Plan to build Victoria’s first gas-import terminal at risk of delays

A plan to build Victoria’s first gas-import terminal in Corio Bay is at risk of further delays amid concerns about gas supply shortfalls.

The Andrews government has requested more detail on the project’s environmental impact, which could delay Viva Energy’s final investment decision.

Viva Energy, the owner of the Geelong oil refinery, had proposed extending a pier where it would park a vessel capable of receiving shipments of liquefied natural gas (LNG) from other parts of Australia or overseas and turning it back into vapour.

The company had previously intended to make a final investment decision on the LNG project last year with an aim to start imports by the winter of 2024.

But following the project’s drawn-out environment approval process, Victorian Planning Minister Sonya Kilkenny said the government still needed further information about the potential environmental impact.

Environmentalists and community members have argued Viva’s project is too close to residential areas and fear it will entrench the state’s use of fossil fuels.

Environmental Victoria chief executive Jono La Nauze welcomed the minister’s request for more information but said she should veto the project. Conservation groups, including Environment Victoria, insist that 2026 provides ample time for the state government to develop a strategy to reduce gas demand, such as switching appliances from gas to electric and prohibiting new residential gas connections rather than lifting supply.

Gas production from the 50-year-old Bass Strait fields is rapidly drying up. The Australian Energy Market Operator and national consumer watchdog have warned that southern states are in danger of winter gas shortages in coming years.

The Australian Competition and Consumer Commission (ACCC) describes the gas outlook as “finely balanced” and forecasts shortfall risks to intensify across the eastern seaboard from 2026, partly driven by LNG exporters delivering less gas into the domestic market and sending more offshore.

Viva’s proposal in Geelong to start importing liquefied natural gas (LNG) is backed by Japan’s Mitsui, France’s Engie, and Swiss trading giant Vitol.

The government’s ruling comes after the state government in 2021 knocked back utilities giant AGL’s proposal to build a $250 million LNG terminal at Crib Point.

Mining billionaire Andrew “Twiggy” Forrest is progressing plans to build an LNG import terminal at Port Kembla in NSW through his privately owned Squadron Energy.