S&P Global Platts said on Monday that starting from January 2018, it will include Norway’s Troll crude grade in the Brent basket—a first such addition since 2007—in a bid to ensure that there will be sufficient deliverable North Sea crude reflected in the price assessments.
S&P Global Platts explained that Dated Brent—the physical cargoes of crude oil loading in the North Sea on any given day, and with specific delivery dates—is the core component of the Brent complex. The Brent crude complex is linked to physical cash BFOE (Brent Ninian Blend -Forties-Oseberg-Ekofisk), as well as financially settled derivatives.
When production from the namesake Brent field declined, Platts added Forties and Oseberg in 2002 and Ekofisk in 2007 to the price assessment.
Although production in the North Sea has stabilized now, the four grades in the BFOE basket are likely to decline further, and therefore, Platts “believes it is time to add another grade to the basket to ensure there is sufficient deliverable crude reflected in the price assessments,” it said.
In December 2016, Platts announced a formal proposal to include more grades to the Brent benchmark assessment. Last year, the Platts Dated Brent crude basket had steady supplies averaging 45 cargoes per month. However, Platts Analytics expects that production will decline to 20 cargoes of crude per month by 2025.
Troll—a light sweet crude oil grade with a typical production of 10-15 cargoes of 600,000 barrels per month—differs from the rest of the BFOE complex in its acid content. While the acid content has been considered a challenge to adding Troll to the basket in the past, many refineries in Europe have been upgraded and diversified, and are now able to handle crudes of the Troll variety, Platts said.
Troll has generally been priced at a premium to Dated Brent, which means that it is unlikely to depress the value of the existing basket, said Platts, which has been assessing Troll as a grade since 2002.
By Tsvetana Paraskova for Oilprice.com
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