SUBSCRIBER NOTE: Platts proposes to assess Dubai derivatives independently of physical market

Platts proposes to begin assessing Dubai crude derivatives independently of physical Dubai assessments, as the continued evolution of the market increasingly demonstrates distinct values emerging for Dubai's physical and derivative markets. Under this proposal, Platts would amend its methodology for assessing Dubai derivatives, and give clear priority in those assessments to the value of Dubai derivatives that are fully demonstrated in the derivatives market. Platts would take into consideration transparently reported bids, offers and trades in flat-price Dubai derivatives, time spreads from the Dubai derivatives market, and other financial instruments, including the Brent-Dubai EFS (Exchange of Futures for Swaps). Platts will collect this information from all participants in the Market on Close assessment process, and through observation of derivatives trading in electronic exchanges and over-the-counter markets. Platts would make no change to the way it assesses physical delivery months through this proposal. Platts proposes to make this change with effect from December 1, 2015, and invites comments by October 31, 2015.

BACKGROUND TO CHANGE: Platts currently assesses the physical value for Dubai crude, for delivery in three forward months -- M1, M2 and M3. The first month of physical assessments reflects loadings two months forward from the date of assessment. So, as an example, on October 1, Platts' M1, M2 and M3 physical Dubai assessments reflect loadings in December, January and February. Platts also assesses the value of Dubai derivatives, which are financially settled using the monthly average of Platts' physical Dubai assessments in the month referenced in the contract. These assessments represent the value of derivatives from the front month, through to 36 months forward. As an example, on October 1, Platts' M1, M2 and M3 Dubai derivatives assessments reflect financially settled contracts for November, December, and January (and onward from there). Since Dubai derivatives are cash settled in reference to Platts Dubai physical assessments, Platts has historically reflected a market convention of fully reflecting the M3 cash assessment in its M2 derivatives assessment, and the M2 cash assessment in its M1 derivatives assessment, so that -- using the example above -- Platts January physical assessment would be the same as its November derivatives assessment, and the February physical assessment would equal the December derivatives assessment. Under the proposed change Platts derivatives assessment for November may not be the same as the January physical assessment, and the December derivatives assessment may not be the same as the February physical assessment. Please send all comments and queries to asia_crude@platts.com and pricegroup@platts.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.