* Urges Platts to reconsider its position on certain points
* Platts consulting until March 10 on changes to Brent
* Industry seen adopting common standard
By Alex Lawler
LONDON, March 8 BP Plc has supported
aspects of a proposal made by Royal Dutch Shell over
reforming the benchmark price assessment for Brent crude, rather
than those of pricing agency Platts.
Oil companies and Platts want to boost the credibility of
Brent, a benchmark for oil trade. Critics say cash Brent is
prone to manipulation because it is based on dwindling supplies
of four North Sea crudes, sometimes leading to higher prices.
Shell and Platts put forward differing proposals last month,
and the prospect of two standards led to concerns about a split
in liquidity in the Brent-Forties-Oseberg-Ekofisk (BFOE) forward
market, which could damage the benchmark's credibility.
The cheapest of the four BFOE crudes - usually Forties
because it is of lower quality - sets the value of dated Brent,
the benchmark used to price cargoes in Europe, the Middle East,
Africa and parts of Asia.
In a March 6 letter to Platts made available by BP, BP
responded to the Platts' proposal to apply quality premiums to
two of the crudes deliverable into BFOE forward contracts that
help establish the Brent price.
BP said it still supported Shell's suggestion over the
timeframe used to calculate quality premiums and disagreed with
Platts' proposal not to apply a premium if price differences
between crude grades were less than 50 cents a barrel.
"For these reasons we are not able to support your
modifications to Shell's proposal and would urge you to
reconsider your position in this regard," BP's letter said with
respect to those two points.
BP also supported Shell's proposal on the size of the
quality premium applied to Oseberg crude - 25 percent rather
than the 50 percent proposed by Platts - although adding that
its concern was less than over the first two issues.
Oil traders say the introduction of quality premiums would
encourage traders to deliver the full range of eligible crudes
into the BFOE contracts, increasing liquidity. At present,
Forties most often tends to be delivered.
Platts, a unit of McGraw-Hill which provides clients
with price benchmarks in the energy markets, is seeking input on
its proposal until March 10.
Trade sources expect the industry to settle on a single
"BP and Shell have made some statements, but they seem to be
looking for concessions from Platts," a senior trader said. "I
guess it is really now Platts' turn to comment."
BP said it agreed to implement changes for cargoes loading
in June 2013 as proposed by Platts, a month later than Shell