New ICP formula to be applied this month

The government plans to apply a new formula in calculating local oil price benchmark Indonesia Crude Price (ICP) starting this month, Bisnis Indonesia reported on Thursday.

?It (the new formula) will be applied for July ICP,? said Director General of Oil and Gas IGN Wiratmaja Puja.

He said that Minister of Energy and Mineral Resources Sudirman Said is expected to soon approve the new formula.

The ICP, which is used as a benchmark to calculate non-tax income in the state budget, is currently set every month using existing references from price agencies Platts and RIM, each with equal weighting. The new formula will include European and US oil price benchmarks to make it more relevant to global prices.

European benchmark oil price Brent and the American West Texas Intermediate (WTI) may be used as further references in formulating the ICP in the future, Puja said earlier.

The ICP has moved around US$34.5 per barrel on average so far this year. Mean-while, Brent and WTI were traded at around $47 per barrel in the same period, around $2 to $3 per barrel more than the Indonesian benchmark. (*)