Russia’s TNK-BP sold two cargoes of ESPO Blend crude oil using price assessments from Argus earlier this month. This is the first time that spot trading activity is known to have taken place using ESPO Blend assessments. In the past, all trade has been done using an agreed differential to the Dubai price.
ESPO Blend is a light sour Russian crude supplied to Asia-Pacific and the US west coast via the East Siberia-Pacific Ocean (ESPO) pipeline and exported from the port of Kozmino, Russia. Term contracts for pipeline deliveries to China are based 50:50 on Argus and Platts assessments. Argus introduced ESPO Blend assessments in its daily Argus Crude report in December 2009 and assesses the market from its offices in Singapore, Moscow, London, Beijing and Tokyo.
TNK-BP is expected to become the biggest seaborne exporter of ESPO Blend shortly as crude production grows in east Siberia.
Argus chairman and chief executive Adrian Binks said: “We are delighted that our ESPO Blend assessment is being used by the key companies involved in this market. We developed the assessment in close consultation with the industry and these deals, the first to use a dedicated ESPO Blend index, demonstrate a high degree of confidence in our price.”
Dmitry Kuranov, Head of TNK-BP crude trading, said: “The Argus assessment is becoming a relevant and transparent index. We think that now is the right time to sign trial contracts using Argus price assessments and extensively use them in the future, especially when ESPO volumes are expected to increase.”