Platts to exclude Russian origin cargoes from CPC Blend assessments, amend FOB netback calculations

Following extensive market feedback, Platts, part of S&P Global Commodity Insights, will exclude Russian origin cargoes and amend the free on board (FOB) netback calculations in its CPC Blend assessments, effective Oct. 3, 2022.

This decision follows Platts consultation on its European oil assessments that reflect the spot value of Russian crude and crude exports from Russian ports.

The consultation was launched June 22 and the subscriber note is available here:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/062222-platts-opens-consultation-on-european-crude-oil-assessments-that-reflect-russian-crude-exports-from-russian-ports

The subsequent proposal note is available here:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/081222-platts-proposes-to-exclude-russian-origin-cargoes-from-cpc-blend-assessments-amend-fob-netback-calculations

Platts understands that European Union sanctions (Council Decision CFSP 2022/884 published June 3, 2022) will impact the merchantability of Russian origin crude oil in European markets.

The sanctions package imposes a complete import ban on all seaborne Russian crude oil to the European Union from Dec. 5, 2022, with spot market transactions and execution of existing contracts to be permitted for six months until then. It will also impose a ban on EU operators insuring and financing the shipping of oil from Russia to third countries.

The sanctions package includes a provision (Council Decision CFSP 2022/884 section 13) in compliance with the principle of the freedom of transit.

This section states that the prohibitions should not apply to crude oil where Russia is the exporter of record but the origin of the crude is identified as a third state. Platts understands that the presence of Russian origin material in the predominantly Kazakh CPC Blend stream will impact the merchantability of these cargoes loading from the CPC terminal at the port of Novorossiisk in the Black Sea.

In line with market feedback, Platts will exclude cargoes that carry a Russian certificate of origin (COO) from being reflected in its assessments of CPC Blend cargoes and CFDs. Bids, offers and trades reported in the Market on Close (MOC) assessment process will need to be performed upon with cargoes carrying a Kazakh origin COO.

Additionally, and in line with extensive feedback regarding the market impact of Additional War Risk Premiums (AWRPs) and freight insurance costs for loading in the Black Sea since Russia's invasion of Ukraine, Platts will amend its FOB netback calculations to include these additional cost considerations for charterers when loading on a FOB basis. AWRP costs will be published as a daily assessment alongside CPC Blend flat price and differential assessment codes.

Further guidance on sanctions and embargoed material in Platts price assessment processes can be found here:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/030222-further-guidance-on-sanctions-embargoed-material-in-s-p-global-commodity-insights-platts-price-assessment-processes

This decision relates to the following Platts assessments:

Code Assessment Name

AAGZU00 CPC Blend CIF

AAHPL00 CPC Blend CIF vs BTC Dated Brent Strip

AALVX00 CPC Blend FOB Suezmax

AALVZ00 CPC Blend FOB Suezmax vs BTC Dated Brent Strip

AAOFV00 CPC FOB Aframax

AAOFW00 CPC FOB Aframax vs BTC Dated Brent Strip

AAOFX00 CPC Blend CFD Mo1

AAOFY00 CPC Blend CFD Mo2

AAOFZ00 CPC Blend CFD Mo3

These assessments appear on Platts Global Alert and Platts Crude Alert pages 1220, 1221, and 1617; in Crude Oil Marketwire and Oilgram Price Report; as well as in the Platts price database under the codes above.

Please send all feedback, comments or questions to europe_crude@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.