Govt reviews plan to change ICP formula

The government will review its plan to change Indonesia Crude Price (ICP) formula on fear that the change could affect  negotiations on the sale of the country's liquefied natural gas (LNG), Kompas Daily reported on Thursday. 

 

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the plan to change the formula needs a thorough study as it could affect the price of Indonesian LNG.

 

Currently, the government uses three benchmarks to determine ICP, that is Platts, RIM Intelligence Co and Asian Petroleum Price Index (APPI). The last change in ICP formula occured on October 1, 2006, during which the governrment cut down the APPI porition to 5 percent from 20 percent. The current ICP uses as benchmarks 5 percent of APPI, 47.5 percent of RIM and 57.5 percent of Platts.

 

Earlier, the ministry announced a plan to change the ICP formula starting July this year to minimize discrepancy with other pricing formulas.

 

I Wayan Suryana, a director at the ministry, said in April 2007, that Indonesia would scrap APPI as a benchmark for the formula and only use Platts and RIM Intelligence Co. with equal weight of 50 percent. (*)