The Indonesian government will require all oil contractors in the country to sell their crude output to state energy company Pertamina. (Reuters Photo/Edgar Su)

Indonesia to Price Crude Against Dated Brent from July: Official


JULY 20, 2016

Jakarta. Indonesia will price its crude grades against dated Brent from July, the first change to its oil price formulas since 2007, a senior government official said on Wednesday (20/07).

The country will price the various Indonesian crudes by setting their values at a premium or discount against dated Brent each month,Wiratmaja Puja, the oil and gas director general at Indonesia's energy ministry, told reporters.

The change is "to make our crude price more realistic" and closer to global prices, he said.

The new formula for Indonesia Crude Price (ICP) includes an alpha in the form of a premium or discount to dated Brent, a benchmark assessed by oil price agency Platts.

Puja said the alpha could change from month to month and will be set by the country's energy minister.

Indonesia previously priced its crude using a formula based on an average of price assessments from Platts and Japanese intelligence company RIM.

State energy company Pertamina said earlier this week that its oil output in the first half of this year rose 11 percent to 305,000 barrels per day from the same period in 2015, buoyed by a rise in Banyu Urip crude production.

Foreign oil producers in Indonesia include Chevron, Exxon Mobil, Inpex and CNOOC.

Indonesia's counterpart Malaysia dropped its Asia-Pacific Petroleum Index (APPI) for Brent in June 2011.

Low liquidity had made the Malaysian and Indonesian benchmarks vulnerable to large price swings that affected sellers and buyers in the market.