New ICP Formula Referring to Dated Brent, What Are the Benefits?

By Editorial Team 30/04/2020
Summary

The government is updating the pricing formula for Indonesia's crude oil price benchmark, known as Indonesian Crude Price (ICP). The new formula was published on March 9, through the Minister of Energy and Mineral Resources Decree No. 71.K/12/MEM/2020. It determined the calculation of the pricing formula for major crude oil based on the publication of dated Brent ± alpha. Meanwhile, the calculation of dated Brent refers to the average publication during the current month.

The alpha calculation will be based on the average publication during the current month or the average publication of two months, which is the current month and the previous month. It has taken into account the suitability of the crude oil quality and/or the progress of international crude oil prices and/or national energy security.

Furthermore, the Energy and Mineral Resources Ministry's Director General of Oil and Gas has set the alpha ICP calculation method as a reference for the Price Team when proposing Indonesian oil prices. ICP formula can be adjusted at any time and determined based on the Minister of Energy and Mineral Resources Decree. The Director-General of Oil and Gas on behalf of the minister also set another temporary crude oil price every month.

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