Australia’s peak oil and gas body has welcomed the Victorian government’s decision to reopen offshore petroleum exploration, marking the state’s first permit release in seven years amid growing concerns over future gas shortages.
The announcement will open acreage in the Otway and Gippsland basins — two historically rich gas-producing regions off Victoria’s southern coast — where new exploration could help offset declining production from mature Bass Strait fields.
“Victoria is forecast to experience gas shortfalls as soon as 2027,” Australian Energy Producers (AEP) Victoria Director Peter Kos said.
Kos stated that this announcement is an essential first step in unlocking new domestic natural gas resources and demonstrates that the government is taking steps to address future energy challenges.
Victoria remains Australia’s largest consumer of natural gas, yet production from the once-prolific Bass Strait fields — operated by ExxonMobil and its joint venture partner Woodside Energy — has fallen sharply over the past decade.
According to the Australian Energy Market Operator (AEMO), gas supply from the Gippsland Basin Joint Venture dropped by more than 40 per cent between 2015 and 2024, contributing to tightening east coast gas availability.
“Natural gas from the Bass Strait has reliably powered Victorian homes and industry since the 1960s, but those legacy fields are now in decline,” Kos said.
“New discoveries are essential to replace that supply and ensure the state’s energy security.”
AEMO’s latest forecasts project potential supply gaps emerging by 2027 unless new developments are brought online or interstate pipeline capacity is expanded.
More than two million Victorian households are connected to natural gas, and about one-third of the state’s manufacturing energy needs are met by gas — underlining its importance for both residential and industrial users.
The 2025 acreage release signifies a pivotal shift in policy after years of restrictive measures that limited exploration in Victoria.
A moratorium on onshore gas projects was lifted in 2021, but no new exploration acreage has been offered for offshore development since 2018.
The renewed program will likely focus on low‑impact, conventional gas prospects in state waters, complementing federal acreage releases managed by the Commonwealth Offshore Petroleum Titles Administrator.
Kos said the move would help revive confidence among energy investors if sustained over multiple years.
“The Victorian government has rightly recognised the need to bring on new gas supply for the millions of homes and businesses that rely on natural gas every day,” he said.
“This process is crucial to developing Victoria’s energy resources, strengthening investor confidence and generating increased exploration activity.”
He added that the state “should commit to regular — preferably annual — acreage releases to rebuild investment confidence and secure ongoing gas supply.”
Victoria’s transition to net zero emissions by 2045 presents a complex challenge for policymakers balancing energy security with climate ambitions.
While gas remains a fossil fuel, industry proponents argue it is a necessary bridge during the shift away from coal and before large-scale renewable and storage capacity can fully meet demand.
Natural gas-fired generation currently provides critical back-up power during periods of low solar and wind output.
It also supports industrial processes — such as glass manufacturing, food processing, and chemicals — that are costly to electrify in the near term.
The state government’s energy strategy emphasises that an orderly transition requires maintaining a reliable gas supply alongside major investments in renewable energy and hydrogen development.
Mr Kos said the industry remains aligned with these objectives.
“The gas industry stands ready to work with the government to bring new supply online and deliver affordable, reliable and cleaner energy for Victorians.”
Expanded exploration could also generate economic benefits through job creation and regional development, particularly in Gippsland, where the energy sector has historically supported thousands of workers.
The Victorian Offshore Petroleum Regulatory Policy framework requires strict environmental assessments prior to any drilling, ensuring compliance with both state and federal environmental laws.
However, environmental groups continue to raise concerns about expanding fossil fuel exploration in state waters.
Advocacy organisations such as Environment Victoria have argued that new gas projects risk extending the state’s dependence on carbon-intensive fuels and could divert resources from faster renewable energy deployment.
Analysts say maintaining both affordability and emissions progress will depend on how quickly discoveries can be developed and whether Victoria can simultaneously scale its renewable capacity and gas network decarbonisation technologies, including biomethane and hydrogen blending.
The government’s decision is expected to trigger renewed interest from both domestic and international exploration companies seeking conventional gas prospects in relatively well-mapped sedimentary basins.
With demand expected to remain steady for heating and manufacturing, exploration success could help stabilise Victorian gas prices and safeguard supply for the next decade.
