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Fears the Twelve Apostles will be affected by gas

A new gas extraction project has been approved in Victoria for the first time in a decade and the government has not ruled out ticking off new exploration sites in the state.

Beach Energy will pipe gas from an offshore field near Port Campbell, close to the Twelve Apostles, from the end of June.

The gas is intended to be used in Victorian homes and businesses with supply already factored into forecasts, meaning it will not impact shortfalls predicted by the Australian Energy Market Operator.

It is the only new gas extraction plan to have sought approval from the state since 2014.

Victoria aims to have 95 per cent of energy come from renewables by 2035 with the government pushing towards towards all-electric homes, including a ban on gas in new builds since January 2024.

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Energy and Resources Minister Lily D'Ambrosio said gas has a role to play in the energy transition but it is a finite resource and supplies are diminishing.

Victorian Minister for Energy and Resources Lily D'Ambrosio (file)
Lily D'Ambrosio says shifting to renewable energy is vital but gas is needed to help the transition. (Diego Fedele/AAP PHOTOS)

She said the new project would provide 10.6 petajoules, a "fraction" of the 188 petajoules Victoria uses each year.

Fifteen gas exploration permits have been granted onshore or offshore and the minister did not rule out further approvals.

However, she said few explorers or gas producers who came forward had actually found new supplies.

"We can't just hope on a wish and a prayer that there's going to be some bonanza found any day now, because it doesn't happen that way," Ms D'Ambrosio told reporters in Glenrowan.

In March, the market operator warned there was a need for more gas supply in Victoria over concerns consumption would outstrip availability.

It found total available supply would fall 48 per cent between 2024 and 2028 and there would be a higher chance of outages.

Opposition leader John Pesutto called on the government to approve more projects or risk "significant gas shortfalls".

He claimed the government had sent signals to the market that it would not approve more gas projects.

"We want energy that is affordable and reliable and also clean but there's no point approving a project that will only address gas that's been factored in already," he said.

Australian Pipelines and Gas Association chief executive Steve Davies said Victoria required a "major course correction" on gas as homes, businesses and the economy will rely on it as coal generators are wound down.

Peter Kos from Australian Energy Producers said more exploration and development needed to be encouraged.

However, Environment Victoria advisor Kat Lucas-Healey hit out at the project she claimed would jeopardise one of the state's biggest tourism attractions "for less than a year's gas supply".

"Victoria needs to get off expensive, polluting gas and we don't do that by drilling new fields," Dr Lucas-Healey said.

The Greens slammed the decision as a tragedy for the local community.

Beach Energy's Enterprise project is not within the Twelve Apostles National Park and no gas extraction activities are permitted in the marine park located several kilometres away from the project site.

Victoria will also open a new wind farm in Mortlake and a new solar farm at Glenrowan, which the government claims will power 170,000 homes combined per year.