June 22, 2018 / 5:20 PM / 10 months ago

Platts revises LNG spot assessment process after Vitol submissions

LONDON, June 22 (Reuters) - S&P Global Platts revised its method for assessing Asian spot liquefied natural gas (LNG) prices after market feedback following untypical offers submitted by Vitol Asia this week.

The price reporting agency (PRA) is the lead provider of daily Asian spot LNG prices via its Japan Korea Marker (JKM) benchmark, in turn boosting liquidity for JKM-settled LNG derivatives markets.

PRA reporters typically collect price information from LNG traders via telephone and messenger, but last week Platts began taking firm bids and offers from market players and publishing them, aiming to boost price transparency.

It uses those bids and offers to set its daily physical Asian spot LNG assessment. It received a firm bid from Trafigura last week.

Vitol submitted a firm offer to sell a cargo for delivery to Tokyo Bay or South Korea on Aug. 27-31 for $11.60 per million British thermal units (mmBtu), information provided by Platts shows.

Vitol then revised down the price by $5 cent increments every few minutes to $11.20 per mmBtu, used by Platts to help set its JKM level for the day.

After taking feedback from market participants Platts has decided to narrow the parameters of bids and offers it will include in its JKM assessment in response to the offers submitted by Vitol on Monday, which it concluded fell outside typical limits.

Jonty Rushforth, head of the agency’s energy pricing group, said the offers prompted it to tighten criteria on cargo delivery periods and volume.

Vitol did not return a request for comment.

Vitol cited the cargo’s size as 3,200,000-3,600,000 mmBtu, plus or minus five percent, at the seller’s choosing.

The offer also cited a seller’s option to narrow the Aug. 27-31 delivery window to a two-day delivery window no later than July 28. In both cases, market participants felt the ranges cited by Vitol were too broad.

As of June 19, Platts updated its guidelines regarding optionality on cargo delivery period and volume to be specified in a standard range.

Platts kept its JKM LNG spot price assessment for June 18 unchanged.

So far, just six entities are cleared to submit firm bids and offers into the Platts LNG Market on Close assessment.

These are Vitol, its Asian subsidiary Vitol Asia, Trafigura, Singapore’s Pavilion Gas, BP and Itochu.

Reporting by Oleg Vukmanovic; Editing by Elaine Hardcastle

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