Platts opens review of Indonesian crude oil Market Parity Prices

Following feedback from market participants and the shift in trade dynamics, S&P Global Commodity Insights is opening a formal review of the methodology it uses to calculate the Market Parity Prices for Indonesian crude oil grades.

Platts amended the methodology for its assessments of Indonesia's Minas crude oil to the MPP model from the Market on Close assessment methodology from Jan. 2, 2020, in response to changing physical market conditions: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/010220-platts-amends-indonesias-minas-crude-assessment-methodology

Similar amendments were made to the assessments of Cinta and Widuri crude oil from July 1, 2020:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/070120-platts-amends-indonesias-cinta-widuri-crude-assessment-methodology

The MPP calculation for each grade is based on its Gross Product Worth values benchmarked to a reference basket of relevant crude grades that are actively traded in the regional spot market.

Platts MPPs provide 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 reference crude grades relative to their product yield values.

Currently, the reference grades used in the Indonesian MPP models include Malaysia's Kimanis, Russia's ESPO and Abu Dhabi's Murban.

The weightage of these reference grades to calculate the Indonesian MPPs was most recently amended in April 1, 2022 following Russia's invasion of Ukraine:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/032822-s-p-global-to-cut-weighting-of-russian-espo-crude-in-indonesian-crudes-market-parity-price-models

The three basket grades, the Indonesian grades and their respective GPW values are currently normalized for delivery to Japan, accounting for freight and regional spot product prices.

The MPP model, which Platts also uses to assess certain illiquid crude oil grades from West Africa, India and Venezuela, ensures that the assessment captures 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.

As part of this review, Platts is inviting feedback from stakeholders on possible amendments to the model, including changes to the underlying refinery model and GPW yields used in the calculations; addition of new reference grades; as well as updates to transportation and processing cost for the various grades.

The daily MPPs and monthly averages for the three grades are published in Platts Crude Oil Marketwire, Platts Oilgram Price Report and on Platts Global Alert and Platts Crude Oil Alert pages 0842, 1250, 1805, 2210, 2211, 2216, 2217, 2244, 2245, 2264, 2265, 2280, 2281, 2810 and 2811 under the following codes:

Assessment Daily Price Monthly Average

Minas PCABO00 (Singapore close), AAPAZ00 (London close) AAFZH00 (Singapore close), AAPAZ03 (London close)

Cinta PCAAX00 (Singapore close), AAPBJ00 (London close) AAFZC00 (Singapore close), AAPBJ03 (London close)

Widuri PCAFE00 (Singapore close), AAPBN00 (London close) PCAFE03 (Singapore close), AAPBN03 (London close)

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

Please send all comments or questions to Asia_Crude@spglobal.com and pricegroup@spglobal.com by Dec. 29, 2023.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.