The state of Victoria is tendering gas exploration licenses for the first time since 2018 in a bid to avoid a shortage, despite efforts to reduce the consumption of hydrocarbons.
In an announcement on its website, the state government invited bids for permits in two areas, the Otway Basin and the Gippsland Basin.
“Applications for the offshore block VIC/25-1 that use existing seismic data and do not propose new seismic testing will be preferred,” the Victorian government noted in its announcement, in tune with a broader government move to protect marine life against further seismic testing. That push has discouraged oil and gas exploration in recent years.
Victoria is Australia’s biggest natural gas consumer. Last year, the state accounted for as much as 62% of the country’s total residential gas use, ABC reported last month. Because of surging LNG exports, however, domestic supply has thinned, prompting a number of warnings about the possibility of a shortage down the road. The warning spurred authorities into action, culminating in a mechanism that requires gas producers and exporters to set aside a certain amount of gas for the domestic market.
According to official data, Victoria, which is also a major gas producer, makes enough of the fuel to cover its demand, not least because this demand has been on the decline. “Victorian gas consumption has been decreasing, due to a combination of electrification of residential loads, cost of living pressures, and declining commercial and industrial gas use,” the Australian Energy Market Operator said earlier this year.
Yet it was the AEMO again that warned the balance between supply and demand was about to flip into a deficit by 2029 because of a natural decline in gas production, notably in the Gippsland Basin. The first step to tackle the problem was the state government’s approval of a gas import terminal. The second, it appears, is the launch of a gas exploration tender to tap new resources.
By Irina Slav for Oilprice.com
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