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[OIL ]
METHODOLOGY AND SPECIFICATIONS GUIDE
North Sea sulfur de-escalator
(Latest Update: February 2015)
METHODOLOGY AND SPECIFICATIONS GUIDE
Platts to increase Forties de-escalator to $0.20/b
on Mar 1, 2015
On February 25 2015, Platts announced that the sulfur de-escalator to
be effective March 1, 2015, in Forties cargoes and related instruments in
the Platts MOC process would be $0.20/barrel per 0.1% weight of sulfur
over the 0.6% wt standard. This was up from $0.15/b the previous month.
The de-escalator should apply to cargoes loading from March 1, 2015.
Platts considers a number of indicators in the determination of the Forties
de-escalator level including the behavior of sweet and light crudes versus
sourer and heavier streams in the North Sea and other competing regions as
well as the performance of refined products, and the outright price of crude oil.
The latest review of the key indicators showed a recovery in the
outright price of Dated Brent, up 21.54% to $59.87/b as of February 23.
NORTH SEA SULFUR DE-ESCALATOR: FEBRUARY 2015
This level is higher than when the Forties sulfur de-escalator was set at
$0.20/b, in December for January-loading cargoes.
Comparing crudes, sweet/sour crude oil spreads widened over the
period under consideration. The Oseberg/Urals spread rose by 10.66% over
the course of the month to reach $3.85/b.
A similar trend was seen in comparing the CIF Gullfaks and CIF
Rotterdam Urals spread, up by 9.14% to $3.83/b.
The fuel oil hi-lo has been considered as less relevant to the
Forties sulfur de-escalator in 2015 following the introduction of
Emission Control Area regulations removing the demand for 1% sulfur
fuel oil as a marine fuel.
However, a widening spread between low sulfur and high sulfur
products was seen in this period, suggesting a need for a higher
de-escalator value.
$/b
$/b
Naphtha versus HSFO was up 22.52% compared to the previous month
at $212/mt, while diesel versus 0.1% gasoil was up 40.00% to $23.75/mt,
both higher than when the Forties sulfur de-escalator had last been set at
$0.20/b in December, for January-loading cargoes.
These factors combined provided evidence for a higher Forties sulfur
de-escalator level, given the widening spread between high sulfur and low
sulfur products, and sweet and sour crudes.
This is despite a rebound in Forties differentials over the most recent
month from Dated Brent minus $0.475/b on February 23 to Dated Brent plus
$0.385/b on February 23, in large part driven by export fixtures from the region.
Platts will continue to review how these factors evolve in the coming
month. The following tables illustrate key data discussed above. Platts
welcomes all comments and questions at [email protected] and
[email protected].
$/b
$/b
0.4
0.4
8
100
0.3
6
0.3
80
0.2
4
0.2
0.1
2
120
60
Dated Brent
De-escalator
40
Feb-14
Apr-14
Jun-14
Aug-14
Oct-14
0.0
Feb-15
Dec-14
0.1
FOB Oseberg/FOB Urals (Primorsk)
De-escalator
0
Feb-14
Apr-14
Jun-14
Aug-14
Oct-14
Dec-14
0.0
Feb-15
Data: Platts assessments
Data: Platts assessments
$/mt
$/b
$/mt
$/b
0.4
40
300
0.3
30
0.3
200
0.2
20
0.2
0.1
10
400
100
0
Feb-14
Naphtha-HSFO
De-escalator
Apr-14
Jun-14
Aug-14
Oct-14
Dec-14
0.4
0.1
Diesel 10ppm–gasoil
De-escalator
0.0
Feb-15
Data: Platts assessments
0
Feb-14
Apr-14
Data: Platts assessments
COPYRIGHT © 2015 BY PLATTS, McGRAW HILL FINANCIAL
2
Jun-14
Aug-14
Oct-14
Dec-14
0.0
Feb-15