Gas Exploration Fees Soar 300 Percent in Victoria as Supply Dwindles

Australian Energy Producers noted Victoria ‘urgently needs more gas supply.’

Flames of a lit burner of a gas stove in Dortmund, western Germany, on Oct. 14, 2021. Ina Fassbender/AFP via Getty Images

The Victorian Labor government has hiked gas exploration fees dramatically in the past two years despite the state facing a potential gas shortage in the future.

Australian Energy Producers drew attention to the fee rise, noting that the government had promised to spearhead gas projects.

“Soaring fee increases for exploration are a massive hit to smaller companies that will drive away investment at a time when Victoria urgently needs more gas supply,” the industry group said in a post to LinkedIn.

“Only weeks ago, the Victorian government promised to fast-track new gas projects in its Economic Growth Statement.”

The peak industry body for exploration and production of gas and oil also suggested that the government should be removing obstacles for accessing gas.

“If the Victorian government is serious about ensuring reliable and affordable energy for homes and businesses, it should be removing barriers to gas exploration, not adding to them.

The Epoch Times found that the annual fee for an exploration permit under Petroleum Regulations 2021 has soared 347 percent from $7,645 (US$4,697) in 2022-2023 to $34,195 in the 2024-2025 financial year.

Further, a new exploration permit has soared from $10,703 in 2022-2023 to $47,879.60 in 2024-2025, also a 347 percent increase.

Call to Abandon ‘Mad’ Plan to Replace Gas Appliances

Meanwhile, the Gas Appliance Manufacturers Association of Australia (GAMAA) has called on the Victorian Labor government to follow the UK’s lead and abandon its “madcap push” to ban the installation of new water and heating gas appliances.

“The fact is that while electrification may be sensible for some, for many of the two million Victorian households and businesses which use gas, forced electrification will impose significant out of pocket costs while driving up gas and electricity prices for everyone else and putting more pressure on an already struggling electricity network,” GAMAA President Ross Jamieson said on Jan. 8.

Just over a month ago, the government’s gas substitution roadmap (pdf) revealed the Victorian government is considering expanding gas bans on new construction and requiring end of life replacement on some appliances.

“The Building Electrification Regulatory Impact Statement will publicly consult on options to require end of life replacement of gas heaters and hot water systems with efficient electric alternatives,” the gas substitution roadmap states.

“It will also consult on expanding the all‑electric requirements for new construction—currently only applying to new homes requiring a planning permit—to all new homes and many new commercial buildings.”

However, Minister for Energy and Resources Lily D’Ambrosio said the state government had not made any final decisions on the gas bans.

“The government will not make any changes to gas cooktops in homes, gas appliances in existing commercial buildings and industrial, agricultural, and factory facilities, as well as the use of LPG,” a release from D’Ambrosio stated.

“All new homes that need a planning permit are already required to be built all electric. The consultation will consider expanding this requirement to all new homes and many commercial buildings.”

However, the Victorian government argues the fee increases are necessary and part of the contemporary cost of doing business.

“Changes are being made to recover the costs for regulatory services that enable gas companies to operate and profit from,” a government spokesperson told The Epoch Times.

“This is the first real rise of these fees since 2011 and they will only make up a small part of overall project costs so will not have any impact on gas prices or availability.”

The government said it was also committed to ensuring secure, reliable, and affordable energy supply for the state as it transitions to renewables, noting it had approved the only gas application it received in ten years to drive down energy bills.

“We have helped millions of households and businesses slash their power bills through our nation-leading Victorian Energy Upgrades program, subsidising energy-efficient electric products and creating jobs as we reach net zero by 2045,” the spokesperson said.

Gas Supply Shortage Concerns

The report also noted that “dwindling gas supplies” represent a challenge for the southern states of South Australia, Victoria, Tasmania, and New South Wales.

“The Victorian government will continue advocating for national reforms to deliver the transitional supply Victorians need,” the roadmap said.

Meanwhile, a report from the Australian Competition and Consumer Commission (ACCC) released on Jan. 9 also warned of a supply shortfall of southern states in 2025.

“The southern states are expected to face a supply shortfall of  up to 16 PJ (petajoule) in 2025, which represents approximately 9 percent of forecast customer demand,” the report said (pdf).

The ACCC predicts actual shortages will occur during the cold season due to increased demand for heating homes.

“As has occurred in recent years, gas demand in winter months will need to be met from gas transported from Queensland and drawn from storage facilities. The Iona underground storage facility in Victoria is particularly important for supporting southern states,” it said.

Further, the report stated, “despite the importance of gas in the energy transition, east coast gas supply is in decline.”

“In the absence of new supply in the southern states to fill the gap, consumers will depend in the near term on gas transported from Queensland,” the ACCC report added.

Amid news of the gas shortfall in Victoria, Shadow Energy Minister David Davis called for D'Ambrosio to step down in a post to X.

“Winter gas shortfall looms for Victoria. [D'Ambrosio] should be sacked. Ten years in the position and gas supplies falling short, prices surging,” he said.