* Platts detailed changes to Brent assessment on Friday
* Platts plan, Shell terms differ in some respects
* Early resolution hoped for to avoid market paralysis-PVM
By Alex Lawler
LONDON, March 18 BP Plc and Royal Dutch
Shell on Monday assessed changes announced by oil
pricing agency Platts to the way it assesses the Brent oil
market, and had yet to decide on any endorsement of the new
The prospect of two standards has led to some concern about
a split in liquidity in the market, which could damage the
Brent-Forties-Oseberg-Ekofisk (BFOE) benchmark rather than fix
"We have yet to see Shell's reaction, but it is hoped that
agreement can be reached soon to avoid any confusion and
consequent paralysis of BFOE trading as a result," said Tamas
Varga of London-based oil brokers PVM.
Platts, a unit of McGraw-Hill which provides clients
with price benchmarks in the energy market, on Friday announced
changes to the way it assesses Brent. These differed from new
trading terms earlier detailed by Shell and backed by BP.
BP was still reviewing the Platts announcement, company
spokesman Robert Wine said on Monday. Shell said on Friday said
it would consider the Platts announcement and respond in due
Brent, based on four types of crude from the North Sea, sets
the price of billions of dollars of daily oil trade. Since these
are in dwindling supply, critics say the smaller market is prone
to manipulation and can lead to higher global prices.
Platts on Friday said it would apply quality premiums for
Oseberg and Ekofisk crude delivered into BFOE
forward contracts that help establish the Brent price from June
The tweak, Platts hopes, will offer an incentive for more
deliveries of bettter-quality Oseberg and Ekofisk into BFOE
contracts, effectively increasing the supply of oil underpinning
the market. At present, Forties most often tends to be delivered
as it is of lower quality and usually the cheapest.
While the market in general appears to agree on the idea of
quality premiums and a June 2013 start, differences between
Platts and Shell include the size of the premium applied to
Oseberg crude, whether to apply one to Brent crude and how much
past price data to use in calculating the premium.
Thomson Reuters, parent of Reuters news, competes
with Platts in providing news and information to the oil market.