Changing West Africa oil markets create new information needs

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Apr 22, 2015, 06:29 ET

LONDON, April 22, 2015 /PRNewswire/ -- West African crude producers are at a critical juncture, as growing North American shale oil output has displaced their crude, all but closing down former export routes to the US.

Market participants have to judge export opportunities to Europe, India or northeast Asia, and must gauge the changing attractiveness of differing grades of crude depending on their suitability for producing different products in each market.

At the same time, west African refining capacity continues to lag far behind growing regional demand for products, making the region an attractive destination for European refiners, particularly those geared to export gasoline surpluses. But this flow is coming under threat from US exporters seeking buyers for their surplus products.

Many west African grades of crude are openly traded and assessed by price reporting agencies such as Argus and its competitors. Argus has identified daily prices for regional crudes since the 1980s in its Argus Crude report, but the market for many other grades remains less transparent. Similarly, the market for refined products imported by west African consumers lacks transparency. To help producers, trading firms, refiners and consumers judge the value of grades of export crude and imported products that are traded in more opaque markets, Argus has launched Argus West Africa Oil, a new daily report.

Argus West Africa Oil publishes prices for 27 grades of crude from Nigeria, Angola, Cameroon, Congo (Brazzaville), Gabon and Ghana. Argus has developed a methodology that compares the refinery gate value (RGV) — the net worth of products processed from the crude — of each grade to the RGV of regional marker crudes with greater visibility and reliable spot market assessments, such as Nigerian Qua Iboe and Angolan Girassol. The report also contains daily prices for gasoline, diesel and heating oil delivered to west Africa. These are calculated using prices from the actively traded barge markets in northwest Europe, adjusted for freight and other costs.

The methodology for the Argus West Africa Oil service can be found at http://www.argusmedia.com/methodology

Most of the new daily prices published in Argus West Africa Oil have not been reported previously by market information providers. In addition to these new prices, the service carries Africa-focused oil market commentary from Argus' market reporting teams and oil news from a network of correspondents across the continent.

"Market participants have requested more extensive coverage of the key west African crude export and product import region, reflecting dramatic changes in the dynamics of the region's oil flows since the US shale oil revolution. The launch of Argus West Africa Oil responds to these new regional market needs," Argus Media chairman and chief executive Adrian Binks said.

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About Argus Media

Argus is an independent media organisation with more than 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.

More than half of Argus employees are commodity journalists who specialise in reporting news and price information relating to physical energy and related commodity markets. They operate according to a rigorous Editorial Code of Conduct and a compliance and ethics policy that align with best journalistic practice, including the avoidance of conflicts of interest.

Argus is a leading provider of data on prices and fundamentals, news, analysis, consultancy services and conferences for the global crude, oil products, natural gas, electricity, coal, emissions, bioenergy, fertilizer, petrochemical, metals and transportation industries. Data provided by Argus are widely used for indexation of physical trade. Companies, governments and international agencies use Argus information for analysis and planning purposes.

Argus has 20 offices globally, including London, Houston, Washington, New York, Calgary, Rio de Janeiro, Singapore, Dubai, Beijing, Tokyo, Sydney, Moscow, Astana and other key centres of the commodity industries. Argus was founded in 1970 and is a privately held UK-registered company.

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