EnergyAustralia is conducting a competitive bidding process for the sale of Iona, with APA tipped as the most likely successful party, but ACCC's market inquiries to date have raised issues, and the body wants to conduct further investigations.

"The ACCC's preliminary view is that the proposed acquisition may raise competition concerns in the supply of gas storage services to customers in Victoria. Following the proposed acquisition, APA would own most of the options for customers of gas storage in Victoria," ACCC chairman Rod Sims said on Friday.

With the potential exception of seeking flexible contracts with producers, there would be very few remaining independent alternative storage options for customers in Victoria.

The ACCC is also examining whether APA's long term incentives to invest in the Victorian direct transmission system would be distorted if the pipeline company took ownership of Iona.

The VDTS, which APA has owned since its purchase of GasNet Australia in 2006, is Victoria's primary gas transmission network, and also supplies gas to NSW via an interconnecter with the Moomba-Sydney pipeline at Culcairn and to South Australia via APA's SEA Gas pipeline at Port Campbell.

The average annual throughput of 2030km pipeline network is in excess of 200 PJ per annum.

The ACCC has also identified potential concerns arising from the combination of Iona and APA's large existing portfolio of gas storage and transmission infrastructure, both in Victoria and throughout the east coast.

"The proposed acquisition, by giving APA access to more complete information along the supply chain, may allow APA to increase transmission and storage charges as compared to an alternative acquirer of Iona," Sims said.

"The same access to information may also place APA in an advantageous position compared to other market participants competing for the development of pipeline augmentations.

"The addition of Iona to APA's infrastructure portfolio may also increase the ability and incentive for APA to leverage its existing strong position in gas pipelines into other markets, such as gas storage or into the development of new pipelines."

Sims said APA did not initially notify the ACCC of the proposed acquisition or seek ACCC approval, however the regulator moved quickly to assess the issues.

"The ACCC's preliminary decision date was scheduled to accommodate the EnergyAustralia bidding process. However, based on the significant concerns raised by market participants in relation to the proposed acquisition, the ACCC's decision is that a statement of issues is necessary," Sims said.

That could take more than a month to prepare, which means if EnergyAustralia wants to sell to APA it will need to amend its tender process and delay the sale.

APA is Australia's largest natural gas infrastructure business, owning an extensive portfolio across mainland Australia.

EnergyAustralia is owned by Hong Kong-based CLP Group.

Located adjacent to the Otway gas plant, Iona is connected to the nearby Minerva gas plant via the SEA Gas pipeline.

The plant includes two gas processing trains and compression equipment to process gas from the storage reservoirs and the offshore Casino development.

APA is widely viewed as Iona's most logical buyer.

The $10 billion listed pipeline owner owns and operates the SEA Gas pipeline, which transports gas from Iona into the South Australian market, and the South West pipeline which takes gas into the Victorian market.