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Viva Energy (ASX:VEA) is threatening to abandon a proposed liquefied natural gas import terminal it pledged to build in Victoria unless APA Group (ASX:APA) hands over “vital” access to the arterial South West Pipeline.
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The pipeline is key to Viva’s plans, apparently, but existing users like Beach Energy (ASX:BPT) and Lochard Energy (formerly ASX:LHD) don’t think there’s space.
Both have warned that “accommodating new gas imports would crowd out supply from domestic sources,” The Australian reported today. That includes Beach’s impending Copper Basin shipments, which sell in Oz.
Viva has been firm, though: The terminal hinges entirely on this access, the company claims.
“If this change doesn’t proceed, Viva Energy considers there is a risk that the [terminal] project will not proceed,” strategy chief Lachlan Pfeiffer declared.
Should the pipeline remain closed for Viva, the Victorian Declared Wholesale Gas Market will face everything from supply shortfalls to higher prices, and “inefficient and unnecessary infrastructure investment,” he warned.
The proposed terminal is considered quite critical to Victoria’s future gas supply and was quickly approved by the reigning state government earlier this year.
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The Victorian government is taking an active hand in remediation, according to reports, with officials setting up a meeting next month where it will “take a more active role in brokering a solution.” The biggest argument for allowing Viva the access will be that any shortfall would impact household bills.
HotCopper understands Beach Energy has already vowed to oppose any requests.
VEA shares are heading into Monday selling at $2.06.
Meanwhile, BPT last sold at $1.27 on Friday.
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