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Indonesia to keep July crude price formula unchanged for stability: official
[JAKARTA] Indonesia is on track to implement a new pricing formula for its crude oil sales, but will likely keep it unchanged in July to maintain stability in the market, a senior oil official said late on Thursday.
The largest oil producer in south-east Asia announced earlier this month that it will set its crude prices using an alpha against dated Brent from July, in the first change to the Indonesia Crude Price (ICP) since 2007. But the move raised concerns among traders who have sold and hedged July-loading oil two months ago.
An alpha is the term used to describe either a premium or discount to the benchmark price.
For July, the energy ministry is likely to set the alpha based on an average of price assessments from Platts and Japanese intelligence company RIM, keeping the formula unchanged for at least a month, Wiratmaja Puja, the director general of oil and gas at Indonesia's Energy Ministry, told Reuters in an interview.
"We hope this transition will go smoothly," he said, reassuring buyers that the aim of the price formula change is to reduce price volatility and not to shock the market.
Indonesia is expected to notify customers of the July alpha early next week.
The ministry is monitoring the prices of Minas and the Banyu Urip crude grade produced at the Cepu field to set the alphas in the future, Mr Puja said.
This week, the government appointed Arcandra Tahar as energy and mining minister, replacing Sudirman Said. Mr Tahar was formerly an executive at Texas-based offshore engineering firm Petroneering.
Mr Puja said the appointment will not detract Indonesia from pushing on with the price formula change as the government has studied it with industry stakeholders for the past two to three years.