Platts Introduces Mechanism to Ensure Integrity of World's North Sea Brent Oil Benchmark

Platts Introduces Mechanism to Ensure Integrity of World's North Sea Brent Oil Benchmark

July 03, 2007

    NEW YORK, July 2 /Xinhua-PRNewswire/ -- Platts, the
world's leading energy information provider and a division
of The McGraw-Hill Companies (NYSE: MHP), today said it
will further enhance its methodology for assessing the
price of Dated Brent crude oil, the world's premier oil
benchmark. 

    Platts currently determines its Dated Brent assessment
by tracking the most competitively priced of Brent,
Forties, Oseberg and Ekofisk crudes produced in the North
Sea. On June 7, 2007, Platts implemented a quality
threshold of 0.6% sulfur for Forties crude oil to be
considered in Platts' North Sea assessments.  Today Platts
is further enhancing the quality standard on Forties crude
by introducing a "price de-escalator" that will
adjust downward the price of oil delivered by a seller to a
buyer at sulfur levels above 0.6%. 

    Both actions were taken to ensure the integrity of the
benchmark and to maintain the continuity of the assessment
process reflecting consistent quality in crude oil grades. 
Today's action followed a constructive dialogue with oil
industry participants about implementing a mechanism to
deal with cases where the crude oil delivered contains
sulfur exceeding the 0.6% quality parameter.

    "We believe the enhancements to our assessment
methodology will help bring greater transparency to this
complex market," said Dan Tanz, editorial vice
president at Platts. "Platts consulted intensively
with the industry over a period of weeks and considered a
number of options to improve the workability of the quality
standard.  In the end the options narrowed to two: either
remove Forties from the assessment process, or introduce a
quality standard to contend with potential erratic price
behaviour of the Forties blend. We chose the second option
as we believe Forties serves the valuable purpose of
providing a sufficient volume of crude to underpin the
benchmark. We believe that greater volume underpinning a
benchmark ensures wider market representation and an
assessment reflective of market value."

    Dated Brent is used in spot and long-term contracts to
value around 60% of the 85 million barrels of crude oil
produced in global oil markets each day.  According to a
press release on June 7 by the Forties Pipeline System
(FPS), the summer quality of Forties crude oil will be
significantly downgraded as a result of field maintenance
activities. FPS said the Forties crude blend beginning in
August will contain a significantly higher percentage of
Buzzard, a more sulfurous and heavier crude oil. Since
sulfur is an impurity that lowers the value of a crude oil,
this would result in a distortion in the value of the Dated
Brent benchmark if left unaddressed.

    "Quality of crude oil and the need for standards
have become an issue in the North Sea as new streams are
blended into established benchmark grades," said Jorge
Montepeque, Platts Global Director of Market Reports. 
"Platts is committed to delivering reports and
assessments that are reflective of the market value of
Dated Brent; and these methodology enhancements will help
us do that."

    The price de-escalator, effective July 2, provides for
an amount of $0.40 cents per barrel for every 0.1 degree of
sulfur over the 0.6% quality threshold. The 40-cent
de-escalator will be effective through calendar year 2007
unless there is a significant and sustained event in the
crude oil market that would necessitate an interim review.
Platts in September 2007 will initiate a consultation with
the industry to determine the de-escalator mechanism for
the 2008 period.

    A detailed "Frequently Asked Questions" (FAQ)
document on Platts' new quality standard for Forties crude
and the de-escalator mechanism can be found at
http://www.platts.com . 


    About Platts 

    Platts, a division of The McGraw-Hill Companies (NYSE:
MHP), is a leading global provider of energy and metals
information and a top supplier of benchmark prices in the
physical markets. With nearly a century of business
experience, Platts serves customers across more than 150
countries. From 14 offices worldwide, Platts serves the
oil, natural gas, electricity, nuclear power, coal,
petrochemical and metals markets. Platts' real time news,
pricing, analytical services, and conferences help markets
operate with transparency and efficiency. Traders, risk
managers, analysts, and industry leaders depend upon Platts
to help them make better trading and investment decisions.
Additional information is available at
http://www.platts.com .

    About The McGraw-Hill Companies: 

    Founded in 1888, The McGraw-Hill Companies (NYSE: MHP)
is a leading global information services provider meeting
worldwide needs in the financial services, education and
business information markets through leading brands such as
Standard & Poor's, McGraw-Hill Education, BusinessWeek
and J.D. Power and Associates. The Corporation has more
than 280 offices in 40 countries. Sales in 2006 were $6.3
billion. Additional information is available at
http://www.mcgraw-hill.com . 


    For more information, please contact:  

     Kathleen Tanzy 
     Tel:   [phone]
     Email: [e-mail]

    Europe: 
     Shiona Ramage 
     Tel:   [phone]
     Email: [e-mail]

    Asia: 
     Casey Yew
     Tel:   [phone] 
     Email: [e-mail]