SUBSCRIBER NOTE: Platts Quality Premium for Dec murban set at $1.4719/b

The Quality Premium for Murban crude oil for December is $1.4719/b and will be effective for trade in February-loading cargoes during the Platts Dubai Market on Close assessment process through the month. The Murban QP can be found on Platts Global Alert pages 2210 and 2220, in the Crude Oil Marketwire, and under code AAISV00 in the Platts database. Platts has engaged widely on this proposal with stakeholders, representing a full range of market and industry participants in Asia, the Middle East and Europe.

Platts first proposed a QP for Murban in a subscriber note published on September 3, 2015 (http://www.platts.com/subscriber-notes-details/27773417). A subsequent proposal note seeking industry feedback on specific aspects of the Murban QP was published March 23, 2016 (http://www.platts.com/subscriber-notes-details/21140191).

QUALITY PREMIUM: Quality Premium will be paid by a buyer to a seller for the nomination and delivery of a cargo of Murban crude oil into a physical convergence of Dubai, Al Shaheen, Upper Zakum or Oman during the Platts Market on Close assessment process.

ANNOUNCEMENT OF QP: Platts will announce the Murban QP on the first publishing day of each month, two months prior to the QP coming into effect. For example, Platts will announce the Murban QP on the first business day of July for cargoes loading in September. This calendar aligns with typical trading practices, where September cargoes are primarily traded in July.

TIME SPAN REFLECTED IN CALCULATIONS: Platts has studied a variety of proposals submitted for how QPs could be calculated, and notes a spectrum of support for different approaches, particularly regarding the time spans that could be used to generate QPs.

After considering the various proposals, Platts has decided to use a single month of data to generate its Murban QP to ensure the value is as close as possible to recent market activity.

CALCULATION METHODOLOGY: Platts will publish Murban QP at 60% of the net price difference between Platts front-month cash Murban assessments and Platts front-month cash Oman assessments during the full month prior to the announcement.

For example, the QP for September-loading cargoes will be calculated on data from the full month of June and announced on the first publishing day of July. A QP of zero will be announced if 60% of the observed price difference between the grades is less than 25 cents/b.

IMPLEMENTATION DATE: Platts has observed support for a prompt implementation and also considered the need for sufficient notice.

Platts introduced the Murban QP from July 1 for September-loading cargoes.

BACKGROUND: From January 4, 2016, Platts started to reflect bids, offers and expressions of interest to trade in Oman partials only where the buyer is willing to take delivery of destination-free Murban crude oil, as well as the possible delivery of Oman Blend itself.

Bids, offers and expressions of interest to trade for all other partials in the MOC -- Dubai, Upper Zakum, and Murban itself -- are also considered for publication only where the buyer is willing to take delivery of destination-free Murban crude oil upon convergence.

ASSESSMENTS: Under the current assessment process, Dubai, Upper Zakum, Oman, Al Shaheen and Murban will all be deliverable against a Dubai partials convergence.

Only Upper Zakum and Murban is deliverable against Upper Zakum convergences; only Oman and Murban are deliverable against Oman convergences; only Al Shaheen and Murban are deliverable against Al Shaheen convergences; and only Murban is deliverable against Murban convergences.

The Platts Dubai assessment therefore reflects the most competitive crude in the group.

Platts Oman, Upper Zakum, Al Shaheen and Murban values are assessed in their own right, but no assessments are above the assessed value of Murban, the highest-quality crude in the group.

Please send all comments, feedback and questions to asia_crude@spglobal.com and pricegroup@spglobal.com.

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