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.