Viva advances LNG project in test of Victoria’s appetite for gas

Viva Energy has submitted an updated environmental report for a LNG import terminal at Geelong, testing the Victorian government’s potential softening attitude towards gas projects.

Viva Refinery Geelong executive general manager Dale Cooper. Picture: Alison Wynd

Viva Energy has submitted updated environmental studies to secure Victorian governmental approval for its proposed LNG import terminal.

It’s an application which could test what industry sources say has been a recent softening of Labor’s attitude towards gas after years of opposition to the fuel source.

If Viva secures support from the Victorian government, it could emerge as a viable solution to a looming eastern seaboard gas shortfall.

The traditional source of gas supplies to the country’s east coast is rapidly being depleted. Supplies from the Longford facility could be exhausted by 2028 leaving Victoria, the most gas-dependent state, facing an economic and social catastrophe.

Viva had proposed extending a pier at the site of the Geelong refinery to moor a vessel capable of receiving LNG exports which could in turn be used to supply Victorian homes and businesses during peak demand periods.

But the then Daniel Andrews-led Labor government in 2023 said it would demand a so-called environment effects statement (EES) to ascertain any potential adverse impacts.

The Australian understands the findings have in recent days been submitted by Viva to the government. Viva Energy declined to comment.

If approval is granted, Viva would make a final investment decision in 2025 for a facility to be operational by early 2028.

Viva had proposed extending a pier at the site of Geelong refinery.

Such a facility would go a long way to resolving the worst of the eastern seaboard supply shortage that the Australian Competition and Consumer Commission last week said would emerge in 2027 when ExxonMobil and Woodside’s Longford facility is depleted.

However, industry sources said Longford was confident it could maintain production until 2028. Beyond 2028, Australia’s eastern seaboard faces an economically damaging shortfall that the industry insists will force authorities to choose between preserving businesses or cutting heating from homes. Shutting businesses off from gas would force operations to shutter for weeks, but curtailing gas for heating would risk the welfare of vulnerable households.

Australia’s gas industry has urged the federal government and states to approve new developments but many proposed fields await regulatory approvals.

Victoria has a moratorium on onshore gas fracking, severely limiting its capacity to do anything apart from permitting LNG imports or rely on other states.

Queensland is more open to approving new developments but much of the existing pipelines are operating at capacity and even increased production is unlikely to have much, if any, effect.

Andrew Forrest’s Squadron Energy is moving ahead with its own LNG import terminal in NSW but the project has yet to confirm any customers – and that has stoked concern about the viability of the facility to resolve Victoria’s woes.

Facing such alarm, sources said the Victorian government had softened its historical opposition towards gas due to a recognition of the precarious nature of the supplies.

While the softening may yet be overruled by ministers, the reversal in attitude by senior figures is in sharp contrast to recent years.

In 2021 the Andrews government rejected a bid by AGL Energy to develop its own LNG import terminal, citing adverse environmental impacts to a nearby wetland of international significance.

Unable to boost supplies, Victoria has recently moved to constrain demand growth. Victoria in 2022 unveiled a series of incentives to encourage two million people who used gas at home or in their businesses to shift to other energy sources.

The measures are widely considered marginal, especially in the long term when Australia’s reliance on gas is expected to increase.

Victoria has introduced Australia’s most aggressive emissions reduction plan, enshrining in law limits on the use of coal by 2035.

The plan has drawn alarm from manufacturers which insist they are unable to switch to renewables. Much of the country’s energy industry has said the plan will require plentiful gas supplies to be the backstop when the sun is not shining and the wind is not blowing.