Crude Prices Impact On Import Parity Pricing

By: PNG Business News February 17, 2022

Photo: Napa Napa Oil Refinery in Port Moresby

Puma Energy PNG, the country's largest fuel and energy provider, claims that changes in crude prices have a direct influence on energy market import parity pricing.

Import parity pricing is a pricing mechanism used by goods providers to establish prices for their domestic sales to domestic consumers based on the opportunity cost of a unit of imported replacement products.

The rise and fall of oil prices, according to Hulala Tokome, the country manager for Puma Energy, are being felt all across the world.

Because petroleum and diesel supplies are nearing seasonal lows, he said the physical market is tight. OPEC continues to underperform, and constrained supply is being exacerbated by crude output limitations.

“Decline in COVID-19 cases as well leading to strong pent up demand and crude production below expectations will continue to drive prices higher in the medium term,” said Mr Tokome.

“Fuel prices surely do have an impact on any business operation.”

According to him, the average MOPS (Mean of Platts Singapore) price has a one-month lag.

As a result, the market's IPP (import Parity Pricing) is directly affected by the increase and decrease of oil prices.

Mr Tokome confirmed that the country's gasoline and energy supply remains unaffected.

“Our supply chain is working very well with fuel and energy supplies continue to be maintained in all regions of the country,” he said.


Reference: Tom, Patrick. Post-Courier (14 February 2022). “Crude Prices Impact On Import Parity Pricing”. 

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