Platts Report: Singapore Moving Towards FOB Straits Basis for Oil? Platts and Oil Marketplace Eye Likely Need for Free-On-Board Straits Price Reference
SINGAPORE, Aug. 22, 2014 /PRNewswire/ -- The expansion of Singapore as a leading Asia-Pacific energy hub, combined with the country's moratorium on the development of further onshore storage, has led to the hub expanding beyond national borders to encompass infrastructure in Malaysia, according to the Platts Special Report "FOB Singapore Beyond Singapore –Towards FOB Straits" released at the Platts Crude Oil & Refined Products Forum in Singapore Thursday.
Singapore's storage capacity is a key reason for the country's status as Asia's leading oil trading hub. As Singapore's storage terminal market has matured, further capacity growth has been curtailed by limited waterfront land availability. Market participants have embraced terminals in Malaysia and Indonesia to accommodate higher trading volumes, as supply and trading of oil has steadily climbed across Asia as a whole.
"With Singapore's land scarcity, it only makes sense for market participants to look beyond Singapore's shores for more cost effective developments of new storage capacity," said Jonty Rushforth, Platts editorial director of Asia and Middle East oil markets. "And we have seen a shift in market dynamics."
These developments mean the oil industry is evolving from a specified loading of Free-on-Board (FOB) basis Singapore ports, towards a broader FOB "Straits" basis. Platts, a leading global provider of benchmark price references and pioneer in Asia oil price benchmarks, is engaging with interested parties across the market to expand the definition of its own assessments accordingly.
"Methodologies evolve through time and must continuously adapt to the changing conditions that are a hallmark of physical commodity markets," said Calvin Lee, Platts senior manager of Asia markets reporting. "By being more flexible with the port locations that our price assessments embrace, we can better match the evolution taking place in oil movements, storage, refining and trading."
To access the full report, visit this link: Platts Special Report – Oil. For more information about Platts' on-going dialogue with industry and market participants and its request for feedback on price assessment enhancements, access this link for FOB Singapore expanding to FOB Straits and this link for Middle East oil and refined products.
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