Opec Member Ecuador adopts ASCI price for crude exports
Houston, 9 December 2014
Opec member Ecuador’s state-owned oil company PetroEcuador has started pricing its crude exports using the Argus Sour Crude Index (ASCITM) published by global energy and commodity news and price reporting agency Argus. This marks the first consistent use of the ASCI price — a volume-weighted average of US deepwater sour crude deals — to value Latin American crude exports.
PetroEcuador´s Oriente and Napo crude term contract prices are using the ASCI benchmark as an element in an innovative formula to calculate a discount to US benchmark WTI. The formula adjusts for quality and freight.
The ASCI price reflects the volume-weighted average of three medium sour crudes trading in the US Gulf coast market — Mars, Poseidon and Southern Green Canyon.
PetroEcuador’s decision to switch to the ASCI benchmark illustrates the growing relevance of using international crude price markers that are based on robust transaction volumes. The transactions that make up the ASCI price are published by Argus on a daily basis. Ecuador’s fellow Opec members Saudi Arabia, Iraq and Kuwait already price their crude exports to the US using the ASCI price.
Ecuador is expected to export more than 400,000 b/d of oil in 2014, rising to 423,000 b/d next year, according to finance ministry projections. PetroEcuador operates various refineries, including 110,000 b/d Esmeraldas, in addition to the Trans-Ecuadorian oil pipeline network (SOTE).
“Argus price assessments are used extensively by governments as independent references for taxation and other purposes,” Argus Media chairman and chief executive Adrian Binks said. “We fully expect other growing and liberalising economies in Latin America to take similar steps in the near future.”
Argus’ crude and products price assessments are widely used in physical and derivative contracts around the world. Its transparent price assessment methodology has been increasingly adopted throughout the Americas. Argus prices are used by major energy producers and consumers as price references in long-term supply contracts, and by market participants for portfolio mark-to-market, counterparty exposure management, derivatives and a wide range of investment and market analysis purposes.
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Argus is an independent media organisation with almost 700 full time staff. It is headquartered in London and has offices in each of the world’s principal commodity centres. Its main activities comprise publishing market reports containing price assessments, market commentary and news, and business intelligence reports that analyse market and industry trends.
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