The arrival of the major LNG projects has “upended” the east coast gas market, most likely permanently, says Australian Competition and Consumer Commission chairman Rod Sims.

Mr Sims made the comments, based on early insights from the consumer watchdog’s inquiry into the east coast gas market, in a speech in Sydney.

“As we all know, QCLNG has commenced production from both its trains, and GLNG and APLNG are ramping up their initial trains towards production. Already LNG demand equals the total domestic demand of the east coast gas market,” he said.

“By the time all six trains are operating, east coast gas production will need to have tripled to meet both LNG and domestic demand from industrial, commercial and household customers and remaining gas-powered generation.”

Mr Sims said the burst in demand for gas over a very short time frame for the LNG industry has effectively upended the east coast gas market.

“To meet these changing market dynamics, transmission pipelines are being interconnected and flows being made bi-directional,” he said.

“In other words, the transmission network is being prepared to enable some gas to flow north out of southern production areas and into Queensland.”

Mr Sims said while there was originally a strong presumption that coal seam gas with some incremental supply from the Cooper Basin would largely supply LNG demand, the east coast now seemed to be one of the few gas markets in the world which is living under the shadow of supply uncertainty.

Mr Sims also noted that user complaints about a dearth of offers for the supply of gas in recent years have largely been proven to be true.

“We have evidence that many domestic users went from a market where they received, say, three to five offers of supply on terms that were able to be negotiated, to one where they received zero or one true offer, on largely take-it-or-leave-it, inflexible terms,” he said.

Mr Sims said that the ACCC’s inquiry will consider if the mechanisms available to market participants to manage risks around supply, demand and price are adequate in this new environment.

“The inquiry is looking across the gas value chain and will be making recommendations to government on whether significant market power and competition concerns exist in the east coast market, and how markets can become more efficient,” he said.

Most countries have  a reservation policy but not stupid Australia. But maybe with that donkey MacFarlane gone things will change.