Viva Energy’s gas import terminal in Geelong facing more delays
Viva Energy is facing more delays for its proposed gas import terminal at Geelong, adding to fears over energy rationing along the east coast.
Viva Energy is facing more delays for its proposed gas import terminal at Geelong, adding to fears over energy rationing along the east coast, after the Victorian government requested more details before deciding whether to approve the project.
Viva on Wednesday confirmed the latest setback, saying it had received a request from Victorian Planning Minister Sonya Kilkenny for additional information relating to the project’s expected impact on the marine environment, air quality, noise and Aboriginal cultural heritage.
The company said it would review the request before determining the likely impact on project timing, but noted a final investment decision was expected to be further delayed.
Viva had previously intended to make an investment decision on the LNG import terminal project last year with an aim to start imports by the winter of 2024.
The Geelong project is already a year behind schedule, with the Australian Competition and Consumer Commission recently indicating that if a decision was made to proceed with the terminal, it could be importing gas by the winter of 2025, “around 12 months later than previously expected’’.
Officials have warned households in NSW, Victoria, the ACT and Tasmania could be forced to cut their gas use this winter due to an ongoing squeeze as production dries up from offshore fields and amid delays bringing on volumes from LNG import plants.
While Australia is among the world’s largest gas exporters, a lack of supplies left available for domestic use have forced the nation into the unusual position of having to develop import plants to ensure enough gas can be sourced for local businesses.
On Wednesday Viva declined to put a revised timeline against the investment go-ahead process in light of the latest setback, or be drawn on whether the ACCC’s forecast was still achievable.
“Viva Energy is currently assessing the requested supplemental process, together with the report of the Independent Advisory Committee, which will be published shortly,” the company said in a statement.
“The IAC report follows the completion of the extensive Environmental Effects Statement process.
“The EES identified the strength of the proposed location, in an existing port and industrial zone with access to a highly skilled manufacturing workforce. It also highlighted synergies with the existing refinery operation in relation to water use and proximity to the Victorian gas transmission system, negating the need for extensive pipelines and other onshore infrastructure.
“Viva Energy will review the supplemental process and the IAC report to determine next steps, including to assess the likely impact to timing for the project; noting that the time frame to final investment decision for the project is expected to be delayed.”
In February Viva boss Scott Wyatt said demand from customers would help determine whether the gas terminal was feasible, and those customers would need to take into account the impact of the federal government’s approach to longer-term intervention in the domestic gas market.
The government’s current measures include a 12-month $12 per gigajoule price cap on new domestic gas supplies, implemented last December, with a mandatory code of conduct to be implemented which will include a “reasonable pricing” clause.
Australia’s east coast gas market has been crimped in the past few years due to Queensland LNG exports, onshore development restrictions, falling Bass Strait production, and the increasing cost of bringing new domestic supplies to market.
Viva intends to be the owner of the gas terminal infrastructure, generating revenue from customers seeking to import gas into the market through its terminal.
It is not yet known whether the government’s long-term price controls will apply to gas sold via an LNG import terminal or just supplies that are sold by gas producers.
The federal government has been consulting on the next steps in its intervention plans and aims to finalise legislation in April.
Earlier this week a report from consulting firm EnergyQuest said the government’s current and planned rules governing the sale of domestic gas had spooked investors, and in the case of LNG import terminals had effectively put them on ice for now.
The report also says the business case for LNG imports has “evaporated for the time being’’, with the uncertainty around government intervention in gas prices making investors wary.
It followed a recent decision by South Korean company EPIK to shelve its plans for a gas import terminal at Newcastle in NSW.
However, the ACCC continues to warn that gas shortages on Australia’s east coast remain possible this year.
Viva on Wednesday said it remained confident about the “long-term demand profile underpinning the (Geelong) project, given the regulatory forecasts that indicate a need for gas imports to supply Victoria’s natural gas supply in the coming years”.
the project continues to face strong opposition from environmentalists and local community groups, who argue it is too close to residential areas and would be harmful to marine environments.
Environment Victoria chief executive Jono La Nauze welcomed the state government’s decision to scrutinise Viva’s plans in greater detail, but wants the project to be rejected altogether.
“Viva Energy has had years to get their proposal right and have failed to address considerable community concerns. They don’t deserve another shot,” he said.
“The Andrews government just won an election promising to take much greater action on climate change – but Viva’s proposal is completely at odds with reducing emissions. If it ever goes ahead this gas import terminal could import fracked gas, undermining Victoria’s ban on the practice.”
Viva shares closed 0.3 per cent higher on Wednesday at $3.04.
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