Platts to amend Indonesia's crude oil MPP methodology from July 1

Platts, part of S&P Global Commodity Insights, will amend the methodology it uses to calculate market parity prices, or MPPs, for Indonesia's Minas, Cinta and Widuri crude oil grades to better reflect the shift in trade dynamics, effective July 1.

From July 1, the reference basket of relevant crude grades where MPP calculations for Minas, Cinta and Widuri are benchmarked would comprise Malaysia's Kimanis, Abu Dhabi's Murban, as well as Angola's Cabinda, Djeno and Dalia grades. The values of Cabinda, Djeno and Dalia would be calculated at the Asian market close (4:30 pm Singapore time or 0830 GMT), based on their last assessed values at the London close, and accounting for the movement in the underlying Dated Brent benchmark at the prior trading day's European market close at 4:30 pm London time, until the Asian close.

Currently, the reference basket of relevant crude grades in the MPP calculations comprises Kimanis, Murban and Russia's ESPO Blend.

Platts will also amend the underlying delivery point for Minas, Cinta, Widuri and the five basket grades to Singapore from July 1. Under the amended methodology, Minas, Cinta, Widuri and the five basket grades would be normalized for delivery to Singapore, accounting for freight.

The underlying refined product prices used in the calculation of the gross product worth, or GPW, values will be based on the regional benchmark Mean of Platts Singapore refined product prices, as listed below, at the Asian market close. Benchmark CFR North Asia propane and butane spot prices will be normalized to Singapore in the GPW calculations.

Currently, Minas, Cinta, Widuri, the three basket grades and their GPWs, are normalized for delivery to Japan, accounting for freight and regional spot product prices.

Platts first updated the proposal to amend the MPP methodology in a subscriber note available at https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/051024-platts-updates-proposal-to-amend-indonesias-crude-oil-mpp-methodology

The updated proposal follows the extension of the feedback period, published in a subscriber note on March 14, of the initial proposal: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/031424-platts-extends-feedback-period-for-proposal-to-amend-indonesia-crude-oil-market-parity-prices-methodology

Platts first sought feedback on its proposal to amend Indonesia's crude oil MPP methodology in a subscriber note published on Feb. 2, which is available at https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/020224-platts-proposes-amending-indonesia-crude-oil-market-parity-prices-methodology

The change would better reflect the recent flow of Minas, Cinta and Widuri crude that is observed to be mainly processed by Southeast Asian refineries.

Platts will continue to report on any spot market transactions for the three grades, but this information will not be used in the daily calculation of the MPP.

The Platts MPP provides a calculation of the equivalent market value of a given crude based on the value of its typical refined product yield, subtracting costs for transport and the refining process, and adjusting the resulting value based on the trading levels of comparison crudes relative to their product yield values. The MPP model will ensure that the assessments capture both the inherent refining value of the crude as well as the broader oil market demand-supply fundamentals reflected in the price of the reference basket.

More details on the Platts MPP models and methodology are available at https://bit.ly/33GZehH.

Platts will continue to review the MPP models for Minas, Cinta and Widuri to ensure they continue to reflect prevailing market conditions and the quality of the crude grades.

The Minas, Cinta and Widuri MPP assessments are published in Platts Crude Oil Marketwire, Platts Oilgram Price Report, as well as on Platts Global Alert and Platts Crude Oil Alert pages 1250, 1805, 2210, 2211, 2216, 2217, 2244, 2245, 2264, 2265, 2280, 2281 and 2811 under the following price database codes:

Please send all feedback, comments or questions to Asia_Crude@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if they are not intended for publication by Platts for public viewing.

Platts will consider all comments received and will make those not marked as confidential available upon request.