Viva believes Squadron Energy’s Port Kembla project and the Geelong terminal would both be required to fill south-eastern Australia’s impending shortage of gas – a fuel commonly used in cooking, heating, power generation and as a raw material for industrial processes.

But for Victoria, it considers the Geelong refinery the optimal location for LNG imports because of its proximity to industrial and commercial demand centres in western Melbourne, its ability to connect to the state’s transmission system at Lara and the fact its gas would not incur the additional tariffs.

“This will relieve the supply pressure, and provide the cheapest alternative gas supply, with minimal future regret in infrastructure investment,” Mr Pfeiffer said.

While Australia is one of the world’s top shippers of LNG, most is produced in the nation’s north, far away from demand centres in the south, and is sold on long-term contracts to overseas buyers. The danger of gas shortages and price rises unless more supply comes to the market has sparked fears for manufacturing companies that may be unable to cope.

Energy authorities earlier this year pushed back their forecasts of gas shortfalls from 2023 to 2026 on the basis that the Port Kembla LNG terminal proceeded according to schedule.

Conservation groups, including Environment Victoria, say 2026 provides ample time for the state government to develop a strategy focused on reducing gas demand, such as switching appliances from gas to electric and prohibiting new residential gas connections, rather than lifting supply.

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Still, shortages could emerge from 2023 if Port Kembla was delayed, or if a demand spike due to a one-in-20-year cold snap led to greater strain on supply, the market operator warned.

Viva is aiming to give financial go-ahead to the project next year and bring new gas supply to the market by 2024.

Squadron, meanwhile, is targeting first gas from Port Kembla as early as 2023.

Last week, the Port Kembla project received a boost as the NSW government awarded “critical” infrastructure status to a gas-hydrogen power plant the company intends to build at the same site.

Credit Suisse analyst Saul Kavonic, however, said the failure of buyers to sign up to LNG supply agreements so far raised questions about the import terminal’s economics.

“It would be hard to turn back now ... but clearly the commercial side has not progressed as hoped, with off-takers remaining elusive for the time being, and some of them opting to secure gas more cheaply via pipeline from Queensland,” he said.

“Potential off-takers could push for haircuts on any toll whilst competing projects such as Viva’s may emerge as more competitive.”