Indonesia is evaluating its existing crude oil benchmarks and has identified the Banyu Urip grade as a possible replacement for Arjuna Indonesia Crude Price (ICP),  Ego Syahrial, director general of oil and gas at the energy ministry, said.

"Relating to Banyu Urip crude to be the benchmark crude to replace Arjuna, at this time it's still being evaluated by the technical team," Syahrial said.

The earliest decision could come in December, but not later than June 2018, Syahrial added.

In the meantime, Indonesia will keep its existing ICP formula unchanged.

Monthly ICPs for the key benchmark grades: Minas, Duri, Widuri, Cinta, Arjuna, Attaka, Belida and Senipah condensate are currently calculated by applying a differential to dated Brent quotes published by oil price agency S&P Global Platts.

Indonesia changed to its current pricing formula in July 2016, the first change to the formula since 2007.

While Indonesia has not explicitly stated how it calculates its monthly price differential to dated Brent, market participants say the differentials track the average of price quotes published by Platts and Japanese energy information provider, RIM Intelligence.

RIM Intelligence is the only oil pricing agency to publish a price for Banyu Urip crude. Platts did not immediately reply to a query on whether it would start a Banyu Urip price assessment.

The Banyu Urip Field, operated by ExxonMobil and located in the Cepu block in East Java, first began exporting cargoes in early 2015. Output from the project stands approximately at 200,000 barrels per day and is crucial to Indonesia, which faces declining production from aging wells.

"A switch from Arjuna makes sense because Banyu Urip has a bigger production," an analyst from a Western firm said.

The grade is also offered on the spot market more regularly than other benchmark Indonesian grades and has a broad customer base as refiners in Thailand, China, Singapore and Malaysia have purchased the grade, Thomson Reuters trade flows data shows.