The topic of this thesis is about the regulatory reform of the Indonesian oil and gas industry, where analyzing the application of the introduction of the competitive forces in the reform is the aim of this thesis. In addition the general model for introducing competition in a vertically integrated network industry, which includes unbundling the incumbent, mandated non-discriminatory access and access pricing, limiting an incumbent's market power in the transitional period and managing social obligation, as well as the choice between vertical separation and vertical integration with liberalization forms the basic of analysis in this thesis.
To achieve the objective, this thesis first discusses the theoretical background for introducing competition in a vertically integrated network industry and also the evidence of the economic impacts which arise from introducing competitive forces in the vertically integrated industry such as the natural gas, electricity and telecoms industries. Then is followed by a discussion of the Indonesian oil and gas industry before and after the reform, and the application of the introduction competitive forces in the Indonesian oil and gas industry reform. Some early indicators, as the result of the reform, that can give a positive sign of Indonesian oil and gas reform are also presented at the end of the discussion.
This thesis concludes that, in general Indonesia follows the general model or prescription for introducing competition in a vertically integrated network industry with its oil and gas industry regulatory reform. In addition, the establishment of upstream and downstream regulatory body is one of the key tools in Indonesian oil and gas reform especially for unbundling the incumbent and liberalizing downstream sector activities. Furthermore, this thesis also finds that in its early stage of reform, there are indicators that can give a positive sign for the direction of Indonesian oil and gas reform in the future.