The House of Representatives, through a dramatic voting process, agreed on early Saturday to revise the 2012 state budget, which includes a contentious article 7 paragraph 6A allowing the government to increase subsidized fuel prices within six months if the Indonesian Crude Price (ICP) is 15 percent higher than assumed in the state budget.
According to government data, the ICP in October stood at $109.25 per barrel, November at $112.94, December at $110.70, January at $115.90, February at $122.17 and March at $128.
This means the current six-month ICP average stands at $116.66 per barrel.
– The average Indonesian Crude Price (ICP) for December 2011 was US$110.7 per barrel, declined from US$112.52 per barrel in the previous month.
The Sweet Light Crude (SLC) also fell to US$112.52 per barrel from previous month’s US$116.04 per barrel.
Ministry of Energy & Mineral Resources assessed the price decline was in line with crude oil price in international market, which was pressured by some factors such as production quota rise by OPEC members, global negative growth sentiment due to European debt crisis, the acceleration of oil production in Lybia and the dollar appreciation.
“For Asia and Pacific region, the decline in crude oil price was due to the decline in oil consumption by China along with the its economic slowdown,” OPEC said
The ICP is determined by Pertamina, based on moving average spot price of a basket of five internationally traded crudes:
* Minas (Indonesia)
* Tapis (Malaysia)
* Gippsland (Australia)
* Dubai (UAE)
In some cases ICP is used as index in long term LNG contracts in East Asia.
Indonesia can increase the price of subsidized fuel as early as next month if the Indonesian Crude Price hits $135 per barrel in April, ministers said on Sunday (April 1st. 2012)
Deputy Minister for Energy and Mineral Resources Widjajono Partowidagdo said that according to his calculation, if April’s ICP rises above $135 per barrel, the six-month ICP average will go beyond $120.75.
However, oil and gas expert Kurtubi says that based on his estimates of how world oil prices fluctuate, a price hike next month was unlikely. “The government will increase the price by July 1, at the soonest,” said the Center for Petroleum and Energy Economic Studies expert.