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PR Newswire (US): US Federal Government Ties Crude Sales to Argus

Published: Feb 28, 2007

HOUSTON, Feb. 27 /PRNewswire/ — Almost all crude oil sold by the US federal government under its latest Royalty in Kind program is linked to prices published by Argus Media.

Companies buying oil from the government’s Minerals Management Service (MMS) specified Argus as the pricing reference in 98pc of all volumes offered at the US Gulf coast in an award announced February 27.

Six companies won crude oil volumes totaling 7.16mn bl, equivalent to roughly 41,750 b/d, which also included some US west coast oil. Winners were Chevron, ExxonMobil, Shell, Marathon, Plains Marketing and Citadel Investment Group. Deliveries will start on 1 April, and most will run over the ensuing three months.

The sale involves oil given to the government as royalties for production taken from federal leases. The Royalty in Kind Program allows the MMS to accept royalties in the form of a physical natural resource and sell it in the open market.

The Argus pricing method produces volume-weighted averages of deals done in the US crude oil market, and has been developed in close cooperation with crude producers, refiners and traders to reflect oil prices measured over the course of an entire day rather than at the market close.

“The oil industry’s preference for the Argus entire-day pricing method has been growing steadily over the last two years,” said Daniel Massey, president of Argus Media, Inc. “Clearly both refiners and producers feel that the most representative price should be the one backed up with the greatest volume of trade.”

Gulf coast prices published by Argus include Mars, Poseidon, Southern Green Canyon, Light and Heavy Louisiana Sweet, Eugene Island and Bonito. Benchmark WTI is also assessed each afternoon in the cash market at the US midcontinent. The prices appear daily in the Argus Crude and Argus Americas Crude publications.

MMS says the crude oil involved in the latest sale will translate into more than 293mn bl of gasoline, diesel fuel and other petroleum products.

In the government’s November oil sale, buyers chose Argus’ volume-weighted pricing method for over three-quarters of the volumes involved.

For further information contact Daniel Massey, president of Argus Media Inc, or Tim Mingee, global crude oil editor, on (1 713) 968-0000.

About Argus Media

Argus Media is a leading provider of price assessments, business intelligence and market data on the global oil, gas, electricity, coal, emissions and transportation industries. It is the largest independent energy publisher in the world and is headquartered in London. Argus has offices Houston, Washington, Los Angeles, Dubai, Singapore, Tokyo, Beijing, Moscow and other key centers of the energy industry. Argus was founded is 1970 and is a privately held UK-registered publishing company. Argus Media

CONTACT: Daniel Massey, president, or Tim Mingee, global crude oil editor, both of Argus Media Inc, +1-713-968-0000

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