Indonesian natural gas policy reform

This paper investigates the challenge to improve Indonesia’s domestic gas market and the remedy to alleviate the problems. Gifted with abundant natural resources, primary oil, and natural gas, Indonesia became a leading world liquid natural gas (LNG) producer. However, since 2001 there has been a shifting paradigm in gas policy from export – oriented to domestic market development. The implication is that Indonesia needs to find the balance between producer and consumer interests and at the same time has to deal with the geographical challenge of the country’s archipelago. The new paradigm also requires that natural resources should promote economic growth instead of state revenue, therefore Indonesia must reform its gas policy to fulfil the multi objective of gas utilisation. This paper suggests ways to overcome these dilemmas.