S&P Global Platts is opening a consultation process to review the methodology for its Middle East netback assessments for gasoline, naphtha, gasoil, jet/kerosene and fuel oil that are published on a FOB Arab Gulf basis.
Specifically, Platts is inviting feedback on whether and how the existing methodology for these netback calculations should be amended in light of recent sharp declines in refined oil product prices and a surge in freight rates.
Platts currently assesses the benchmark Middle East netback prices for gasoline, gasoil, jet/kerosene and fuel oil by deducting relevant freight costs from respective FOB Singapore assessments and for naphtha by deducting freight from C+F Japan assessments.
Details of the assessment methodology and netback calculations can be found at: http://plts.co/N5hJ30qCT0D
Platts understands that further declines in the FOB Singapore or C+F Japan base prices, increases in freight rates, or a combination of both could result in the netback calculations producing a value at or below zero.
Platts is considering a range of possible changes, including but not limited to: a floor price for the netback values, amendments to the current calculation methodology, as well as a change in the assessment to reflect values traded in the spot market in the Middle East as opposed to a netback calculation.
Platts separately assesses spot market values for gasoline, gasoil, jet fuel and fuel oil in the Middle East on a FOB Fujairah basis, reflecting bids, offers and trades heard in the broader market and reported in the Market on Close assessment process. Details of these assessments are also available at the link above.
In addition to potential amendments to the netback methodology, Platts is also inviting feedback on a timeline or possible triggers for any changes to take effect.
Platts will discuss this methodology review in greater detail during a webinar titled 'Market Update and Impact on South Asia – Middle East Crude and Refined Products' on May 5, 2020, Tuesday at 11 am Indian Standard Time or 1:30 PM Singapore time. To register, click on: http://plts.co/eBU230qCSZX
The following FOB Arab Gulf netback assessments, published in Asia-Pacific/Arab Gulf Market Scan and Platts Global Alert pages 2004 and 2018, are under review as part of this market consultation:
Naphtha ($/mt) PAAAA00
Naphtha LR2 ($/mt) AAIDA00
Gasoline 95 unleaded AAICY00
Gasoline 92 unleaded AAGJA00
Kerosene LR2 AAKNZ00
Gasoil 10 ppm AAIDT00
Gasoil LR2 AAKBT00
HSFO 180 CST ($/mt) PUABE00
HSFO 380 CST ($/mt) AAIDC00
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.