APA Group (ASX:APA) today welcomes the Australian Energy Regulator’s (AER) decision to approve APA’s proposed $213 million expansion of the South West Pipeline in Victoria to help meet projected peak day gas shortfalls later this decade.

The expansion includes two new compressor stations at Pirron Yallock and Stonehaven that will allow more Victorian gas from the Otway Basin in Port Campbell, and Lochard’s Iona Underground Gas Storage (UGS) facility, to be injected into the Victorian Transmission System (VTS) to help address projected gas shortfalls in Victoria on peak winter days from 2029.¹

In response to feedback following stakeholder engagement, the AER also approved $31 million for APA to progress additional early works to maintain optionality for a future looping solution of the South West Pipeline and Brooklyn-Lara Pipeline that could help deliver additional capacity. 

APA owns and maintains the VTS, an over 2000 kilometres gas pipeline network that delivers most of the natural gas used in the state. The VTS is operated by the Australian Energy Market Operator (AEMO) under the National Gas Rules.

The South West Pipeline expansion will form part of the VTS Regulated Asset Base. The investment is expected to deliver returns consistent with its requirements for a regulated asset, will be funded from existing balance sheet capacity and forms part of APA’s $3 billion organic growth pipeline.

APA CEO and Managing Director Adam Watson said:

"We welcome today’s decision, which will deliver efficient infrastructure expansion to ensure more Victorian gas can flow to support energy security in Melbourne in 2029.

“Incremental expansion of existing pipeline infrastructure is a proven, simple and efficient way to move more gas where it’s needed. The adopted compression solution is cost-effective, almost 40% cheaper than partial looping for the same capacity and approximately 60% cheaper than a full looping solution.

“While the final expansion proposal goes beyond APA’s original submission, in response to our engagement with stakeholders, we have demonstrated our commitment to working with stakeholders to deliver the best solution for all.

“This project is in addition to the more than $700 million APA has already invested over the last four years to deliver more gas into Victoria through our East Coast Gas Grid (ECGG) expansion. This includes Stages 1 and 2 that enable ~25% more gas to flow to southern markets when needed, alongside the Western Outer Ring Main and Winchelsea compressor projects to support Victoria’s energy reliability on peak days.

“In February 2026 APA committed to further expansion of our East Coast Gas Grid, investing a further $260 million to increase north to south capacity by 11%, ensuring Australian gas is available for Victorians when they need it.”

Following today’s favourable decision by the AER, work will commence immediately on delivery of the South West Pipeline expansion, with the first step being the procurement of compression units targeted for the end of July 2026. Required access, approvals and detailed engineering work will continue in parallel.

¹ AEMO, Gas Statement of Opportunities 2026, p7 and Victorian Gas Planning Report 2025, p3