* To use quality premiums for Oseberg, Ekofisk crude
* Says to use two months of data to set premiums
* No immediate comment from Shell, BP
By Alex Lawler
LONDON, March 15 (Reuters) – Oil pricing agency Platts on Friday announced changes to the way it assesses the Brent oil market, in a bid to bolster the credibility of the benchmark used to set oil prices globally.
Brent, based on four types of crude oil 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.
Calls for reform prompted Royal Dutch Shell to propose different terms to those used by Platts, posing a risk of rival standards that would undermine the benchmark rather than fix it. The latest change by Platts aims to avert a split.
The efficiency and transparency of a wide range of other benchmarks in financial and commodity markets have also come under a spotlight.
In oil, part of the problem is that traders most often deliver the cheapest and lowest quality of the four crude streams into the Brent-Forties-Oseberg-Ekofisk (BFOE) forward contracts that help establish the price of dated Brent, which is used to price oil around the world
Platts said it plans to apply quality premiums for the better Oseberg and Ekofisk crude from June 2013 to encourage delivery of these, increasing liquidity.
“The introduction of quality premiums offers an incentive for more deliveries of Oseberg and Ekofisk and thus has the potential to further gird the supply of oil underpinning the BFOE complex and the dated Brent price assessment,” Dave Ernsberger, Platts global editorial director, oil, said in a statement.
The plan from Platts, a unit of McGraw-Hill, follows feedback from oil companies on proposals announced on Feb. 18, which differed from new trading terms earlier detailed by Shell and backed by BP Plc.
BP could not immediately be reached for comment on Friday, while Shell said it would respond later.
“We will review the announcement Platts has made today and respond in due course,” Shell said.
North Sea oil traders have previously said they expect the industry to eventually adopt the Platts standard, since their deals are exposed to prices as assessed by Platts.
The quality premiums for Oseberg and Ekofisk will be published at 50 percent of the net price differences between these grades and the cheapest of the four streams, Platts said.
They will draw on two months of price assessment data. Platts initially proposed using one month’s data.
Oil traders say the quality premiums will encourage delivery of the full range of eligible crudes into the BFOE contracts.
At present, Forties most often tends to be delivered as it is of lower quality and the cheapest of the four BFOE crudes sets the value of dated Brent, used to price cargoes in Europe, the Middle East, Africa and parts of Asia.
Forward BFOE and dated Brent underpin Brent crude futures , increasingly seen as the standard global price of oil.
U.S. crude, Brent’s longtime rival, has also faced questions around its credibility as a benchmark.
Global regulators have stepped up scrutiny of a wide range of benchmarks across the markets especially after the Libor-rigging scandal exposed manipulation by British banks of the interest rate-setting benchmark.
The International Organisation of Securities Commissions (IOSCO) – an umbrella group for markets regulators – is running a wider review of benchmarks and the U.S. Commodity Futures Trading Commission is looking into whether the setting of gold and silver prices in London is open to manipulation.
Thomson Reuters, parent of Reuters news, competes with Platts in providing news and information to the oil market.
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UPDATE 2-Platts unveils changes to bolster Brent oil benchmark
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