보기: S&P Global Platts to include Norway's Troll in Dated Brent, BFOE assessments from 2018

Video Transcript

Joel Hanley: Hello, and welcome – I’m Joel Hanley, head of Platts oil price reporting team in Europe and I’m joined today by Jonty Rushforth, head of the oil price group at Platts. In this short video we’ll be discussing the inclusion of a new crude grade in the Brent complex, Norway’s Troll.

Norway’s Troll to be included in Platts Dated Brent, BFOE assessments from January 2018

At the core of the Brent crude complex of assessments is Dated Brent, which represents the most competitive of a basket of crudes loading in the North Sea on any given day. Linked to this is the physical Cash BFOE market, as well as a host of other assessments and contracts.

As the Brent field itself has declined over the last few decades, Platts has moved to reflect a broader range of crudes in these assessments, starting with Forties and Oseberg in 2002 and then adding in Ekofisk in 2007.

Looking ahead, the four grades in the basket are likely to see further declines over the coming years. We believe it is time to add another grade to the basket, to ensure there is sufficient deliverable crude oil reflected in the assessments.

We have been discussing the possible inclusion of new grades with a range of stakeholders in recent months, including refiners, traders, international oil companies, exchanges and others.

We have found broad support for adding new crude to the basket, and significant support for the addition of Troll crude.

We are now moving ahead with a decision to include Troll from January 2018 onwards. That means that Platts assessments of forward Cash BFOE will begin reflecting the grade from that contract month onwards, while Dated Brent itself will begin reflecting the new basket from December 1, 2017, the first day when the Dated loading programs will begin to include January 2018 dated cargoes.

So, viewers, what will this involve, and what does it mean for North Sea crude benchmarking? To explain that, I’ll pass to Jonty.

Jonty Rushforth: Thanks, Joel.

As Joel mentioned, overall the North Sea has seen significant declines over the last several years, with more declines to come. There have been new fields come on stream in the North Sea, and there are more due to begin production in the coming years. However, the vast majority of the rest of the North Sea production aside from BFOE is heavier, sourer or more acidic than the existing basket.

Troll itself is a light, sweet crude with a typical production of 10 to 15 cargoes of 600,000 barrels each month. As is the case with the existing BFOE grades, Troll loads on an FOB basis, from the Mongstad terminal in Norway.

Troll has a typical gravity of 35.9 API degrees, sulfur of 0.19% wt and a total acid number of 0.70 mgKOH/g)

The grade is more acidic than the existing basket. However, North Sea production is growing more acidic generally, and Europe’s refiners have evolved over the years to increase their flexibility in processing acidic crudes.

Troll is also operated by Norway’s Statoil, which also owns a significant proportion of the grade’s equity production. It is not unusual for single streams of commodities within benchmark baskets to be majority owned by national resource companies; within oil markets globally it is fairly common.

However, Platts strongly believes that robust benchmarks involve multiple buyers and sellers. The new North Sea basket would see no single company owning more than a quarter of total production, with an array of companies holding quite small shares.

We’ve been assessing Troll as a grade in its own right since 2002. We have noted that on the whole it has priced at a premium to Dated Brent. That is important as it makes it very unlikely that the new crude would depress the existing benchmark. Of course, we don’t take a view as to whether a benchmark should be higher or lower; the important point is that it reflects market value.

We are continuing to consider whether to include a quality premium for Troll in the assessment process. We currently reflect quality premiums for Oseberg and Ekofisk, but not for Brent Ninian Blend or Forties. But we believe it is important to take a measured approach to including the new grade.

Platts continuing to consider Quality Premium for Troll

Joel Hanley: So, what will the impact of this new addition be?

The key point is that the new addition of grade the grade adds around a quarter of a million barrels a day of deliverable crude to the North Sea basket. And it should not depress the value of the basket, based on its historical values.

Dated Brent is a robust and well-supplied crude benchmark, but it’s important that we prepare for the future. And this is a key step on that path.

We will over the next few weeks be discussing all this with stakeholders and looking to hear your views, whether in person or in writing.

We welcome your comments, suggestions and questions on the issues we’ve covered in this video. I’m Joel Hanley, thanks for taking time to watch this video.

See the full proposals at http://www.platts.com/subscriber-notes