Price formula for crude oil exports to be reviewed

Government plans to change the formula it uses to price overseas crude oil sales to narrow the gap with global benchmarks, government official has said.

State oil upstream regulator BP Migas plans to dilute the weighting of Asian Petroleum Price Index in the formula to 5 percent from 10 percent, and increase the weighting for both Platts, an oil-pricing service, and RIM Intelligence Co to 47.5 percent from 45 percent, an official said asking not to be identified because the plan hasn?t been approved,The Jakarta Post reported Wednesday.

Indonesia?s official prices have lagged international benchmarks by an average US$5 a barrel this year, the BP Migas official said.

?There?s a gap between the Indonesia Crude Price and price in New York, London an Asia,? Luluk Sumiarso the director general of oil and gas at the energy ministry said in an interview Tuesday.

The revised price formula may be introduced in October, he said.

Indonesia sets its so-called Indonesia Crude Price each month based retroactively on 40 percent of the monthly average price for its crude oil as assessed by RIM Intelligence Co, 40 percent of the average assessed by Platts and 20 percent by Asian Petroleum Price Index.

The benchmark export prices for Minas oil, the country?s main grade, was $67.33 barrel in June. Energy and Mineral Resources Minister Purnomo Yusgiantoro will decide on the formula, Sumiarso said. The current formula will apply until the minister decides on the new one, he said.

Indonesia,the second smallest member of Organization of Petroleum Exporting Countries (OPEC), needs more revenue from crude oil exports as price rose to records in New York and London, to narrow a budget deficit.

Indonesia?s Ministry of Energy and Mineral Resources reviews the formula every six months. The current formula has been used since 1999. (*)