“Are European and Middle East price

quotations relevant to Africa?”

James Gooder, Argus

ARA, Marrakech, March 2012

London, Houston, Washington, New York, Portland, Calgary, Santiago, Bogota, Singapore, Beijing,

Tokyo, Sydney, Dubai, Moscow, Astana, Kiev, Porto, Brussels and Johannesburg

What is Argus?

• The only independently-owned, global energy market price reporting and market intelligence service

• Offices in London, Singapore, Beijing, Tokyo, Dubai, Astana, Moscow, Washington, Houston

• Founded in 1970

• Today over 50 publications and around 400 employees

• Privately held by the founder’s family and the employees

Argus provides

• Pricing

– Market report portfolio

• Informed comment, analysis and news

– Business Intelligence portfolio

• Data and statistics

– Databases, research services

• Global provision of information on the oil, gas and energy

markets

• One of the two leading providers of global oil and energy price

and market information - the other is Platts

• Oil complex continues to be driven by diesel – the fuel of

economic growth

• Softer demand in Europe and growing biofuels mandates

• Shutdown of several US east coast and European refineries

• Steady flow of gasoline to US and diesel into Europe

• US becomes net exporter of products for first time

• Europe will compete with Latin America for US diesel, though

new hydrocracking facilities will boost local supply.

• India’s importance will grow as an exporter of products to

Europe and the US, and the Mideast Gulf refineries will also

expand to meet this demand.

Products markets trends

Liquidity and transparency

• The best benchmarks are those which are most liquid and

most transparent

– It is more important that the underlying benchmark is robust, sound

and reliable than the benchmark purports to represent the quality and

location of your product

– It is better for your specific product to be priced at a premium or

discount to a robust global benchmark than to an unreliable

benchmark than might superficially reflect your quality or location

Argus is the gasoline benchmark in northwest Europe

• Argus publishes the benchmark gasoline price for the

Rotterdam barge market

• The market prefers Argus’ volume weighted average

methodology that protects against end of day price distortion

• The gasoline that is imported into Nigeria is usually priced at

source linked to Argus, but sales into Nigeria are made on a

Platts basis, which can lead to unrepresentative pricing

• When there is a difference between Argus and Platts, the

consumers and governments do not benefit, trading

companies do

• Whether for subsidy calculation or market monitoring

purposes, Argus gasoline prices should be the key reference

Argus bulletin boards bring transparency to the market

Users can see trades as soon as they are confirmed, and a running

volume weighted average at top right shows the Argus price being

calculated in real time

VWA

0

100,000

200,000

300,000

400,000

500,000

600,000

vol of non-VWA deals

vol of VWA deals

Liquidity is king

Note that the blue VWA (Euro-Bob Oxy) deals take

place throughout the day, while off-spec (95R) deals in

red are often being done late in the day and influencing

the outcome of Platts’ price

tonnes

Rotterdam barge trades 2011

Sellers Buyers

The market is well served with 30 participants. No-one has a

dominant position either on the sell or buy side.

VWA trend – Argus not distorted by last deal done

Argus is the basis for a healthy gasoline swaps market

0

100

200

300

400

500

600

700

800

900

0

1000

2000

3000

4000

5000

6000

‘000 t

‘000 t

CME Clearport trade

volumes of Argus Euro-Bob

Oxy swaps

CME Clearport open interest

on Argus Euro-Bob Oxy

swaps

There are few gasoline

swaps traded in

northwest Europe on a

Platts basis

South African Customs Union Basic Fuel Price

• Argus recommendation for amendments to the SACU BFP

• For gasoline use Argus Eurobob fob Rotterdam as it is the

benchmark for Rotterdam trade and for price risk

management. Adjust for quality and location using agreed

differentials

• For diesel use ICE gasoil plus the Argus diesel German 10ppm

premium to ICE at Rotterdam. Adjust for quality and location

using agreed differentials. ICE allows for price risk

management and Argus differentials are regarded as robust.

• For freight use Argus spot freight rates. Spot freight is more

appropriate than alternatives

500

600

700

800

900

1,000

1,100

1,200

1,300

Propane ARA large cargo

prompt, London close, midpoint,

USD/t, cif

Propane Mt Belvieu LST (LDH)

$/t month 1, Houston close,

midpoint, USD/t, pipeline fob

European and US LPG prices – US now an exporter

US becomes net products exporter

‘000 b/d

New crude benchmarks iron out WTI dislocations

-35

-30

-25

-20

-15

-10

-5

0

5

10

15

WTI-Dated

LLS-Dated

ASCI-Dated

More information:

James Gooder

Wilfried Nkolo

Sam Roberts

Telephone: 00 44 20 7780 4200

Website: www.argusmedia.com

London, Houston, Washington, New York, Portland, Calgary, Santiago, Singapore, Beijing, Tokyo,

Sydney, Dubai, Moscow, Astana, Kiev, Hamburg and Johannesburg