Govt to use Dated Brent as reference price for ICP

The government will use Dated Brent as reference price to determine Indonesian Crude Price (ICP) rather that the prices of Indonesian crudes as the former is considered more independent and more impervious to manipulation.

?The use of Dated Brent as reference price will more substantially benefit us as it is more independent and more difficult for certain parties to manipulate because many countries use it as reference,? Director General of Oil and Gas IGN Wiratmaja said in a press conference on Friday.

Dated Brent is a market term for a cargo of North Sea Brent blend crude oil that has been assigned a date when it will be loaded onto a tanker. Dated Brent prices are used, directly and indirectly, as a benchmark for a large proportion of the crude oil that is traded internationally.

Wiratmaja said the ICP formula that is being used now has been in place for nine years. At present, the price of Indonesian crude is much different from those of crudes produced elsewhere in the world. ?The price difference is now almost US$5 per barrel. We have to reform our crude price in order to narrow its gap with global average crude prices,? he said.

He said Indonesian crude production is getting smaller, which makes it prone to fluctuation. Therefore, like many other countries, Indonesia will change its ICP formula with reference to Dated Brent.

The new ICP formula will consist of Dated Brent plus Alpha, which will be calculated in consideration of several factors, including the quality of Indonesian crude, price trend on the international market, and national energy resilience. The Alpha will be determined by the minister of energy and mineral resources every month. The new ICP formula starts being applied on July 1, 2016.

Editing by Johannes Simbolon