Regulatory reform in the Indonesian Natural Gas Market

This paper analyses the problems and dilemmas Indonesia is facing in the upstream and downstream segments of the gas market and the remedies suggested and practiced in Indonesia to mitigate the problems. Indonesia is a country gifted with natural resources, including natural gas and oil. The exploitation of both of these energy resources has given rise to a large oil and gas industry and resulting in Indonesia becoming a leading world LNG producer. However, prospects for Indonesian gas are changing due to the country’s natural gas policy in 2001. Implications of this policy change have become more visible and demonstrate the difficulties Indonesia is facing with respect to the national management of this natural resource. Indonesia is in a way trapped: the country possesses a tremendous natural resource without being able to get the full benefit out of it for the benefit of the country’s economic prosperity.