On 29 November 2016, the Saint Petersburg International Mercantile Exchange (SPIMEX) started trading in physically-settled SPIMEX Urals Crude Futures (FOB, Primorsk).
The contract was launched by SPIMEX together with SDCO (JSC) clearing organization under the assignment of President of Russia Vladimir Putin, a decision of the Presidential Commission for Strategic Development of the Fuel and Energy Sector and Environmental Security and the relevant Action Plan adopted by the Russian Government. Preparations were made with direct participation of the Ministry of Energy of Russian Federation, the Federal Antimonopoly Service and the Bank of Russia. On such key issues as guarantee of physical delivery and quality of export crude oil SPIMEX worked hand in hand with the Russian national pipeline operator Transneft.
The SPIMEX Urals Crude Futures contact has to become a core of a new pricing mechanism for exported Russian crude oil by setting a direct market price without any reference to other marker crudes and filling the gap between physical "wet" barrels and futures traded "paper" barrels. The contract size is 1,000 bbls denominated in US Dollars with Standard Delivery equal to 720,000 bbls (100,000 mt). A variety of assets are accepted for margining purpose including Roubles.
The official ceremony marking the launch of SPIMEX Urals Crude Futures was attended by Igor Artemyev, Head of the Federal Antimonopoly Service of Russia; Sergey Shvetsov, First Deputy Governor of the Bank of Russia; Kirill Molodtsov, Deputy Minister of Energy of Russian Federation; Anatoly Golomolzin, Chairman of the Exchange Committee, Deputy Head of the Federal Antimonopoly Service of Russia; Nikolai Podguzov, Deputy Minister of Economic Development of Russian Federation; Maxim Grishanin, First Vice President of Transneft; Anatoly Aksakov, Chairman of the Financial Market Committee of the State Duma; Alexey Rybnikov, President of SPIMEX, heads of Russian and overseas petroleum companies, trading participants and media representatives.
In his written address to the participants of the official ceremony Igor Sechin, Chief Executive Officer, Chairman of the Management Board of Rosneft and Chairman of the Board of Directors of SPIMEX, said: “Today we are launching creation of a new pricing mechanism for exported Russian crude oil. This task was assigned by our President, Vladimir Putin. A crude oil futures contract is needed by trading and financial companies, banks, investors and above all us, the oil companies. In a highly volatile market Russian petroleum companies will take maximum advantage of this flexible financial instrument to hedge their risks and to efficiently manage their finances. Needless to say, a direct Urals crude futures contract is our long-term competitive advantage. The petroleum exchange in St. Petersburg is our weighty argument in favour of setting an international price of oil, creation of a new liquid market and a representative quotation for the Urals grade. I am sure that in the near future large oil traders, overseas banks and financial institutions will join the market and the Saint Petersburg International Mercantile Exchange will emerge as one of the world’s leading trading venues.”
Speaking at the ceremony held at the Moscow premises of SPIMEX, Head of the Federal Antimonopoly Service of Russia Igor Artemyev said: “Russia once again demonstrated that it is a great nation which can not only produce crude oil but also is in possession of high-tech solutions including those required for exchange trading. Highly professional team of SPIMEX succeeded in launching the crude oil futures contract and I am glad to congratulate all of us with this landmark achievement.”
First Deputy Governor of the Bank of Russia Sergey Shvetsov noticed: “We put high hopes on the success of the project and believe that the Saint Petersburg International Mercantile Exchange will become the price formation centre for both westbound and eastbound deliveries of Russian crude oil.” Deputy Minister of Energy of Russian Federation Kirill Molodtsov stressed: “Today we are not just launching the Urals Crude Futures (FOB, Primorsk), today we are opening a new page in the history of Russian petroleum industry. Two years ago the start of exchange trading in natural gas initiated a new phase in our efforts to create real natural gas market mechanisms. For years our country is either the world’s largest or the second largest crude oil producer. Today, when the production is at record-high levels we shall create viable tools which will allow our producers and their counterparties from amongst oil trading companies to convert exchange traded financial products into physical delivery of Russian crude oil.”
“Use of the Urals Crude Futures contract is one of the factors of macroeconomic stability and prestige of the Russian state in the global energy and financial markets,” Deputy Minister of Economic Development of Russian Federation Nikolai Podguzov said. “Exchange trading in Russian export crude oil opens the door for even closer integration of our country into the world economy and will contribute to further introduction of market tools inside Russia.”
Chairman of the Exchange Committee, Deputy Head of the Federal Antimonopoly Service of Russia Anatoly Golomolzin pointed out: “The current state of commodity exchange trading in Russia, both in spot and derivatives segments, fully complies with the highest international standards. The launch of the Urals Crude Futures contract will offer fresh investment prospects for the national economy and largest domestic corporations by creating an effective price discovery mechanism and increasing interest of overseas companies in the Russian commodity market.”
“Participation in setting of the Russian marker crude is a whole new level in the operation of our company,” underlined First Vice President of Transneft Maxim Grishanin. “The physically-settled futures contract is based on the large stream of the Urals crude oil. Long-term guarantees of stable shipments and quality of export crude oil were the core of our cooperation with SPIMEX in the run-up to the launch of the contract.”
“Today we witnessed a major event which will be instrumental in stimulating further development of our commodity and financial markets. The Russian State Duma also contributed to the efforts which made the launch of the contract possible: amendments to the Russian Federal Law ‘On Organized Trading’ came into effect and access to the trading in commodity-based derivatives was granted to non-residents of Russia. It is noteworthy that implementation of the project will gradually broaden the use of the Rouble in Russian exchange trading,” Chairman of the Financial Market Committee of the State Duma Anatoly Aksakov asserted.
“Trading in the physically-settled Urals Crude Futures contact, an indispensable trading and risk management tool, has started,” President of SPIMEX Alexey Rybnikov pointed out after highly appreciating endeavors taken by all the stakeholders. “Russian petroleum companies are now all ready to use it. Today, the task of the exchange is not less daring: we are to raise the number of trading participants and to boost liquidity of the fresh SPIMEX product.”
Saint Petersburg International Mercantile Exchange (SPIMEX) is the largest Russian commodity exchange which offers a wide range of products traded both in its Spot Commodities Markets (refined products, crude oil, natural gas, LPG, timber and construction materials) and in its Derivatives Market. The Exchange’s key task is operating a transparent price formation mechanism to ensure fair prices for the commodities produced in Russia. SPIMEX was incorporated in 2008. The exchange license is available at the SPIMEX web-site.