SUBSCRIBER NOTE: Platts to reflect pre-loaded oil in Med Urals crude

Effective January 4, 2016, Platts will amend the conditions under which Mediterranean Urals crude cargoes can be sold against specific loading dates in the Platts Market on Close assessment process.

As of January 2016, Platts will allow pre-loaded oil to be sold into bids. This change will only apply to oil being sold into bids, while offers of pre-loaded oil remain prohibited. Additionally, this change specifically excludes oil sourced from land-based storage other than the original loading terminal.

Platts will allow sellers to deliver a cargo that has loaded prior to the dates being bid, provided it meets all other Platts guidelines and the seller covers any additional costs incurred by the buyer.

For example, a company bidding for oil loading January 20-24 could receive a cargo loading January 7-8 or even earlier.

This update to Platts methodology is in line with changing trading practices and market conditions in the Mediterranean CIF Urals crude market and follows a proposal note published on the same topic July 21, 2015.

Platts Mediterranean crude oil assessments will continue to reflect crude oil that has been recently loaded at one of the typical terminals of origin for the specific grade; assessments will continue to reflect only crude oil that remains in its original condition. Platts existing ship approval methodology will still apply.

The changes described will apply to Platts assessments for Urals Mediterranean crude only.

The following guidelines will apply to all pre-loaded oil MOC transactions:

PRICING AND PAYMENT: All deals done on this basis will price as if the Bill of Lading were the first day of the originally bid five-day loading range. Slippage days will not apply to pre-loaded oil sales.

TITLE & RISK: If a seller is delivering a pre-loaded cargo, then title and risk should pass to the buyer at 00.01 Moscow time on the first day of the originally bid five-day laycan.

FREIGHT AND DEVIATION: Platts guidelines maintain that buyers should not be harmed by higher freight and demurrage rates stemming from vessels chartered earlier than the "natural fixing window" for a given laycan. Using feedback gathered from the industry, Platts has determined that the "natural fixing window" is between 14 and 16 days prior to the first day of the originally bid five-day loading range. If no mutual agreement is reached for freight deviation costs, Platts expects counterparties to use the three-day average of the Black Sea-Mediterranean 80,000 mt Aframax assessment as published in Platts Dirty Tankerwire 14 to 16 days prior to the first day of the original five-day loading range. As such, the lower of either the charterparty or the "natural fixing window" for Mediterranean Urals crude should be used to determine the cost of deviation.

DEMURRAGE: Similarly, buyers should not be harmed by demurrage incurred by the vessel charterer due to the earlier shipment date stemming from pre-loaded oil transactions. Demurrage should be relevant to the first day of the originally bid five-day loading range.

NOMINATION: If a seller is delivering a pre-loaded cargo, then seven days prior, the seller must declare as such and the laycan will be deemed the first two days of the original five-day bid. The seller must also specify at least seven days in advance the name of the ship, the loading port and when the cargo loaded.

Please send any comments and queries to europe_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.