Platts issues MOC guidelines for Carbon-Accounted Crude

S&P Global Platts would like to inform the market of its methodology and publishing standards for its Market on Close (MOC) assessment process covering Carbon-Accounted Crude.

MOC process

Platts will consider all firm bids and offers submitted and published as open to the market at large and executable unless otherwise informed by the market participant submitting the information.

Platts publishing standards require full performance on all information submitted by a counterparty within its MOC process. This means that any entity participating in the MOC, either as market maker or market taker, must confirm the relevant terms of any deal that results from information submitted as part of the MOC process, including a clear intention to fix a vessel and confirm the charter party, subject to requirements being fulfilled, with each counterparty and also to Platts for publication purposes.

Market indications will be published to Platts Global Alert (PGA003) service line.

To request participation in this MOC please contact pricegroup@spglobal.com

Standard terms

Standards for the Carbon-Accounted Crude market are an extension of the existing Crude Oil and MOC standards put forth by Platts for each specific market.

Platts considers the following terms to be typical for the publication of Carbon-Accounted Crude bids, offers, and trades. All submitted information will be considered against these terms for assessment purposes. Platts may publish bids, offers, and trades for Carbon-Accounted Crude that carry different terms and conditions, but may normalize these for assessment purposes.

Unless stated otherwise by a market participant at the time of submission, all bids and offers will be considered as reflecting the below standards, which Platts understands to be broadly typical in the spot Carbon Accounted Crude market. Any variations from these standards in published bids or offers should be clearly stated by MOC participants at the time of submission.

All potential sellers must show a recent statement of carbon accounting and show evidence of third-party calculation that is setting the carbon intensity of the crude in order to publish an offer. The carbon intensity of the crude must be calculated by a first-class, third-party carbon accounting firm. In the event that the offer is for a Carbon Neutral Crude, wherein the calculated carbon intensity is offset by the use of carbon credits, the seller must also include clear documentation of the Standard certification, vintage and type of credits used for the purpose of off-setting. To ensure that the credits included are of a sufficient quality, they must conform to the Platts Voluntary Carbon Credit methodology available here:https://www.spglobal.com/platts/PlattsContent/_assets/_files/en/our-methodology/methodology-specifications/method_carbon_credits.pdf.

Any potential buyer must be able to perform on any published bid or lifted offer and must have been previously reviewed for participation in the waterborne crude MOC for the market in question. In addition to meeting the existing MOC publication standards, a bid for carbon accounted crude must also include the maximum carbon intensity for the cargo and the degree to which that coverage should extend: ie well-to-tank, well-to-refinery gate, etc.

In the event of a performance review -- in addition to the standards set forth by Platts in the Crude Oil market -- market participants must show that the credits have indeed been purchased to cover the total emissions for expressed cycle and have been retired to offset the specified carbon intensity. Additional documentation demonstrating that the credits used have adhered to the Platts methodology may be required. Counterparties also may be required to fully document the upstream production pathway for the full crude cargo. All physical cargo standards must match those laid out in the specific MOC, ie any carbon accounted WTI Midland cargo delivered into Europe must, in addition to the standards highlighted above, also meet the physical requirements laid out in the DAP Europe WTI Midland MOC process.

CI Verification & Calculation: The calculation/verification party must be stated in any potential offer. The names of the parties must be explicitly stated in the terms of the offer.

The carbon intensity of the crude must be calculated by a first-class third-party carbon calculating firm.

Through feedback from market participants, Platts will accept third parties included in the lists provided by national accreditation boards such as but not limited to ANAB (ANSI National Accreditation Board). These parties will be able to perform the verification function for MOC participants. Any third parties not accredited will be subject to further review by Platts.

CI coverage: To be stated in any offer. Ex: well-head to refinery gate.

Platts expects CI in the bid/offer to cover emissions during the production, processing, and transportation segments of the supply chain. A bid/offer that includes CI and considers other segments such as but not limited to exploration, drilling, combustion will be accepted but is subject to normalization.

Platts expects that CI should be calculated using the Oil Production Greenhouse Gas Emissions Estimator (OPGEE) 2.0 model as a minimum basis for analysis.

Shipping:

In the event that the cargo on offer has not yet loaded, and thus a specific vessel cannot be guaranteed to fully determine the CI of the voyage from loadport to refinery gate cannot be known at time of trade, carbon intensity should be calculated basis a standard Aframax vessel carrying 700,000 barrels, with length of journey and average speed to be estimated and then verified upon delivery.

Timing and increments

Market participants must submit any bids and offers with complete information to Platts editors by phone, instant message, or email before 3:45 pm London time ahead of the European MOC, for consideration to be published as part of the MOC process. Market participants can improve the price of their published bids and offers by a maximum of 5 cents/barrel every minute. Participants may change the price of their bids or offers by a minimum of 1 cent/barrel. No price changes will be permitted in the final five minutes of the MOC process, which concludes at 4:30 pm London time for the European MOC, respectively.

Buyers and sellers may withdraw their bids or offers at any time during the MOC by communicating so to Platts editors, provided interest to trade against the published bid or offer has not already been received by Platts.

Counterparties must clearly communicate their interest to trade a published bid or offer to Platts editors, and counterparties are expected to promptly report resultant confirmed transactions to Platts.

Please send all feedback, comments, and questions to Platts_LowCarbonCrude@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.