platts african refining summit · platts african refining summit 18 november 2014 ... one of the...
TRANSCRIPT
© 2013 Platts, McGraw Hill Financial. All rights reserved.
Platts African Refining Summit
18 November 2014
Olivier Lejeune, Managing Editor – Middle Distillates, Europe & Africa Oil
Will Africa get its own price benchmarks?
Enabling the markets to perform with greater
Transparency & Efficiency
Since
Platts – An introduction
Editorial and market assessments are conducted
with complete Independence & Impartiality
Platts – An introduction
Africa relies on netback pricing
4
Source:
Platts
CIF/FOB Med 1,000 ppm gasoil
FOB Med 10 ppm gasoline
CIF NWE 1,000 ppm gasoil
FOB 10 ppm gasoline barge
MOPAG 500 ppm gasoil
50-50 FOB Sing/Med gasoline
MOPAG 500 ppm gasoil
FOB Med 10 ppm gasoline
CIF NWE 10 ppm diesel
Towards African Benchmarks? Opportunities and Challenges for New Benchmarks
Platts Global Products Assessments Adapting Platts Benchmarks to Market Changes
The Role of Benchmarks Market Requirements for Benchmarks
Market requirements for benchmarks
are used as reference points in commodity trading and
to derive related commodity prices. They:
Achieve
convergence
between market
values and
published values
Display
responsible
behavior
Fully reflect market
value
Provide full
transparency
Essential Benchmark DNA
Market acceptance
Adhere to international norms of trading
Chain formation high degree of circulation
Lead to the development of a forward market
High degree of transparency
Open to industry scrutiny
Clearly defined assessment methodology
One of the world’s busiest
ports and Europe’s
refining and petrochemical
hubs with around 2.2
million barrels/day of
refining capacity
A major logistics hub –
pipelines, rivers, publically
accessible storage tanks –
it’s a deep water port
capable of discharging the
largest vessels in the world
It’s a key import and export
location open to multiple
market participants
Why is ARA so important?
– Platts benchmarks are used
to price term contracts
– Futures settlements are
often tied to Platts spot
market assessments
– Derivatives “price out”
against Platts spot price
assessments or futures
settlements
Focus, Impact and Relevance
Benchmark – The significance
A robust
How data is
analyzed to
produce a
final value
What
is being
assessed
How data
is collected –
Platts Price
Discovery
Process
Market on Close – Methodology
must define
Northwest European diesel assessments
ULSD CIF ARA Cargo
Freight Netbacks: ULSD CIF NWE (Le Havre) Cargo
ULSD CIF UK Cargo
ULSD FOB ARA Cargo
ULSD FOB NWE (Le Havre) Cargo
ULSD FOB Rotterdam Barge
CIF - Cost, Insurance & Freight Contract Basis FOB - Free-on-Board
Amsterdam Location Rotterdam (Amsterdam-Antwerp Flushing-Ghent allowed)
10-25 days forward Delivery Period 3-15/5-15 days forward
10,000-35,000 (norm. 20,000) Size 1,000-5,000 (norm. 1,000-2,000)
French quality Specification German quality
US $ Currency US $
Metric ton UOM Metric ton
7.45 Conv (to bbls) 7.45
Europe diesel deficit rising (million mt/mo)
Source: JODI
-2.0
-1.0
0.0
20
09
20
10
20
11
20
12
20
13
20
14
-0.5
-0.3
-0.1
20
09
20
10
20
11
20
12
20
13
20
14
-1.1
-0.6
-0.1
20
09
20
10
20
11
20
12
20
13
20
14
-1.0
-0.5
0.0
20
09
20
10
20
11
20
12
20
13
20
14
0.0
0.5
1.02
00
9
20
10
20
11
20
12
20
13
20
14
-1.1
-0.6
-0.1
20
09
20
10
20
11
20
12
20
13
20
14
More European refineries at risk
Source: Market
sources
Whitegate
Lindsey
Grangemouth
La Mede
Donges
Feyzin
Q8 Europoort
Stanlow
Milford
Livorno
Gela
Taranto
Falconara
Thessaloniki
Sisak
Lietuva
Fredericia
Kralupy
Petrotel
Reported bids, offers and trades
($/mt, Rotterdam 3.5%S Barges for prompt ‘Front End’ delivery, February 1 2013)
627
629
631
633
635
637
639
641
643
645
16:0
0
16:0
1
16:0
2
16:0
3
16:0
4
16:0
5
16:0
6
16:0
7
16:0
8
16:0
9
16:1
0
16:1
1
16:1
2
16:1
3
16:1
4
16:1
5
16:1
6
16:1
7
16:1
8
16:1
9
16:2
0
16:2
1
16:2
2
16:2
3
16:2
4
16:2
5
16:2
6
16:2
7
16:2
8
16:2
9
16:3
0
16:3
1
16:3
2
16:3
3
MERCURIA
ARGOS
VITOL1
VITOL2
WILJO
OW
AGEAN
CARGILL
BP
GUNVOR
CHEMOIL
TRADES
KCEL1
KCEL2
TOTSA
CARGILL
OW
BP
MERCURIA
GUNVOR
LITASCO
Market on Close process in action
Towards African Benchmarks? Opportunities and Challenges for New Benchmarks
Platts Global Products Assessments Adapting Platts Benchmarks to Market Changes
The Role of Benchmarks Market Requirements for Benchmarks
Africa product import locations
21
Tema
Dakar
Nouadhibou
Lagos Conakry
Lomé
Luanda
Durban
Cape Town
Dar es Salaam
Beira
Mohamedia
Mombasa
Port Sudan
Jorf Lasfar
Arzew Skikda
Alexandria
La Skhirra
Source:
Platts
US flow
Hydrocracker
Huge disparities in retail pricing
24
Source: Platts
Note: as of 13 Nov 2014
$0.19/l $0.31/l
$1.09/l $1.36/l
$0.68/l $0.91/l
$1.51/l $1.69/l
$1.28/l $1.47/l
Gasoil ($/litre) Gasoline ($/litre)
$1.17/l $1.43/l
$0.25/l $0.36/l
$1.17/l $1.10/l
$0.89/l $1.01/l
$1.67/l
$0.69/l $0.56/l
Towards African Benchmarks? Opportunities and Challenges for New Benchmarks
Platts Global Products Assessments Adapting Platts Benchmarks to Market Changes
The Role of Benchmarks Market Requirements for Benchmarks
Diesel cargo sizes moving up
26
Size January-April 2013 January-April 2014
22,000 mt 44 59
26,000 mt 9 9
30,000 mt 21 14
33,000 mt 8 19
35,000 mt 14 -
40,000 mt 7 28
Other 4 4
Total 107 (2.97 million mt) 133 (3.83 million mt)
Count of Primorsk diesel parcels by size
Source: Platts, traders
Platts to raise ARA diesel cargo sizes
SUBSCRIBER NOTE: Platts to raise cargo sizes in CIF ARA diesel assessment
London (Platts)--19Aug2014/757 am EDT/1157 GMT
Platts will extend the range of cargo sizes reflected in its CIF ARA
diesel assessment from 10,000-35,000 mt plus/minus 10% to 10,000-40,000 mt
plus/minus 10% with effect from January 2, 2015.
The announcement follows a middle distillates technical workshop hosted
by Platts on April 28 in London and a formal proposal made on May 21.
The basis of the assessment will remain 20,000 mt plus/minus 10%, but
cargoes across the entire size range of 10,000-40,000 mt plus/minus 10% will
also be considered.
The current approach of normalizing price data for different cargo sizes
back to the value of a 20,000 mt plus/minus 10% cargo will be maintained.
Platts will continue to monitor market developments to ensure the
assessment process reflects flows that become more prevalent and relevant in
the European market.
The following assessments will be affected by today's announcement: CIF
ARA diesel cargoes (AAVBG00), CIF NWE (Le Havre) diesel cargoes (AAWZC00), CIF UK diesel cargoes (AAVBH00), FOB ARA diesel cargoes (AAVBF00), FOB NWE (Le Havre) diesel cargoes (AAWZD00).
Some European ports too restrictive
Source:
Platts
Le Havre
Dunkirk
Rouen
La Pallice
Donges
Bordeaux
Lorient
Thames
Bilbao
Tees
ARA Milford
Tranmere Bremen
Hamburg
US diesel flow
Brest
Can take full MR
Cannot
0 10 20 30 40 50 60 70 80 90 100
Zawiya
Vysotsk
Ventspils
Ust Luga - Sibur
Ust Luga - Novatek
Ust Luga - Gunvor
Tuapse
Suez
Skikda splitter
Skikda refinery
Riga
Murmansk
Mongstad
Mohamadia
Milazzo
Karsto
Kaliningrad
Cartagena
Bizerte
Aspropyrgos
Arzew
Arkhangelsk
Alexandria
Agio Theodoroi
12,500 mt 20,000 mt 25,000 mt 30,000 mt 35,000 mt 40,000 mt 60,000 mt 70,000 mt 85,000 mt 90,000 mt
29
Naphtha going through similar transition
Source: Platts, shipping reports, Market Sources, CFlow
Platts to raise naphtha cargo sizes
SUBSCRIBER NOTE: Platts CIF NWE naphtha to reflect cargoes from 12,500mt to 36,000mt London (Platts)--30Oct2014/646 am EDT/1046 GMT
Platts will update its CIF NWE naphtha cargo assessment to include larger sizes alongside its existing 12,500mt delivery volume with effect from January 2, 2015. Following a comprehensive review of feedback, Platts reconsidered its initial proposal where the assessment was going to reflect the value of naphtha delivered in three larger cargo sizes. From January 2, 2015, the four cargo sizes reflected in the assessment will be 12,500mt, 24,000-28,000mt, 28,000-32,000mt and 32,000-36,000mt. The most competitive of the four cargo sizes will be reflected in the final published CIF NWE naphtha cargo assessment. By reflecting four commonly traded cargo sizes, Platts seeks to ensure that its assessment reflects a broader cross-section of Europe's evolving spot market. This change reflects the evolution of the market, as demand is increasingly supplied by larger cargoes. As trade in these cargoes has become more commonplace across the market as a whole, so trading in smaller cargoes, generally produced by local Western European refineries, has become relatively less common.
Platts launches RMK barge assessment
SUBSCRIBER NOTE: Platts to launch 500 CST Rotterdam barge assessment Aug 1 London( Platts)--1Aug2014/859 am EDT/1259 GMT
Effective August 1, 2014 Platts will launch a new assessment for 500 CST, 3.5% sulfur fuel oil barges, FOB basis Rotterdam. The new assessment will be published alongside all existing Rotterdam fuel oil barge assessments, and separately from a new 500 CST bunker fuel assessment.
The specification reflected in the new assessment will conform to ISO
8217: 2010 specifications, category ISO-F, RMK 500. Specification and assessment parameters will be detailed in Platts' Europe and Africa Refined Oil Products Methodology and Specifications Guide at the time of launch.
The assessment will reflect the value of barges at 16:30 London time, for oil loading three to 15 days forward on Monday-Tuesday, and five to 15 days forward on Wednesday-Friday. During UK public holidays this schedule and time may change and Platts will publish changes to its typical publishing schedule when the need arises. The assessment will reflect a barge size of 2,000 mt.
Platts will publish bids, offers and interest to trade RMK 500 CST barges, FOB basis Rotterdam, in front-end, middle-window and back-end loading ranges (FE, MW and BE, respectively), as in Platts' other European fuel oil barge Market on Close assessment processes.
Platts proposal to modify AG assessments
SUBSCRIBER NOTE: Platts proposes to amend Middle East methodology
Singapore (Platts)--31Jul2014/135 am EDT/535 GMT
Following a review of the volumes and nomination procedures reflected in its Middle East gasoline, naphtha, gasoil, jet fuel and fuel oil spot cargo differential assessments, Platts proposes to amend elements of these assessments from April 1, 2015.
Platts opened a review of these procedures in December 2013 and the proposals that follow are the result of industry feedback and discussion collated in that process. Platts proposes to make changes to the following spot market differentials assessments:
Assessment Volume Loading Period
Naphtha 25 kt 20-40 days
Gasoline 95 200-300 kb 20-40 days
Gasoline 95 CFR 200-300 kb 20-40 days
Jet Kero 200-300 kb 20-40 days
Gasoil 200-300 kb 20-40 days
FO 180 No change (20-40kt) 20-40 days
FO 380 No change (20-40kt) 20-40 days
From FOB Singapore to FOB Straits
Platts proposes to expand 'FOB Singapore' assessments to 'FOB Straits' July 2015 Singapore (Platts)--17Jul2014/1058 pm EDT/258 GMT
Platts requests feedback on a proposal to amend the loadpoints reflected in its FOB Singapore assessments for fuel oil, middle distillates and gasoline, with effect from July 1, 2015. For FOB Straits bids and offers, buyers and sellers would not state a specific loadpoint at the point of communication to Platts, and would proceed to nominate loading from one of the locations in Singapore and Malaysia that are already approved. For FOB Straits transactions, sellers would nominate an approved loadpoint seven days prior to loading for all products, except gasoline. Such approved loadpoints may include approved terminals in Singapore, or southern Malaysia. Additionally, Platts requests comments around the possible future inclusion of Indonesian terminals in the process.
Platts to launch new Gulf assessment
Platts to launch USGC Export ULSD cargo assessment Following a period of industry feedback that ended September 15, Platts confirms it will introduce an assessment for Ultra Low Sulfur Diesel export cargoes loading at US Gulf Coast terminals on an FOB basis, effective December 1, 2014. The Platts FOB USGC Export ULSD assessment will reflect EN590 quality diesel with a typical standard clip size of 300,000 barrels and a typical operational tolerance of plus/minus 10%.
The assessment will reflect cargoes loading seven to 21 days forward from the date of publication, subject to industry standard terminal and vessel nomination procedures. Export ULSD should be free of any biofuels. Loading locations include terminals along the US Gulf Coast from Corpus Christi, Texas, to Pascagoula, Mississippi, normalized to a Houston basis.
The Platts FOB USGC Export ULSD assessment will not include the value of Renewable Volume Obligations (RVOs), which reflect the cost of supplying RINs with fuel when mandated by the US Environmental Protection Agency as part of the Renewable Fuel Standard (RFS). RVOs are the amount of renewable fuels to be blended into transportation fuels for US domestic consumption.