Petronas proposes new Asian crude benchmark: sources

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Malaysia state energy firm Petronas is in talks with producers, buyers and traders on setting up a new mechanism to price oil produced in the Asia-Pacific to better reflect regional supply and demand, sources familiar with the matter said.

The plan comes two years after the second largest oil producer in Southeast Asia switched to dated Brent pricing after dropping a more volatile Asian price marker. That move also prompted Vietnam and Brunei to change to the dated Brent benchmark published by pricing agency Platts.

Petronas is studying several options including working with an exchange in Singapore to start a futures contract based on four Malaysian crude grades - Labuan, Miri, Kikeh and Kimanis, one source said.

"It's more to reflect regional supply and demand more accurately," a second source said. "Dated Brent sometimes can be detached from the regional market."

The four Malaysian grades will have a total capacity of just over 300,000 barrels per day (bpd) next year when Kimanis comes onstream and this could rise to nearly 400,000 bpd in 2016 when a new field starts operation.

Dated Brent is underpinned by a dwindling pool of four North Sea crudes - Brent, Forties, Oseberg and Ekofisk (BFOE) - and often spikes whenever the main crude stream Forties suffers an outage. The marker weakens whenever demand falls in Europe such as during refinery maintenance seasons.

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