Pertamina may roll over Indonesian Crude Price for next 6 months: Report
Friday, June 1 2001 - 07:00 AM WIB
Indonesia's state oil and gas company Pertamina may roll over its Indonesian Crude Prices (ICP) for the next six months without revision, although it had suggested implementing the new formula as of July. "It may not be the right timing to make any changes now," considering the recent Indonesian energy sector issues and strong opposition by Asian crude customers, according to sources close to the matter.
In February, Pertamina first suggested possibly revising the current ICP--which is based on spot crude price assessments by Platts (40%), Rim Intelligence (40%) and Asia Petroleum Price Indes or APPI (20%)--as of July.
The committee, holding the meeting this week in Jakarta, has at least four versions of the new ICP to choose from. Apparently, the two versions are to lessen the component of price assessments by the APPI and add the new component, Petroleum Argus, according to sources.
However, Pertamina may strike a compromise with Asian customers by maintaining the ICP unchanged for now. Some buyers consider the APPI assessments "more conservative" than others. Thus lessening the APPI assessments could mean bringing up the ICP from the current one, one Japanese buyer sources said.
Particularly now, Japanese and South Korean customers have collective bargaining power, as they have been suffering from the disruption of liquefied natural gas (LNG) supplies from Indonesia since mid-March.
PT Arun NGL, operated by state-run Pertamina, has suspended LNG supply in mid-March, as ExxonMobil's local subsidiary stopped producing natural gas at a field in Aceh because of reported violence in the area.
And Asian LNG customers remain pessimistic about the likelihood of a quick resumption of LNG supply from Indonesia's PT Arun despite recent optimistic forecasts by suppliers.
Pertamina may take into consideration such other energy issues, coming to an agreement with Asian crude customers on the ICP, according to sources.
The Indonesian government is expected to make the final decision on the ICP Thursday, sources said. (*)