A proposed $800 million gas pipeline from the Northern Territory to the east coast is an "ill-conceived pipe dream" that aims to deliver high-cost gas into an oversaturated market, a report says.
The pipeline lacks customers, the United States-based Institute for Energy Economics and Financial Analysis argued in the report published on Thursday.
"When this project was first proposed a couple of years ago, it probably wasn't such a silly idea," but markets have rapidly changed, author Bruce Robertson told AAP.
He said the global LNG market had been estimated to be oversupplied by 26 per cent and supply was increasing, while fallen prices weren't likely to recover until 2030 or beyond.
Developing the NT's onshore shale gas industry now would be a mistake, he said, as it would be expensive to produce and the east coast gas market was already operating at a loss.
But Jemena rejected the report, saying there's an acknowledged demand for more gas on the east coast, and the pipeline is intended for the domestic market.
"This is a long-term investment, a 50-year investment ... on international markets, which is not our primary market right now, there will always be shortages and gluts. It's a cyclical industry," said spokesman Ian Israelsohn.
So far the only customer is the NT government-owned Power & Water Corporation, which contracted to buy too much gas and was now looking to on-sell it, making the pipeline "a bad decision being promoted to cover up another bad decision", Mr Robertson said.
Mr Israelsohn said Jemena was in talks with other customers and was confident that by the time gas flows in 2018 it would be close to or fully contracted.
The report said the Chinese and Singaporean governments, which own Jemena, had been gifted by the NT the right to run an unregulated natural monopoly, and would reap most of the profits.
But NT Mines and Energy Minister David Tollner denied this was the case.
"He says there's no regulation of pipelines in the NT, that is just complete and utter bunkum. He says there's Territory money going into it and there's no benefit to the Territory, that is bunkum," he said.
"His assumptions are completely wrong. There is no fact or merit in anything I've heard him say publicly."
THE NORTH-EAST GAS INTERCONNECTOR (NEGI):
* 623 kilometres from Tennant Creek to Mount Isa
* First gas is expected to flow to the east coast mid-2018
* Contract was awarded to Jemena, owned by Chinese and Singaporean governments (60 per cent via State Grid Corporation of China and 40 per cent to Singapore Power)
* Australia's east coast onshore gas export industry is expensive and running at a loss
* Power & Water Corporation, the only customer so far, has a 10-year deal beginning in 2018
* Jemena expects 100 local jobs during the early stages, out of a total of up to 900
(SOURCE: IEEFA report, Pipe Dream: A Financial Analysis of the Northern Pipeline; Jemena)
