ACCC releases issues paper for the East Coast Gas Inquiry

4 June 2015

 The ACCC today released an issues paper for the East Coast Gas Inquiry.

The issues paper seeks information and responses from industry participants and other interested parties to assist the ACCC in its inquiry into the east Coast gas market.

Key issues in the paper include:

  • Impacts of LNG export gas on gas flows and the domestic gas industry
  • Rising domestic gas prices and changes in non-price terms
  • Negotiation processes
  • Access to essential infrastructure, including gas processing
  • Availability of information
  • Pipeline development and access to capacity

ACCC Chairman Rod Sims said, “Since the inquiry commenced on 13 April 2015, the ACCC has been engaging broadly to hear firsthand issues and concerns of participants in the East Coast gas market. Gas users, for example, have suggested that there are difficulties in gaining offers to supply gas, and they feel that this is evidence of a non-competitive market.”

"Conscious of the reviews to date, the ACCC is seeking specific examples of conduct, negotiations and market practices that show the operation of the market during this time of transition. These could go to issues such as difficulties in obtaining gas, deteriorating non-price terms and conditions, or increases in price.”

"The issues paper forms part of the ACCC inquiry process. Other tools include continuing consultation with industry, conducting public and private hearings, and modelling of the East Coast gas system.  The ACCC will also exercise compulsory information powers as required to access information not available to other inquiries."

Submissions are due by 2 July 2015, and can be made to

Further information on the inquiry and the issues paper is available at: East Coast gas inquiry 2015.


The inquiry

The ACCC East Coast Gas Inquiry inquiry will consider the competitiveness of wholesale gas prices and the structure of the upstream, processing, transportation, storage and marketing segments of the gas industry. It commenced on 13 April 2015 in accordance with terms of reference, available on the ACCC website. The inquiry is due to report to the Government by April 2016.

The issues paper

The issues paper comprehensively covers the upstream gas sector encompassing exploration, production, processing, supply, transportation and storage.

The ACCC is seeking specific examples of market structures, key factors, or behaviour by market participants that may:

  • affect the incentives or ability of parties to supply gas
  • affect the ability or willingness of parties to compete in the provision of a range of services across the gas value chain
  • demonstrate whether the outcomes observed in the domestic gas industry are driven by broader changes in the domestic gas industry, such as rising production costs or export price linkages, or are indicative of an increase in the market power of domestic gas suppliers
  • demonstrate possible anti-competitive conduct.

Specific issues explored in the paper

The impact of the LNG developments on the gas industry

  • For the LNG projects under development in Eastern Australia to operate at capacity, gas production will need to almost triple from a current level of around 700 petajoules to almost 2000 petajoules later this decade.
  • Gas supply is being increasingly directed to meet this demand. The effects of these changes, and uncertainties about the supply and demand dynamics in Eastern Australia, appear to be flowing through to domestic negotiations for the supply of gas.
  • The ACCC is seeking to understand whether changes vary by location and if these affects are likely to be temporary and transitional or sustained and transformational for market participants.

Rising domestic gas prices, changes in non-price terms and negotiation processes

  • Domestic gas users have raised concerns about rapidly increasing gas prices, deteriorating non-price terms and conditions and difficulties in eliciting reasonable gas supply offers.
  • Higher prices and difficulties experienced by gas users in negotiating gas supply agreements may be due to domestic users being exposed to international prices, producers not having un-contracted gas available for supply, changes in costs of production and transport, or may reflect risks and uncertainties in an industry that is undergoing considerable change.
  • The ACCC is seeking information about the key factors currently affecting the price of gas in Eastern Australia and how changes in gas contracting and negotiation behaviours are affecting industry participants.

Access to essential infrastructure, including gas processing

  • Key to ensuring that gas supply reacts to increasing gas demand and prices is the ability for developers of new gas supplies to efficiently bring their gas to market. While it may be economic to develop stand-alone infrastructure for some gas developments, the ability to access existing infrastructure on reasonable terms has the potential to facilitate the development of a wider range of gas resources and to lower prices to end users.
  • The ACCC is seeking information and examples where access to essential gas infrastructure is limiting the ability of the gas supply chain to respond efficiently to increasing demand and prices.

Availability of information

  • An important characteristic of a well-functioning competitive market is that participants have ready access to the information they require to make informed and efficient decisions about their behaviour in that market.  A consistent criticism from gas users is that there is insufficient information available to make either short or long-term gas buying decisions relevant to their business.  In addition, the market lacks the trading arrangements and futures markets that provide the opportunity for both gas suppliers and users to manage future price and supply risks.
  • The ACCC is seeking the views of gas market participants on what further information is needed to improve market outcomes and how the market should be developed to ensure it operates more efficiently for both gas suppliers and gas users in the future.

Pipeline development and access to capacity

  • With the increased interconnection of transmission pipelines in Eastern Australia, along with greater fluctuations in demand driven by LNG projects, the demand for transportation services is changing. A broader range of services including forward haul, backhaul, bi-directional services and a range of on-the-day services are now being requested by some users.

The ACCC is asking whether, in this environment, pipelines are being developed or enhanced to meet producer and shipper needs and also whether capacity is being made available when it is required.

Release number: 
MR 96/15
ACCC Infocentre: 

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