Buyers mull over Pertamina price formula

Buyers mull over Pertamina price formula

SINGAPORE (Reuter): Indonesia's state-owned oil firm, Pertamina, has given its term buyers several options in proposed changes to its crude oil price formula effective April 1, oil traders said.

"During the annual buyers' forum last week, Pertamina has discussed its plans to change the existing crude formula and has showed us several option plans," one of Pertamina's Japanese customers told Reuters Tuesday.

"In essence, what Pertamina wants is to factor in a greater spot (market) influence on its formula," he added.

Currently, Pertamina calculates its monthly crude prices on a formula which comprises 50 percent crude price assessments on Asia Petroleum Price Index (APPI). The other half is based on spot assessments comprising 50 percent APPI, 30 percent Platts and 20 percent Rim publications.

Pertamina has proposed excluding APPI assessments totally from the latter half of the formula and take into account only Platts and Rim.

Under a second proposal, it suggested increasing the spot influence of the three publications to either 60 or 70 percent.

So far, Japanese buyers are resisting any of the proposed changes over concerns that the new formula would raise prices by at least 10 cents.

Japan is Indonesia's largest crude importer, taking almost half of the archipelago's exports.

Pertamina last modified its crude formula for Widuri and Duri crudes in 1992. Instead of just APPI, the new calculation took into account assessments from Platts and Rim. The change in formula was later extended to all grades.