* Vitol boss calls for widening of Brent benchmark
* Platts, Argus see need to add new grades over time
* Difficult to add Nigerian, Russian crude to Brent-traders
By Dmitry Zhdannikov, Claire Milhench and Alex Lawler
LONDON, Feb 20 (Reuters) - The oil industry hopes Norwaywill bring plenty of new oil onstream to help fix the Brentbenchmark as other solutions - such as adding Russian orNigerian crude to the North Sea mix - pose too many risks,executives and traders said.
A long-running debate about Brent, which is facing a drop inthe North Sea supply underpinning the contract and which criticssay is therefore vulnerable to manipulation, entered a new phasethis week.
Ian Taylor, the chief executive of the world's largesttrader Vitol, called for fundamental and immediate reform.
His comments added fuel to the controversy following theopening by European authorities last year of a probe intosuspected manipulation of oil prices. Brent is used to pricetwo-thirds of oil globally.
Taylor said Brent, which is currently calculated using fourNorth Sea crude grades, should be broadened to include crudesfrom West Africa, Kazakhstan, Algeria, maybe Russia and even theUnited States because of dwindling North Sea output.
The issue has been a talking point for traders andexecutives in London for the annual IP Week industry gatheringand several said it be very hard to bring in crudes from moredistant sources to boost the global role of Brent.
"It feels to me like we are quite a long way away from that- because of the freight differences, because of the qualitydifferences," Tony Hayward, chief executive of Genel Energy, told a conference organised by Energy Institute.
"I think we will see the emergence of some more global gasbenchmarks... But I don't see there being a global oil pricebenchmark any time soon," said Hayward, a former CEO of BP, one of the world's largest oil traders.
Traders and executives have insisted for decades that abenchmark needs at least three elements to be successful - amplesupplies of material, a well-developed derivatives market behindit and politically unrestricted deliveries.
If dwindling supplies are the Achilles heel for Brent, it isthe monopoly of the Russian state over pipelines that has so farprevented the Russian grade Urals from becoming a benchmark. InNigeria, oil theft is seen as a major risk.
Jonathan Kollek, head of Russian and former Soviet Unionoffices at trading house Trafigura, said that rather thantinkering with Brent, a new benchmark could be based on Urals, provided it was based on trading outside Russia in a hub such asRotterdam.
"Instead of trying to fix something, I would createsomething new using Urals provided it is done on a non-Russianterritorial basis," Kollek said.
Didier Casimiro, vice-president for commerce and logisticsat the Kremlin's oil champion Rosneft, said Russiashould get its first oil benchmark in Asia.
EYES ON NORWAY
The Brent benchmark is underpinned by four North Sea crudestreams - Brent and Forties from the British side, and Norway'sOseberg and Ekofisk. Together they are known as BFOE.
Output of these four grades has fallen by more than 20percent in the past four years to below 1 million barrels perday (bpd) in February, according to Reuters data.
"As a reminder, no-one is forcing people to price oil off ofBrent. If they want to price ex-Dubai or (U.S. crude) WTI or anynew benchmark, they can or could do it," one trader said.
Taylor said he was concerned that large volumes of Brentwere flowing to Asia, encouraged by a free trade agreement (FTA)between the EU and South Korea, which made those deliveriescheaper than other grades.
Changing the FTA to reduce those deliveries could be one solution, traders said.
Platts, a unit of McGraw Hill and the dominant oilpricing agency, says fundamental changes to Brent may be neededbut not immediately.
Argus Media, a Platts competitor, says it believes that overthe next few years West African and then Urals grades willinevitably be added to help assess Brent.
"Adding Russian crude would solve the issue of volume," saidPeter Caddy, head of business development at Argus.
Russia exports over 3 million bpd of Urals but most traderssay they are sceptical about adding Urals or African grades.
"Urals would not really introduce more liquidity into themarket, it would only introduce more quality problems," onetrader said, referring to the fact that sour and heavy Urals isinferior in quality to lighter, sweeter Brent.
"And whilst West African is sweet, it is five weeks outversus two to three weeks for North Sea, which would introducestructure into the benchmark," he said referring to differencesin loading schedules for African grades and Brent.
The chance of making large new oil finds are low on theNorth Sea's British side, where output peaked in 1999. ButNorway plans to revive production after a decade-long decline,although a major field, Johan Sverdrup, will not start up until2019.
Some traders saw no need to add any new grades for now,following the introduction by Platts last year of qualitypremiums for Oseberg and Ekofisk, intended to make it easier forthem to be delivered into contracts. Others said existing gradesof Norwegian crude, such as Statfjord, could be added.
"I would just include more Norwegian grades - just grabwhatever barrels you can find that are both domestic and sweet,and hope the Norwegians strike it big in the future," one tradersaid.
