June 26, 2018 / 3:55 AM / 9 months ago

Commodity price agency Platts to review Indonesia crude methodology

SINGAPORE, June 26 (Reuters) - Commodity price agency S&P Global Platts, a unit of S&P Global Inc, is reviewing the way it prices Indonesia’s Minas crude oil, the company told subscribers in a note on Tuesday.

Platts is reviewing the suitability of continuing to assess the crude oil grade using a “market-on-close” methodology or move to a market adjusted “gross product worth” calculation, it said.

The gross product worth is typically calculated based on the value of refined products that are derived from the crude oil grade.

Platts’ pricing process, which it calls market-on-close, usually includes a half-hour period daily when companies which have been pre-approved are able to bid, offer or trade cargoes. The agency then prices the oil cargo using that information among other things.

A steep decline in production, as well as continued domestic consumption has led to a “significant fall” in spot market liquidity for Minas, Platts said in the note.

Production and exports of Minas crude have fallen in recent years to about 155,000 barrels per day now from a peak of about 420,000 bpd, the agency added.

Platts currently assesses the price of Minas crude oil on a free-on-board (FOB) Indonesia basis.

Platts is asking for feedback from subscribers by Oct. 1. (Reporting by Jessica Jaganathan Editing by Joseph Radford)

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