Platts amends Indonesia's Cinta, Widuri crude assessment methodology

S&P Global Platts has amended the methodology for its assessments of Indonesia's Cinta and Widuri crude oil from July 1, 2020, in response to changing physical market conditions.

From July 1, 2020, Platts calculates daily values for Cinta and Widuri using Market Parity Price, or MPP, models, instead of assessing the grades using its existing Market on Close assessment methodology. As a result of this change, Platts will no longer consider bids, offers and trades for spot cargoes of the grades in the assessment process. Platts will continue to publish any spot market transactions for Cinta and Widuri cargoes, but this information will not be used in the daily calculation of the MPP.

Platts first proposed the change in the Cinta and Widuri methodology in a subscriber note published February 7, taking into consideration the decline in spot market trading activity for the grades in recent years: http://plts.co/KWhg30qxl5v

BACKGROUND: Oil production from the Southeast Sumatra, or SES, working area, which produces Cinta and Widuri crudes, has fallen to around 27,000-28,000 b/d in 2019 from a peak of around 244,000 b/d in July 1991, according to data from Indonesia.

Exports of both crude oil grades have ceased following the expiry of operator CNOOC's SES production sharing contract in September 2018.

Oil produced from the SES working area, which is now operated by Pertamina's subsidiary PT Pertamina Hulu Energi Offshore Southeast Sumatra, is domestically processed at Pertamina's refineries.

MPP MODEL: The MPP calculations for Cinta and Widuri are based on the grades' Gross Product Worth values benchmarked to a reference basket of relevant crude grades that are actively traded in the regional spot market. These will initially include Russia's ESPO, Abu Dhabi's Murban, and Malaysia's Kimanis. The three basket grades, Cinta, Widuri and their GPW will be normalized for delivery to Japan, accounting for freight and regional spot product prices.

The MPP model, which Platts also uses to assess certain illiquid crude oil grades from West Africa and India, as well as Indonesia's Minas crude and Mexico's Maya crude, will ensure that the assessment captures both the inherent refining value of the crude as well as the broader oil market demand-supply fundamentals reflected in the price of the reference basket.

The Platts MPP models for Cinta and Widuri incorporate the yield of the following products normalized for delivery to Japan:

Product Code

Propane Japan cargo (H2 Jan) AAVAM00

Butane Japan cargo (H2 Jan) AAVAP00

Naphtha Japan swap M02 AAXFF00

92 unleaded swap M02 AAXEM00

95 unleaded swap M02 AGUMM02

Jet swap M02 PJABT00

Gasoil swap M02 POAFG00

IFO 380 CST swap M02 AAPKD00

Marine Fuel 0.5%S swap M02 FOFS002

Platts then subtracts additional costs, such as freight, labor, capital, power, insurance, and chemicals and catalysts from this GPW model. Finally, Platts applies an adjustment differential derived by averaging the difference between the cost-adjusted GPW and the daily assessed price of the following three actively traded crude grades:

Crude Grade Code

Kimanis AASCL00

ESPO M1 AARWF00

Murban M1 AAKNL00

Platts will review the MPP models for Cinta and Widuri annually to ensure it continues to reflect prevailing market conditions and quality of the crude grades.

To learn more about Platts Market Parity Price assessments, click on http://plts.co/FMFt30pSC5D

ASSESSMENTS IMPACTED: The Cinta and Widuri MPP assessments are published under the existing codes below for Platts Cinta and Widuri assessments in Platts Crude Oil Marketwire, Platts Oilgram Price Report, and on Platts Global Alert pages 1250, 1805, 2210, 2211, 2216, 2217, 2244, 2245, 2264 and 2265.

Assessment Code

Cinta at Singapore Close PCAAX00

Cinta at Singapore Close Monthly Average AAFZC00

Cinta at London Close AAPBJ00

Cinta at London Close Monthly Average AAPBJ03

Widuri at Singapore Close PCAFE00

Widuri at Singapore Close Monthly Average PCAFE03

Widuri at London Close AAPBN00

Widuri at London Close Monthly Average AAPBN03

The methodology for Platts Cinta and Widuri assessments at London close, which takes into account the movement in the underlying Brent benchmark from Asia close to the European market close at 1630 London time, remains unchanged.

Alongside the change in Minas methodology, Platts has discontinued the following differentials assessments for the grade from July 1, 2020:

Assessment Code

Cinta differential to ICP PCAAY00

Cinta differential to ICP Monthly Average PCAAY03

Cinta differential to Asian Dated Brent AAPBK00

Cinta differential to Asian Dated Brent Monthly Average AAPBK03

Widuri differential to ICP PCAFF00

Widuri differential to ICP Monthly Average PCAFF03

Widuri differential to Asian Dated Brent AAPBO00

Widuri differential to Asian Dated Brent Monthly Average AAPBO03

Please send all comments or questions to Asia_Crude@spglobal.com and pricegroup@spglobal.com

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