ARGUS JET FUEL - METHODO LOGY AND ...
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Methodology and specifications guide
ARGUS JET FUEL
Contents:
Methodology overview 2
Introduction5
Argus Jet Fuel Index™ 5
Sustainable Aviation Fuel (SAF) 5
Argus jet fuel assessments 6
Last Updated: July 2021
The most up-to-date Argus Jet Fuel methodology is available on www.argusmedia.com
www.argusmedia.com19 January 2005
Methodology and specifications guide July 2021
Methodology overview • Transactions
• Bids and offers
Methodology rationale • Other market information, to include spread values between
Argus strives to construct methodologies that reflect the way the grades, locations, timings, and many other data.
market trades. Argus aims to produce price assessments which are
reliable and representative indicators of commodity market values In many markets, the relevant methodology will assign a relatively
and are free from distortion. As a result, the specific currencies, higher importance to transactions over bids and offers, and a
volume units, locations and other particulars of an assessment are relatively higher importance to bids and offers over other market
determined by industry conventions. information. Certain markets however will exist for which such a
hierarchy would produce unreliable and non-representative price as-
In the jet fuel markets, Argus publishes physical market prices in sessments, and so the methodology must assign a different relative
the open market as laid out in the specifications and methodology importance in order to ensure the quality and integrity of the price
guide. Argus uses the trading period deemed by Argus to be most assessment. And even in markets for which the hierarchy normally
appropriate, in consultation with industry, to capture market liquidity. applies, certain market situations will at times emerge for which the
In order to be included in the assessment process, deals must meet strict hierarchy would produce non-representative prices, requiring
the minimum volume, delivery, timing and specification require- Argus to adapt in order to publish representative prices.
ments in our methodology. In illiquid markets, and in other cases
where deemed appropriate, Argus assesses the range within which Verification of transaction data
product could have traded by applying a strict process outlined later Reporters carefully analyse all data submitted to the price assess-
in this methodology. ment process. These data include transactions, bids, offers, vol-
umes, counterparties, specifications and any other information that
Survey process contributes materially to the determination of price. This high level
Argus price assessments are informed by information received from of care described applies regardless of the methodology employed.
a wide cross section of market participants, including producers, Specific to transactions, bids, and offers, reporters seek to verify the
consumers and intermediaries. Argus reporters engage with the in- price, the volume, the specifications, location basis, and counter-
dustry by proactively polling participants for market data. Argus will party. In some transactional average methodologies, reporters also
contact and accept market data from all credible market sources examine the full array of transactions to match counterparties and
including front and back office of market participants and brokers. arrive at a list of unique transactions. In some transactional average
Argus will also receive market data from electronic trading platforms methodologies, full details of the transactions verified are published
and directly from the back offices of market participants. Argus will electronically and are accessible by subscribers. The deals are also
accept market data by telephone, instant messenger, email or other published in the daily report.
means.
Several tests are applied by reporters in all markets to transactional
Argus encourages all sources of market data to submit all market data to determine if it should be subjected to further scrutiny. If a
data to which they are a party that falls within the Argus stated transaction has been identified as failing such a test, it will receive
methodological criteria for the relevant assessment. Argus encour- further scrutiny. For assessments used to settle derivatives and for
ages all sources of market data to submit transaction data from many other assessments, Argus has established internal proce-
back office functions. dures that involve escalation of inquiry within the source’s company
and escalating review within Argus management. Should this pro-
Throughout all markets, Argus is constantly seeking to increase cess determine that a transaction should be excluded from the price
the number of companies willing to provide market data. Report- assessment process, the supervising editor will initiate approval
ers are mentored and held accountable for expanding their pool and, if necessary, documentation procedures.
of contacts. The number of entities providing market data can vary
significantly from day to day based on market conditions. Primary tests applied by reporters
• Transactions not transacted at arm’s length, including deals
For certain price assessments identified by local management, if between related parties or affiliates.
more than 50pc of the market data involved in arriving at a price • Transaction prices that deviate significantly from the mean of
assessment is sourced from a single party the supervising editor will all transactions submitted for that day.
engage in an analysis of the market data with the primary reporter to • Transaction prices that fall outside of the generally observed
ensure that the quality and integrity of the assessment has not been lows and highs that operated throughout the trading day.
affected. • Transactions that are suspected to be a leg of another trans-
action or in some way contingent on an unknown transaction.
Market data usage • Single deal volumes that significantly exceed the typical trans-
In each market, Argus uses the methodological approach deemed action volume for that market.
to be the most reliable and representative for that market. Argus will • Transaction details that are identified by other market par-
utilise various types of market data in its methodologies, to include: ticipants as being for any reason potentially anomalous and
perceived by Argus to be as such.
2 www.argusmedia.com19 January 2005
Methodology and specifications guide July 2021
•T ransaction details that are reported by one counterparty dif- metrics mirror the process used by physical commodity traders
ferently than the other counterparty. to internally assess value prior to entering the market with a bid or
• Any transaction details that appear to the reporter to be illogi- offer. Applying these valuation metrics along with sound judgement
cal or to stray from the norms of trading behaviour. This could significantly narrows the band within which a commodity can be as-
include but is not limited to divergent specifications, unusual sessed, and greatly increases the accuracy and consistency of the
delivery location and counterparties not typically seen. price series. The application of judgement is conducted jointly with
• Transactions that involve the same counterparties, the same the supervising editor, in order to be sure that guidelines below are
price and delivery dates are checked to see that they are being followed. Valuation metrics include the following:
separate deals and not one deal duplicated in Argus records.
Relative value transactions
Secondary tests applied by editors for transactions Frequently transactions occur which instead of being an outright
identified for further scrutiny purchase or sale of a single commodity, are instead exchanges of
commodities. Such transactions allow reporters to value less liquid
Transaction tests markets against more liquid ones and establish a strong basis for
the exercise of judgment.
•T he impact of linkage of the deal to possible other transac- • Exchange one commodity for a different commodity in the
tions such as contingent legs, exchanges, options, swaps, same market at a negotiated value.
or other derivative instruments. This will include a review of • Exchange delivery dates for the same commodity at a negoti-
transactions in markets that the reporter may not be covering. ated value.
• The nature of disagreement between counterparties on trans- • Exchange a commodity in one location for the same com-
actional details. modity at another location at a negotiated value.
• The possibility that a deal is directly linked to an offsetting
transaction that is not publicly known, for example a “wash Bids and offers
trade” which has the purpose of influencing the published If a sufficient number of bids and offers populate the market, then in
price. most cases the highest bid and the lowest offer can be assumed to
• The impact of non-market factors on price or volume, includ- define the boundaries between which a deal could be transacted.
ing distressed delivery, credit issues, scheduling issues,
demurrage, or containment. Comparative metrics
•T he relative values between compared commodities are read-
Source tests ily discussed in the market and can be discovered through
• The credibility of the explanation provided for the outlying dialogue with market participants. These discussions are the
nature of the transaction. precursor to negotiation and conclusion of transactions.
• The track record of the source. Sources will be deemed more • Comparison to the same commodity in another market centre.
credible if they • Comparison to a more actively traded but slightly different
• Regularly provide transaction data with few errors. specification commodity in the same market centre.
• Provide data by Argus’ established deadline. • Comparison to the same commodity traded for a different
• Quickly respond to queries from Argus reporters. delivery timing.
• Have staff designated to respond to such queries. • Comparison to the commodity’s primary feedstock or primary
• How close the information receipt is to the deadline for derived product(s).
information, and the impact of that proximity on the validation • Comparison to trade in the same commodity but in a different
process. modality (as in barge versus oceangoing vessel) or in a dif-
ferent total volume (as in full cargo load versus partial cargo
Assessment guidelines load).
When insufficient, inadequate, or no transaction information exists,
or when Argus concludes that a transaction based methodology will Volume minimums and transaction data thresholds
not produce representative prices, Argus reporters will make an as- Argus typically does not establish thresholds strictly on the basis
sessment of market value by applying intelligent judgement based of a count of transactions, as this could lead to unreliable and non-
on a broad array of factual market information. Reporters must use representative assessments and because of the varying transporta-
a high degree of care in gathering and validating all market data tion infrastructure found in all commodity markets. Instead, mini-
used in determining price assessments, a degree of care equal to mum volumes are typically established which may apply to each
that applying to gathering and validating transactions. The informa- transaction accepted, to the aggregate of transactions, to transac-
tion used to form an assessment could include deals done, bids, of- tions which set a low or high assessment or to other volumetrically
fers, tenders, spread trades, exchange trades, fundamental supply relevant parameters.
and demand information and other inputs.
For price assessments used to settle derivatives, Argus will seek to
The assessment process employing judgement is rigorous, repli- establish minimum transaction data thresholds and when no such
cable, and uses widely accepted valuation metrics. These valuation threshold can be established Argus will explain the reasons. These
3 www.argusmedia.com19 January 2005
Methodology and specifications guide July 2021
thresholds will often reflect the minimum volumes necessary to policy are restrictions against staff trading in any energy commodity
produce a transaction-based methodology, but may also establish or energy related stocks, and guidelines for accepting gifts. Argus
minimum deal parameters for use by a methodology that is based also has strict policies regarding central archiving of email and
primarily on judgement. instant messenger communication, maintenance and archiving of
notes, and archiving of spreadsheets and deal lists used in the price
Should no transaction threshold exist, or should submitted data fall assessment process. Argus publishes prices that report and reflect
below this methodology’s stated transaction data threshold for any prevailing levels for open-market arms length transactions (please
reason, Argus will follow the procedures outlined elsewhere in this see the Argus Global Compliance Policy for a detailed definition of
document regarding the exercise of judgement in the price assess- arms length).
ment process.
Consistency in the assessment process
Transparency Argus recognises the need to have judgement consistently applied
Argus values transparency in energy markets. As a result, where by reporters covering separate markets, and by reporters replacing
available, we publish lists of deals in our reports that include price, existing reporters in the assessment process. In order to ensure
basis, counterparty and volume information. The deal tables allow this consistency, Argus has developed a programme of training and
subscribers to cross check and verify the deals against the prices. oversight of reporters. This programme includes:
Argus feels transparency and openness is vital to developing confi-
dence in the price assessment process. •A global price reporting manual describing among other
things the guidelines for the exercise of judgement
Swaps and forwards markets • Cross-training of staff between markets to ensure proper holi-
Argus publishes forward assessments for numerous markets. These day and sick leave backup. Editors that float between markets
include forward market contracts that can allow physical delivery to monitor staff application of best practices
and swaps contracts that swap a fixed price for the average of a • Experienced editors overseeing reporting teams are involved
floating published price. Argus looks at forward swaps to inform in daily mentoring and assisting in the application of judge-
physical assessments but places primary emphasis on the physical ment for illiquid markets
markets. • Editors are required to sign-off on all price assessments each
day, thus ensuring the consistent application of judgement.
Publications and price data
Argus jet fuel prices are published in the Argus Jet Fuel report. Review of methodology
Subsets of these prices appear in other Argus market reports and The overriding objective of any methodology is to produce price as-
newsletters in various forms. The price data are available independ- sessments which are reliable and representative indicators of com-
ent of the text-based report in electronic files that can feed into vari- modity market values and are free from distortion. As a result, Argus
ous databases. These price data are also supplied through various editors and reporters are regularly examining our methodologies
third-party data integrators. The Argus website also provides access and are in regular dialogue with the industry in order to ensure that
to prices, reports and news with various web-based tools. All Argus the methodologies are representative of the market being assessed.
prices are kept in a historical database and available for purchase. This process is integral with reporting on a given market. In addition
Contact your local Argus office for information. to this ongoing review of methodology, Argus conducts reviews of
all of its methodologies and methodology documents on at least an
A publication schedule is available at www.argusmedia.com annual basis.
Corrections to assessments Argus market report editors and management will periodically and
Argus will on occasion publish corrections to price assessments as merited initiate reviews of market coverage based on a qualita-
after the publication date. We will correct errors that arise from cleri- tive analysis that includes measurements of liquidity, visibility of
cal mistakes, calculation errors, or a misapplication of our stated market data, consistency of market data, quality of market data and
methodology. Argus will not retroactively assess markets based on industry usage of the assessments. Report editors will review:
new information learned after the assessments are published. We
make our best effort to assess markets based on the information we • Appropriateness of the methodology of existing assessments
gather during the trading day assessed. • Termination of existing assessments
• Initiation of new assessments.
Ethics and compliance
Argus operates according to the best practices in the publishing The report editor will initiate an informal process to examine viability.
field, and maintains thorough compliance procedures throughout This process includes:
the firm. We want to be seen as a preferred provider by our sub-
scribers, who are held to equally high standards, while at the same • Informal discussions with market participants
time maintaining our editorial integrity and independence. Argus • Informal discussions with other stakeholders
has a strict ethics policy that applies to all staff. The policy can be • Internal review of market data
found on our website at www.argusmedia.com. Included in this
4 www.argusmedia.com19 January 2005
Methodology and specifications guide July 2021
Should changes, terminations, or initiations be merited, the report Argus Jet Fuel Index™
editor will submit an internal proposal to management for review
and approval. Should changes or terminations of existing assess- The Argus Jet Fuel Index™ is an arithmetic average of the following
ments be approved, then formal procedures for external consulta- assessments:
tion are begun.
• New York fob barge 54 grade
Changes to methodology • US Gulf fob Colonial 54 grade
Formal proposals to change methodologies typically emerge out of • Chicago fob
the ongoing process of internal and external review of the meth- • Los Angeles fob
odologies. Formal procedures for external consultation regarding
material changes to existing methodologies will be initiated with an The index is published in ¢/USG.
announcement of the proposed change published in the relevant See the Argus US Products methodology.
Argus report. This announcement will include:
•D etails on the proposed change and the rationale Sustainable Aviation Fuel (SAF)
• Method for submitting comments with a deadline for submis-
sions fob ARA range
• For prices used in derivatives, notice that all formal comments Sustainable Aviation Fuel (SAF) meeting ASTM D7566 specifications
will be published after the given consultation period unless If the ASTM D7566 specification differs from the Argus specification
submitter requests confidentiality. listed below, the Argus specification takes precedence.
Included Pathways: Synthesised Paraffinic Kerosene from hydro-
Argus will provide sufficient opportunity for stakeholders to analyse treated esters and fatty acids (HEFA)
and comment on changes, but will not allow the time needed to Feedstock: RED-compliant used cooking oil
follow these procedures to create a situation wherein unrepresenta- Currency/unit: US dollar/t
tive or false prices are published, markets are disrupted, or market Prices are assessed as an outright and converted to a US dollar/t
participants are put at unnecessary risk. Argus will engage with premium to the front-month Ice gasoil settlement on the day of pub-
industry throughout this process in order to gain acceptance of pro- lication as well as a US dollar/t and US dollar/m³ premium to RED
posed changes to methodology. Argus cannot however guarantee HVO fob ARA range (Class II).
universal acceptance and will act for the good order of the market Market information priced as a differential to another basis, includ-
and ensure the continued integrity of its price assessments as an ing but not limited to northwest Europe jet fuel, will be converted to
overriding objective. an outright price for consideration for inclusion in the assessment.
Timing: loading 7-28 days forward of the day of the assessment
Following the consultation period, Argus management will com- Location: fob ARA range — including Antwerp, Rotterdam, Amster-
mence an internal review and decide on the methodology change. dam, Dordrecht, Flushing and Ghent
This will be followed by an announcement of the decision, which Size: 100-5,000t
will be published in the relevant Argus report and include a date for Certification: material must be accompanied with an on-specifi-
implementation. For prices used in derivatives, publication of stake- cation neat SAF certification issued by a European Commission-
holders’ formal comments that are not subject to confidentiality and approved auditing body
Argus’ response to those comments will also take place. GHG savings: minimum 85pc greenhouse gas (GHG) savings,
based on a fossil fuel comparator of 83.8g CO2 equivalent/MJ
Assessment time: weekly outright prices are assessed and a dif-
Introduction ferential calculated to front-month Ice gasoil at 4:30pm London time
on Fridays. Outright prices are published daily using the calculated
Argus Jet Fuel publishes global bulk spot prices for jet fuel. It is differential and the daily front-month Ice gasoil settlement.
published daily. The report contains a price summary of international
bulk jet prices, news, market commentary, jet fuel forward curves Delivered US west coast
and global spot market prices. Differentials are assessed monthly as a multiple of the underlying jet
fuel price. Outright prices are calculated daily. Differentials may be
Argus Jet Fuel is a composite report consolidating jet fuel prices assessed more frequently if market conditions change significantly
from Argus European Products, Argus Asia-Pacific Products, during the month. Argus will notify subscribers of assessments
Argus Mideast Gulf and Indian Ocean Products, Argus Mexico Fuel made outside of the usual monthly schedule.
Markets, Argus US Products, Argus Russian Motor Fuels, Argus Location: delivered California or Oregon
Caspian Markets, Argus West Africa Oil and Argus Air Daily. The Specification: ASTM D7566 with no pass-through of environmental
methodology for these price assessments can be found in the and federal credits
online methodologies for these respective reports. Differential basis: jet fuel LA pipe (see the Argus US Products
methodology)
Timing: term deliveries to be completed within twelve months
Volume: 100-5,000 bl/month
5 www.argusmedia.com19 January 2005
Methodology and specifications guide July 2021
Delivered Tampa, Florida Jet 54 Argus US Products
fob Singapore netback
Calculated as the SAF fob ARA range assessment less the weekly Tulsa fob Group Three Q grade ¢/USG Argus US Products
Singapore to ARA region HVO freight assessment as published in Chicago fob ¢/USG Argus US Products
Argus Biofuels. See the Argus Biofuels methodology Los Angeles fob ¢/USG Argus US Products
LAX fob ¢/USG Argus US Products
San Francisco fob ¢/USG Argus US Products
Argus jet fuel assessments
California LCFS premium per carbon intensity
Assessment Source report Argus Air Daily
point alternative jet fuel
Asia-Pacific Oregon LCFS premium per carbon intensity point
Argus Air Daily
alternative jet fuel
Singapore fob cargo $/bl Argus Asia-Pacific Products
Argus US Jet Fuel Index™ ¢/USG
South Korea fob cargo $/bl Argus Asia-Pacific Products
Mexico
Japan c+f cargo $/bl Argus Asia-Pacific Products
Delivered East coast Mexico Argus Mexico Fuel Markets
Mideast Gulf
Delivered Rosarito Argus Mexico Fuel Markets
Mideast Gulf fob cargo $/bl Argus Asia-Pacific Products
Delivered Lazaro Cardenas Argus Mexico Fuel Markets
Mideast Gulf fob diff to Ice $/bl Argus Asia-Pacific Products
Delivered Progresso Argus Mexico Fuel Markets
Fujairah fob cargo $/lb Argus Asia-Pacific Products
Brazil
Africa
Delivered Santos Argus US Products
Durban c+f cargo $/t Argus Asia-Pacific Products
Delivered Rio de Janeiro Argus US Products
West Africa delivered $/t Argus West Africa Oil
Delivered Suape Argus US Products
FSU
Delivered Itaqui Argus US Products
Moscow formula incl VAT Rbs/t Argus Russian Motor Fuels
Trinidad and Tobago
Moscow formula ex VAT $/t Argus Russian Motor Fuels
Pointe-a-Pierre fob (Paria posted) Argus US Products
Moscow spot fit incl VAT Rbs/t Argus Russian Motor Fuels
Peru
Moscow spot fit ex VAT $/t Argus Russian Motor Fuels
Delivered Callao Argus US Products
Omsk fca incl VAT $/t Argus Russian Motor Fuels
Colombia
Yaroslavl fca incl VAT $/t Argus Russian Motor Fuels
Delivered Barranquilla Argus US Products
Kirishi fca incl VAT $/t Argus Russian Motor Fuels
Argus jet fuel forward prices
Chimkent fca incl VAT $/t Argus Caspian Markets
Singapore cargo swap $/bl Argus Asia-Pacific Products
Pavlodar fca incl VAT $/t Argus Caspian Markets
Northwest Europe cargo swap $/t Argus European Products
Atyrau fca incl VAT $/t Argus Caspian Markets
New York barge ¢/USG Argus US Products
Russia-Kazakhstan border dap excl VAT, excise $/t Argus Caspian Markets
Houston Colonial pipeline ¢/USG Argus US Products
Russia-Kazakhstan border fca incl VAT, excise $/t Argus Caspian Markets
Argus jet fuel differentials to gasoil
Europe
Singapore jet vs 0.5% Argus Asia-Pacific Products
Northwest Europe fob cargo $/t Argus European Products
Rotterdam jet vs 0.1% Argus European Products
Northwest Europe cif cargo $/t Argus European Products
Houston jet vs heating oil Argus US Products
Northwest Europe fob barge $/t Argus European Products
Argus jet fuel differentials to crude
Mediterranean fob cargo $/t Argus European Products
Singapore jet vs Dubai month 1 Argus Asia-Pacific Products, Argus Crude
Mediterranean cif cargo $/t Argus European Products
Rotterdam jet vs North Sea Dated Argus European Products, Argus Crude
Mediterranean cif diff to Med fob $/t Argus European Products
Houston jet vs Nymex WTI month 1 Argus US Products, Argus Crude
US
New York cif waterborne 54 grade ¢/USG Argus US Products Note: the delivered west Africa price is published in Argus West Africa Oil a day after it
appears in Argus Jet Fuel. The price is calculated using assessments published in Ar-
New York del Colonial 54 grade ¢/USG Argus US Products gus European Products and Argus Freight on the date of publication of Argus Jet Fuel.
New York fob barge 54 grade ¢/USG Argus US Products
New York fob Buckeye 54 grade ¢/USG Argus US Products
Philadelphia fob Laurel 54 grade ¢/USG Argus US Products
US Gulf fob waterborne 54 grade ¢/USG Argus US Products
US Gulf fob Colonial 54 grade ¢/USG Argus US Products
US Gulf fob Colonial 54 wgt avg ¢/USG Argus US Products
Delivered Port Everglades, Florida Jet 54 Argus US Products
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