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, after the Andrews government requested more detail on the project’s environmental impact.
Viva Energy – owner of the Geelong oil refinery – 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 turn it back into vapour.
Viva Energy’s Geelong oil refinery.Credit:
The company announced on Wednesday it would likely delay a final investment decision on the project after a request from Victorian Planning Minister Sonya Kilkenny.
Viva had previously intended to make a final investment decision on the LNG project last year with an aim to start imports by winter of 2024.
But following the project’s drawn-out environment approval process, Kilkenny said the government still needed further information about the potential environmental impact.
“I have been left with no choice but to advise Viva that an additional environment effects statement (EES) will need to be prepared,” Kilkenny told parliament on Wednesday.
“It is then up to the proponent whether it wishes to embark on that further environment effects statement, and I will leave that entirely with the proponent in this case.”
On Wednesday, Viva said Kilkenny’s request for more information about the environmental and cultural heritage impact of the project would lead to delays.
“The time frame to final investment decision for the project is expected to be delayed,” a spokesman said.
However, the company added it remained confident about the long-term demand profile underpinning the project, given regulatory forecasts that indicated a need for gas imports to meet Victoria’s natural gas needs in coming years.
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.
Environment Victoria chief executive Jono La Nauze welcomed the minister’s request for more information, but said she should veto the project.
“Viva Energy has had years to get their proposal right and have failed to address considerable community concerns. They don’t deserve another shot,” La Nauze said.
Gas production from the 50-year-old Bass Strait fields is rapidly drying up and the Australian Energy Market Operator and national consumer watchdog have warned that southern states are in danger of winter gas shortages in coming years, prompting fears of further price rises for homes and businesses that use the fuel for heating, cooking, energy or industrial processes.
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.
Conservation groups, including Environment Victoria, however, insist that 2026 provides ample time for the state government to develop a strategy focused on reducing gas demand, such as switching appliances from gas to electric and prohibiting new residential gas connections, rather than lifting supply.
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, citing “unacceptable effects on the environment in Western Port, which is listed as a Ramsar wetland of international significance”.
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.
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