SUBSCRIBER NOTE: Platts proposes change in loading period for Russian ESPO assessments

S&P Global Platts is inviting feedback on a proposal to change the assessment laycan reflected in all assessments of Russia's East Siberian Pacific Oil or ESPO crude effective January 2, 2019.

Platts proposes to change the assessment laycan of its ESPO M1 and ESPO M2 to reflect cargoes loading two calendar months and three calendar months forward respectively from the month of publication.

This proposal will apply to ESPO assessments at both the Asia close and European close.

For example, during August, Platts ESPO M1 and ESPO M2 assessments would reflect cargoes loading FOB Kozmino in October and November respectively.

Currently, Platts ESPO M1 assessment reflects cargoes loading 15-45 days forward, and ESPO M2 reflects loadings 45-75 days from the date of publication.

The proposal to amend the assessment laycans follows changes in the ESPO market since shipments first began in 2009.

Spot cargoes of ESPO crude in the past often traded on a relatively prompt basis, partly because of the proximity of loading port Kozmino to major refining centers in North Asia.

As spot volumes and acceptability of the grade grew, market dynamics in recent years have pushed trading activity in ESPO to align more closely with trading calendars of similar grades from Asia and the Middle East that typically trade for loading two months forward.

The change helps refiners better evaluate ESPO relative to other grades and secure cargoes early to fit their desired mix of feedstock.

Spot cargoes of ESPO crude, typically of 100,000 mt each, now usually trade for loading on an FOB Kozmino basis two months forward as a differential to front-month Platts Dubai crude assessments.

The benchmark Platts Dubai assessments also reflect cargoes loading two calendar months forward.

Following the change, Platts ESPO M1 assessments will align with Platts front-line Dubai crude assessments while ESPO M2 will align with second-line Dubai crude assessments.

The change will also align the ESPO M1 assessment with front-month Platts assessments for other Far East Russian crude grades such as Sokol and Sakhalin Blend.

At the Asia close, alongside ESPO M1 (AARWF00) outright assessment, the ESPO M1 Differential to Dubai (AARCN00) would reflect value for cargoes two calendar months forward. Similarly ESPO M2 (AAWFE00) and ESPO M2 Differential to Dubai (AAWFG00) would reflect cargoes loading three calendar months forward.

At the European close, the outright ESPO FOB Kozmino (AARWD00) and ESPO M1 Differential to Forward Dated Brent (AARWE00) would reflect value for cargoes two calendar months forward.

Platts invites comments, questions and other feedback on potential changes to the date ranges assessed by November 30, 2017.

Please send all comments, feedback and questions to asia_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.