S&P Global Platts has changed the assessment laycan reflected in all assessments of Russia's East Siberian Pacific Oil or ESPO crude effective January 2, 2019.
Platts has changed the assessment laycan of its ESPO M1 and ESPO M2 to reflect cargoes loading two calendar months and three calendar months forward respectively from the month of publication. This change applies to ESPO assessments at both the Asia close and European close.
Following the change, in January 2019, Platts ESPO M1 and ESPO M2 assessments reflect cargoes loading FOB Kozmino in March and April respectively.
The change follows extensive consultation with the industry after Platts formally invited feedback on a proposal to amend the ESPO assessment laycan in a subscriber note published September 10, 2017: https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/091017-pl atts-proposes-change-in-loading-period-for-russian-espo-assessments.
Platts announced the decision to amend ESPO assessment laycan in a subscriber note published April 12, 2018: https://www.platts.cn/subscriber-notes-details/27956337 Prior to this change, the Platts ESPO M1 assessment reflected cargoes loading 15-45 days forward, and ESPO M2 reflected loadings 45-75 days from the date of publication. The decision to amend the assessment laycans follows changes in the ESPO market since shipments first began in 2009. Spot cargoes of ESPO crude in the past often traded on a relatively prompt basis, partly because of the loading port Kozmino's proximity to major refining center in North Asia.
As spot volumes and acceptability of the grade grew, market dynamics in recent years have pushed trading activity in ESPO to align more closely with trading calendars of similar grades from Asia and the Middle East that typically trade for loading two months forward.
The change helps refiners better evaluate ESPO relative to other grades and secure cargoes early to fit their desired mix of feedstock. Spot cargoes of ESPO crude, each typically 100,000 mt now usually trade for loading FOB Kozmino basis two months forward as a differential to front-month Platts Dubai crude assessments. The benchmark Platts Dubai assessments also reflect cargoes loading two calendar months forward.
From January 2019, Platts ESPO M1 assessments have aligned with Platts front-line Dubai crude assessments month while ESPO M2 is in line with second-line Dubai crude assessments. The change also align the ESPO M1 assessment with front-month Platts assessments for other Far East Russian crude grades such as Sokol and Sakhalin Blend.
At the Asia close, alongside ESPO M1 (AARWF00) outright assessment, the ESPO M1 Diff to Dubai (AARCN00) now reflect value for cargoes two calendar months forward. Similarly ESPO M2 (AAWFE00) and ESPO M2 Diff to Dubai (AAWFG00) now reflect cargoes loading three calendar months forward.
At the European close, the outright ESPO FOB Kozmino (AARWD00) and ESPO M1 Diff to Fwd Dated Brent (AARWE00) now reflect value for cargoes two calendar months forward.
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