* Platts proposes own Brent reforms, following Shell
* Split would be in nobody's favour, says JBC Energy
* Two traders see industry adopting single standard
By Alex Lawler
LONDON, Feb 19 (Reuters) - The cash Brent oil market faces a period of confusion as pricing agency Platts and oil companies have only weeks to iron out their differences on rival reform proposals and avoid a damaging split.
Platts on Monday proposed a plan to apply quality premiums from June 2013 to two crudes deliverable into forward contracts that help establish the Brent price, differing from new terms announced previously by Royal Dutch Shell and backed by BP Plc.
The plans are designed to bolster the credibility of cash North Sea Brent, a benchmark for global oil trade. Critics say cash Brent is prone to manipulation because it is based on the dwindling supply of four North Sea crude grades, sometimes leading to higher prices.
The cash Brent market is also used by the Intercontinental Exchange to settle Brent futures contracts at expiry each month and can occasionally influence the price of Brent futures, which otherwise largely reflect global oil supply and demand patterns.
Oil traders attending annual International Petroleum (IP) week functions in London were concerned about a period of uncertainty and of two rival standards emerging.
"The aim of all parties is to improve liquidity and transparency," said David Hufton, managing director of oil broker PVM Oil Associates in London. "In due course it will, but not it would seem without a period of concern, confusion and controversy."
A North Sea trader expected the industry to settle on a single standard to ensure there was no split in liquidity in the Brent-Forties-Oseberg-Ekofisk (BFOE) forward market, used in Brent futures contract expiries.
"The big issue is getting agreement so we have liquidity," said the trader, who declined to be identified. "Hopefully Platts can help to resolve this into some sort of alignment relatively quickly. I think their proposal is fair."
Shell in a statement said: "We are pleased that Platts have supported all the concepts of our February 8th proposal to introduce a quality premium as regards BFOE forward transactions."
Platts plans to apply quality premiums for Oseberg and Ekofisk crude from June 2013 - two of the four crudes deliverable into BFOE forward contracts that help establish the Brent price.
The firm, a unit of McGraw-Hill which provides clients with price benchmarks in the energy markets, said it would consult on its proposals until March 10.
Platts is not planning to introduce quality premiums for Brent and Forties , the two other crudes making up BFOE. Shell's proposal includes a quality premium for Brent as well and begins in May, a month earlier than Platts.
As is, each of the proposals will produce different results, traders and analysts say. Another North Sea trader expected the Platts proposal to win out, as participants' price exposure is to Platts.
"The biggest differences between the two methodologies concern the historical timing of the calculations used to derive the value of the escalator and the weighting itself," analysts at Vienna-based JBC Energy said.
"Unification would be in the market's interest as there is a danger that two competing systems could split the liquidity of the BFOE market, which would not be in anybody's favour."