Malaysia to change crude price marker soon; likely adopt Brent-sources

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* Petronas likely to drop Tapis APPI for Brent - sources

* Tapis APPI prices volatile, low liquidity

By Florence Tan

SINGAPORE, March 24 (Reuters) - Malaysian state oil firm Petronas is expected to announce a new pricing formula soon for its crude based primarily on European bellwether Brent, dropping a decade-old marker once commonly used to price Asia-Pacific crude, industry sources said on Thursday.

The move would homogenise and simplify a fragmented pricing structure in Asia, user of a third of global crude, extending Brent's influence as a cross-continent price marker beyond the 70 percent of world supplies that now use it as a reference.

A Reuters survey in August last year showed traders expected Brent to replace regional benchmarks such as the Asia Petroleum Price Index (APPI) and Indonesia Crude Price (ICP) by 2012.

Petronas was studying late last year the use of several price references including dated Brent and Tapis assessments from pricing agencies such as Platts and RIM.

It remained unclear if the new formula would include other price markers, the sources said.

The APPI is used to price more than 1 million barrels a day of crude produced in Malaysia, Brunei and Vietnam.

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PRICE VOLATILITY

Local markers suffer from low liquidity due to production decline at mature fields, with prices frequently diverging from global benchmarks, traders and analysts say.

Australian crude and condensates are now sold on dated Brent after gradually moving away from APPI in 2009.

Output of Malaysian light sweet benchmark Tapis has fallen to around 190,000 barrels per day (bpd) from a peak of more than 350,000 bpd in the 1990s. Most of the output is kept for refining by equity producers ExxonMobil and national oil company Petronas, leaving little for the spot market.

Hong Kong-based Seapac Services Ltd, manager of the APPI, has twice tweaked the methodology used in assessing Tapis prices to curb volatility.

The company narrowed the range of prices used in the assessments in May last year and had to set a price band against Brent. (Editing by Jo Winterbottom)

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