S&P Global Platts invites comments on a proposal to reflect competitive offers of North Sea crudes on a freight-adjusted CIF Rotterdam basis in its benchmark FOB Dated Brent crude oil benchmark.
Platts also invites comments on the possible timing for introducing this update to methodology, as well as comments on which if any possible additional crude oil grades that are delivered to the North Sea area could, in time, be considered as relevant inputs to the Dated Brent benchmark.
Platts requests that comments, questions and other feedback be sent by December 10, 2018.
COMPETITIVE CIF ROTTERDAM OFFERS AND DATED BRENT: Under Platts' specific proposal, offers on a CIF Rotterdam basis for any of the five grades currently reflected in the Dated Brent assessment would be considered when evaluating the most competitively available light, sweet crude oil grade in the North Sea when assessing the value of Dated Brent itself.
Specifically, if a firm CIF Rotterdam offer for Brent Ninian Blend, Forties, Oseberg, Ekofisk or Troll is more competitive than a comparable bid for those grades on an FOB basis, after adjusting for freight, the CIF Rotterdam offer would take precedence in the final assessment of Dated Brent on the loading dates in question.
This would mean that Dated Brent would represent the most competitive of the five BFOE grades on an FOB or CIF Rotterdam basis, where relevant.
RATIONALE FOR PROPOSAL: In keeping with evolving economics in the North Sea, Platts notes support in the market for consideration of light, sweet crude oil from the North Sea offered in the region when establishing the value of North Sea crude oil reflected in Dated Brent.
The availability of these five grades offered for delivery to Northwest Europe is demonstrated in the market, including at times when loading programs are in relatively high demand on an FOB basis.
Reflecting competitive freight-adjusted CIF offers would allow the benchmark Dated Brent assessment to more fully reflect all available North Sea crude.
CASH BFOE: This proposal would not affect Platts' methodology for assessing Cash Brent (BFOE) crude markets.
Platts considers in its Cash BFOE assessment bids where the buyer is willing to accept nomination of Brent, Forties, Oseberg, Ekofisk or Troll crude on an FOB basis for the relevant contract month by the seller upon physical performance of the trade, with any applicable Quality Premium to be paid by buyer to seller upon grade nomination and delivery.
TIMING OF METHODOLOGY UPDATE: Platts invites comments regarding when such a change should be introduced to its Dated Brent methodology, should these proposed changes be implemented.
POTENTIAL ADDITIONAL CRUDE GRADES: In line with Dated Brent's role as an assessment of the value of light, sweet crude oil in the North Sea area, Platts also invites comments regarding the possible addition over time of similar streams of crude oil available in the region.
In particular, Platts is seeking feedback on the potential long-term relevance of different grades that may trade on a CIF Rotterdam basis, including certain grades like Statfjord, Gullfaks, CPC Blend, WTI Midland, Qua Iboe and Forcados, or other sources of light sweet crude oil delivered to NWE.
METHODOLOGY WORKSHOP: Platts intends to review and discuss these proposals in more detail at a methodology technical workshop to be held in London in December, with specific date and location to be confirmed in due course.
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Platts will consider all comments received and will make those not marked as confidential available upon request.