Platts Mulls Asia Crude Liquidity Boost

Platts also studies more ship transfer locations, faster trading.

Oil pricing agency Platts is looking at approving more Middle East crude grades to boost liquidity in the daily assessment of Asia's Dubai benchmark, company executives said on Wednesday.

Monthly volumes have twice hit records in the past year, raising concerns that cargoes that can be delivered over Platts' pricing mechanism may have hit an upper limit.

Also, record daily Dubai crude trades by two Chinese state companies this month have pushed the benchmark higher, even as other grades are pressed lower by a global glut.

Output of Dubai, Oman and Upper Zakum - the grades approved for delivery during the Platts Market on Close (MoC) process - is 1.6 million barrels per day (bpd) but the volume that can be freely traded is about 1.2 million bpd, traders said.

That is far smaller in comparison with even just China's refining throughput as Sinopec alone can process close to 5 million bpd and PetroChina nearly 3 million bpd, they said.

"The key issue is the benchmark's liquidity," a North Asian crude trader said. "We keep hitting new records, it shows that we have hit the limit."

Platts said it is looking at adding new grades into the Dubai mechanism, including Qatar's al-Shaheen and Qatar Marine, Abu Dhabi's Murban and Iraq's Basra Light. Approving any one of the crudes would add between 200,000 bpd and 2 million bpd to the Dubai basket volume.

"Qatar Marine and al-Shaheen are strong contenders to be added to the Dubai mechanism as they are very good fits," said Dave Ernsberger, global oil director at Platts.

Platts previously had talks with customers in 2011 over the addition of Qatar Marine to the Dubai basket due to worries about Oman supply disruption, but nothing was implemented.

Platts is also looking at more locations for ship-to-ship (STS) transfers to increase liquidity, said Jonty Rushforth, editorial director for Asia and Middle East oil markets.

The company has started accepting the delivery of Upper Zakum via ship-to-ship (STS) transfer from an Aframax tanker in Abu Dhabi, and that could add 2-3 cargoes this month, the executives said.

"We are happy to review other ships (for STS loadings) at other locations," Rushforth said.

Platts is still in discussions with key market participants and stakeholders about the changes, which could be implemented "relatively soon", he said, without providing a timeline.

To speed up trade, Platts also said it is looking at cutting in half the time a company has to make a subsequent bid or offer, making it 30 seconds instead of a minute.

Platts, part of McGraw Hill Financial Inc, competes with Thomson Reuters in providing news and information to the energy markets.

By Florence Tan