This question is specifically related to refinery LP and pricing. Hopefully this is the right section to post it.
For our input prices for crude for the current month we use Brent Dtd + the differential on the crude at which the crude can be purchased today for delivery in M+1, 2 etc.. i.e. the so-called replacement value, and not the actual differential at which you purchased the crude.
Likewise, on the products, you use the current Platts price, with the spot premium / discount.
My question is, how do other refineries do it. If one uses the purchased differential you see different economics to the replacement value.
For the experienced LP planners, is there any generally accepted way of doing it?
For our input prices for crude for the current month we use Brent Dtd + the differential on the crude at which the crude can be purchased today for delivery in M+1, 2 etc.. i.e. the so-called replacement value, and not the actual differential at which you purchased the crude.
Likewise, on the products, you use the current Platts price, with the spot premium / discount.
My question is, how do other refineries do it. If one uses the purchased differential you see different economics to the replacement value.
For the experienced LP planners, is there any generally accepted way of doing it?