there will be no change to Platts current methodology, which reflects the value of cargoes delivered into Japan, South Korea, Taiwan and China.

Price differences for delivered port destinations, should they be observed, will be reported in the daily commentary and rationale. Platts currently assesses the deviation costs between Japan/Korea and Taiwan/China (code AAPSC00), and this deviation cost stands at zero. Platts' original proposal can be found here: https://www.platts.com/subscriber-notes-details/26752909. Platts invites further comments and feedback on these methodology and specification topics to LNGeditorialteam@spglobal.com and copied to pricemethodology@spglobal.com by September 29, 2017.

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.