Methodology and specifications guide Crude oil Latest update: January 2019 Introduction 2 Part V: Corrections 12 How this methodology statement is organized 2 Part VI: Requests for clarifications of data and Part I: Input data 2 complaints 12 Reporting data to Platts 3 What to report 3 Part VII: Definitions of the trading locations for which How to report 3 Platts publishes daily indexes or assessments 13 MOC data publishing principles 3 North Sea 16 West Africa 23 Part II: Security and confidentiality 7 Urals and Mediterranean 27 Persian Gulf 35 Part III: Determining assessments 8 Asia Pacific 42 MOC price assessment principles 8 United States 52 Normalization price adjustment techniques 8 Canada 57 Prioritizing data 9 Latin America 59 Assessment Calculations 9 Futures Assessments 62 Part IV: Platts editorial standards 12 Revision History 64 www.spglobal.com/platts Methodology and specifications guide Crude oil: January 2019 INTRODUCTION market acceptance for any proposed introduction or changes to where one or more reporting entities submit market data methodology. For more information on the review and approval that constitute a significant proportion of the total data upon Platts methodologies are designed to produce price procedures, please visit: https://www.spglobal.com/platts/en/ which the assessment is based. assessments that are representative of market value, and of the our-methodology/methodology-review-change particular markets to which they relate. Methodology documents ■■ Part IV explains the process for verifying that published prices describe the specifications for various products reflected All Platts methodologies reflect Platts commitment to comply with Platts standards. by Platts assessments, the processes and standards Platts maintaining best practices in price reporting. adheres to in collecting data, and the methods by which Platts ■■ Part V lays out the verification and correction process for arrives at final assessment values for publication. revising published prices and the criteria Platts uses to How this methodology statement is organized determine when it publishes a correction. Platts discloses publicly the days of publication for its price This description of methodology for assessments is divided assessments, and the times during each trading day in which into seven major parts (I-VII) that parallel the entire process of ■■ Part VI explains how users of Platts assessments can contact Platts considers transactions in determining its assessments producing the end-of-day price values. Platts for clarification of data that has been published, or levels. This schedule of publication is available on Platts website, to share a complaint. It also describes how to find out more at the following link: http://www.platts.com/HolidayHome. ■■ Part I describes what goes into Platts assessments, including about Platts complaint policies. details on what data market participants are expected to The dates of publication and the assessment periods are subject submit, the process for submitting data and criteria for ■■ Part VII is a list of detailed specifications for the trading to change in the event of outside circumstances that affect timeliness of market data submissions, as well as the editorial locations and products for which Platts publishes Platts ability to adhere to its normal publication schedule. Such collection of input data from market sources. assessments for a particular commodity. This section circumstances include network outages, power failures, acts of describes why specific units of measurement are used, and terrorism and other situations that result in an interruption in ■■ Part II describes any security and confidentiality practices what conversion factors are used to move between units of Platts operations at one or more of its worldwide offices. In the that Platts uses in handling and treating data, including the measurement, where relevant. event that any such circumstance occurs, Platts will endeavor, separation between Platts price reporting and its news reporting. whenever feasible, to communicate publicly any changes to its publication schedule and assessment periods, with as much ■■ Part III is a detailed account of how Platts collects bids, offers, PA RT I: INPUT DATA advance notice as possible. trades and other market data, and what Platts does with the data to formulate its assessments. It includes descriptions Platts objective is to ensure that input data that editors use as Platts methodologies have evolved to reflect changing market of the methods that Platts uses for reviewing data, and the the basis for their price assessments is of the highest quality. conditions through time, and will continue to evolve as markets methods used to convert raw data into assessments. This Ensuring that data used in Platts assessments is of high quality change. A revision history, a cumulative summary of changes also includes the procedures used to identify anomalous is crucial to maintaining the integrity of Platts various price to this and previous updates, is included at the end of the data. This section describes how and when judgment is assessment processes. methodology. Methodology is reviewed regularly to ensure it applied in this process, the basis upon which transaction reflects current market reality. Such reviews are carried out data may be excluded from a price assessment, and the Platts encourages entities that submit any input data for by Platts reporters and their managers, supplemented and relative importance assigned to each criterion used in forming consideration in its assessment processes to submit all market supported by price methodology specialists who operate the price assessment. This section describes the minimum data that they have which may be relevant to the assessment separately from the reporting teams. Platts follows a clearly amount of transaction data required for a particular price being made. Platts aim is to determine the full circumstances defined process for public consultation on material changes to assessment to be published. This is based on reported surrounding all reported transactional data, including details of its methodologies. This process is based on full transparency transactions and other market information. Finally, this quality, specifications, order sizes, dimensions, lead times and and communication with industry stakeholders aimed at gaining section describes how Platts addresses assessment periods any locational and loading/delivery information. Platts uses that © 2019 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 2 Methodology and specifications guide Crude oil: January 2019 information to determine a typical and repeatable market level for Platts considers several criteria as whether to use source How to report the commodity being assessed. information. These criteria include: Platts accepts any reasonable method of delivery/communication ■■ Company reputation for information provided for publication in real-time, including for Reporting data to Platts bids, offers and transactions. Platts editors typically communicate Platts assesses a variety of different markets and commodities. ■■ Source position within a company with market participants through phone, eWindow (if relevant) In some of these Platts receives information from back office and/or online instant messaging systems . functions. However, in many markets back office functions are ■■ Source understanding and knowledge of the market in not best placed to communicate relevant market data to Platts question Platts tries to accommodate the communication needs editors, and in these instances Platts has processes in place of its customers and will endeavor to open any additional to ensure that data is corroborated either through reviews of ■■ Ability of source to provide relevant, valuable information communication channels required. Other means of entities participating in its process, or through source validation communication, such as emails during the assessment process, and publication of information. ■■ Ability of Platts to verify information with other sources are acceptable but are considered to be atypical. If a market participant chooses to communicate with Platts editorial using As part of its standard editorial practise, Platts routinely reviews ■■ Source credibility such atypical means, this needs to be highlighted well ahead of the companies participating in its price assessment processes. the assessment process. These reviews ensure the suitability of data and information What to report that are used to formulate Platts end-of-day price assessments. The following reporting methods are accepted by Platts editorial staff: These reviews are conducted on a regular basis, and may take Platts encourages all market participants to submit all data that into consideration an array of issues including, but not limited may be relevant to Platts assessments, including but not limited to: ■■ Commonly used Instant Messaging software to, adherence to editorial guidelines, operational and logistical issues, as well as counterparty acceptance. Further details ■■ Firm bids that are open to the marketplace as a whole, with ■■ eWindow concerning Platts MOC Participation Guidelines can be found standard terms online at https://www.platts.com/market-on-close. ■■ Telephone ■■ Firm offers that are open to the marketplace as a whole, with The reviews are not designed to impede a company’s ability to standard terms ■■ Email bilaterally engage in market transactions;