UPDATE 1-Shell's shock move jumpstarts oil benchmark reform debate

Fri Feb 8, 2013 6:59pm EST
 
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* Shell's rules start Monday for May and beyond cargoes

* Rules would improve liquidity in North Sea market -Shell

* Platts says will ignore Shell's terms for now

By Alex Lawler and David Sheppard

LONDON/NEW YORK, Feb 8 (Reuters) - Royal Dutch Shell upended the oil world on Friday, unilaterally rewriting the rules of the market that sets the basis of billions of dollars of oil worldwide, risking a liquidity-sapping confrontation with other actors.

In a notice published on its website, Shell said it would alter its SUKO 90 terms in the so-called Dated Brent market starting on Monday for cargoes loading in May and thereafter in a move the oil major said would bolster liquidity in the key North Sea market.

The SUKO 90 terms are the standard terms for the Dated Brent market, a complex interlocking market for over-the-counter forward oil sales contracts and physical oil cargoes in the North Sea that underlies Brent crude futures.

Dated Brent has come under scrutiny from oil market analysts as overly reliant on increasingly small streams of North Sea crude oil production, which critics say leaves the Dated Brent price open to distortion and manipulation.

Other major participants in the Dated Brent market did not immediately publicly endorse or reject Shell's proposed changes. But price reporting agency Platts, which sets the generally accepted Dated Brent price that underlies oil sales contracts worldwide, said in a statement it would ignore Shell's new terms until further notice.   Continued...