Australian State Offers First Gas Exploration Permits Since 2018
(Bloomberg) -- The Australian state of Victoria is going ahead with its first petroleum exploration tenders in seven years in an attempt to head off looming gas supply risks as production from existing fields declines.
The tenders cover blocks in the Otway and Gippsland basins, with bids due Feb. 11, the Victorian government said in a statement. These areas have the most industry interest for exploration, it said.
The new projects will supply the domestic market, rather than being for export, and are part of a drive to meet rising electricity demand in the states of New South Wales, Victoria and South Australia.
Demand for the fossil fuel on the country’s populous east coast is expected to exceed supply from 2028, the Australian Energy Market Operator forecast earlier this year. That has led to calls to force liquefied natural gas exporters to help meet the shortfall by diverting non-contracted supply to the domestic market.
Developing new gas projects has spurred a backlash from environmental groups, who are worried about the climate impact, as well as seismic blasting, marine ecosystem damage and groundwater drawdown. Indigenous land owners have also legally challenged a project in New South Wales. Australia has pledged to cut greenhouse gases between 62% and 70% from 2005 levels by 2035, a goal it’s in danger of missing.
“Any new fossil fuel projects would undermine Victoria’s climate targets and the imperative to transition off gas,” Environment Victoria said in a statement.
Australian Energy Producers’ Victoria Director Peter Kos said the decision was “an essential first step in unlocking new domestic natural gas resources.” Around one-third of the state’s manufacturing energy needs are met by gas, according to the AEP.
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