SUBSCRIBER NOTE: Platts clarifies Dated Brent CIF Rotterdam methodology

Ahead of the upcoming change to its Dated Brent methodology from October 1, 2019, S&P Global Platts would like to clarify its guidelines around Dated Brent CIF Rotterdam offers and trades in the Platts Market on Close assessment process.

This applies to the methodology decision announced February 25 and available here: https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/022519-platts-to-reflect-cif-rotterdam-offers-in-dated-brent-from-november-2019-loadings

From October 1, for November-loading cargoes, Platts would only reflect CIF basis Rotterdam offers and trades in its Dated Brent assessment that conform to the guidelines below.

LAYCANS: In line with the existing CIF Rotterdam methodology, Platts will publish offers into Rotterdam for a five-day delivery range, and for a longer delivery range in which the seller grants the right to narrow to the five-day delivery range to the buyer at point of trade.

CARGO NOMINATION: In line with existing methodology in the CIF Rotterdam Dated Brent market, cargoes should be nominated seven full calendar days ahead of the first day of the original delivery laycan, at which point the seller must also nominate the three-day delivery window. Sellers should provide the original loading laycan at time of nomination. A buyer may request for a CIF deal to be converted to FOB terms, and sellers should not unreasonably withhold their approval.

DE-ESCALATOR AND QUALITY PREMIUMS: The De-Escalator and Quality Premiums will apply on a deemed B/L basis. For example, if a cargo of Forties is due to be delivered December 1-3, the deemed B/L will be November 30 and the de-escalator applied will be from November. Similarly, if an Oseberg cargo is due for delivery January 2-4, then the deemed B/L will be December 31 and the Quality Premium to apply will be from December.

GENERAL TERMS & CONDITIONS: GTCs should be as per typical counterparty trading terms between counterparties.

TITLE & RISK: Title and risk pass from a seller to a buyer at 00:01 London time on a deemed B/L ahead of the first day of the narrowed, three-day delivery window. In the case of Forties and Ekofisk, this is two days ahead of the midpoint of the three-day delivery window. In the case of Oseberg, Brent and Troll, this is three days ahead of the midpoint of the three-day delivery window.

FREIGHT AND DEVIATION: Platts guidelines maintain that buyers requesting deviation should not be harmed by higher freight rates stemming from ships chartered earlier than the "natural fixing window" for a given delivery range. 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 80,000-mt Aframax assessment as published in the Platts Dirty Tankerwire 10-12 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.

In the event a cargo is bought CIF basis Rotterdam in the Platts MOC and is then reoffered where it trades again, freight deviation should be carried through the chain, and not contain undue deviation. For example if a Forties cargo is sold CIF basis Rotterdam by Seller A to Buyer B, and then sold by Buyer B to Buyer C who wants to take the cargo to Wilhelmshaven, freight should be measured as Hound Point to Wilhelmshaven.

Please send all further feedback and comments to europe_crude@spglobal.com and pricegroup@spglobal.com.

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