* Regulator raises domestic gas supply, price concerns
* ACCC to issue final decision on Nov. 12
* Shell says still expects to complete deal in early 2016 (Adds details, quotes)
By Sonali Paul
MELBOURNE, Sept 17 (Reuters) - Australia's competitionwatchdog flagged concerns on Thursday that Royal Dutch Shell's proposed $70 billion takeover of BG Group maylessen gas supply competition in the country's east, and it putoff a final decision on the bid until November.
The acquisition, which would transform Shell into theworld's biggest liquefied natural gas (LNG) trader, stillrequires the green light from Australian and Chinese regulatorsbut is on track for completion in early 2016, according to theAnglo-Dutch oil and gas company.
The Australian Competition and Consumer Commission (ACCC)said a large number of market participants had expressed concernthat the takeover might lead Shell's Arrow Energy to sell itsgas into BG's Queensland Curtis liquefied natural gas plant(QCLNG) for export.
"If the proposed acquisition resulted in less supply of gasto the domestic market, therefore, this could substantiallylessen competition to supply domestic gas users and lead tohigher domestic prices and more restrictive contractual terms,"ACCC Chairman Rod Sims said in a statement.
The commission said it now planned to issue a final decisionon Nov. 12. Analysts at Nomura said the delay was not unusual,maintaining its "buy" rating on Shell.
"We see no immediate red flags for the Shell-BG deal," thebank said in a note.
Concerns that the deal could face regulatory hurdles anddelays as well as low oil prices have stoked investor anxiety inrecent months, with BG shares trading at a discount of around 10percent to Shell shares.
In response to the regulator's concern about gas sales byArrow Energy, which is 50-50 owned by Shell and PetroChina, Shell said BG already had enough gas to meet allits commitments.
"Arrow and QCLNG collaboration could assist the developmentof Arrow's undeveloped resources to potentially accelerateadditional gas supplies into both the domestic and exportmarket," Shell said in an emailed statement.
The takeover has already been cleared by EU, U.S. andBrazilian anti-trust authorities. It still needs approvals fromAustralia's Foreign Investment Review Board and China to goahead.
Some of Australia's biggest manufacturers fear Shell'stakeover of BG could worsen what they see as a lack ofcompetition in the country's eastern gas market, spurred bythree new LNG export plants, including BG's, in Queensland.
"This burst in demand for gas over a very short time framefor the LNG industry is effectively upending the east coast gasmarket," Sims said in a speech at a gas conference on Thursday,outlining the commission's preliminary impressions on a reviewof the east coast gas market due in April 2016.
He said the commission had evidence that after the LNGprojects were approved, many Australian industrial gas userswent from a market where they received three to five offers ofsupply on negotiable terms to a market where they received nooffers or only one true offer on inflexible terms.
Shell, Australian regulators and third parties will hold adiscussion over the next eight weeks to consider the issuesraised by the ACCC, a Shell spokesman said.
"We will continue working with the regulators in Australiato ensure a timely completion of the transaction." (Reporting by Sonali Paul, additional reporting by Ron Boussoin London; Editing by Mark Heinrich)
