1. Market reporting and benchmarks ARGUS

2. A reporting service needs to be Independent –Not influence by one party –Not influenced by a government Professional –Experienced and trained staff –Competent resources Transparent –Methodologies –Inputs Fully compliant –With a fully documented procedures and compliance rules

3. Calculating Argus North Sea Dated – the spreadsheet explained

7. Methodologies www.argusmedia.com/methodology

8. Benchmarks Benchmarks need to be robust Benchmarks need to be relevant Benchmarks need to be acceptable

9. WTI Inversion 2010 $/bl

10. WTI inversion $/bl

12. ASCI adoption is expanding The ASCI index is the volume-weighted average of all trades for Mars, Poseidon, and Southern Green Canyon (SGC). –WTI crude (Nymex settlement) forms the underlying fixed price. Launched March 2009 Adopted as benchmark in early 2010 by Saudi Aramco, Kuwait (KPC), Iraq (Somo) for all sales into US ASCI also used in –Urals to US –Colombian spot crude transactions –Venezuelan spot crude transactions –Alberta Department of Energy

13. Futures and physical adjustments Physical supplies respond to physical market fundamentals independently of the futures markets This is expressed through the price differentials for physical supplies

14. Conclusion OTC (over-the-counter) markets provide the best benchmarks for the trade in physical crude in both the US and Europe Futures exchanges provide financial risk management vehicles. These are essential to minimise risk but do not provide good benchmarks for physical crude Countries and companies which use the wrong benchmarks potential lose vast amounts of money by either selling below the market or losing market share