MEDIA RELEASE

1 May 2026

Lochard Energy plans next phase of expansion to strengthen Victoria’s energy security

Lochard Energy is pleased to announce that it has commenced early planning for the next phase of expansion at the Iona Gas Storage Facility (IGSF).

This expansion is in response to strong market signals for additional gas storage capacity, which will be increasingly needed to meet future peak-day demand from gas-powered generators, industry and households.

The project, known as the Heytesbury Underground Gas Storage Project Phase 2 (HUGS2), will focus on expanding Iona’s storage capacity through the addition of new storage reservoirs.

“As Australia’s energy system continues to transition, gas storage remains a vital source of flexibility and reliability – particularly as coal retires and renewable generation increases,” said Lochard Energy CEO, Tim Jessen.

Lochard Energy is the owner and operator of the Iona Gas Storage Facility, a critical energy infrastructure asset which is the largest supplier of gas storage services to the East Coast Gas Market and can supply up to 45 per cent of Victoria’s peak daily winter gas demand, as well as supplying the South Australian market.

“HUGS2 is about ensuring the market stays ahead of rising peak gas demand and system stress. Market bodies, including AEMO in their recent Gas Statement of Opportunities, continue to point to the need for more storage to support reliability, flexibility and energy security as we move to a renewables dominated energy system,” Mr Jessen said.

“Fast start gas-powered generation, in particular, will be critical in balancing electricity supply with demand at those times when insufficient renewables are available.”

Early screening studies indicate the HUGS2 Project has the potential to add 5 petajoules or more of additional underground gas storage from winter 2029, subject to regulatory approvals and a final investment decision.

While planning for HUGS2 progresses, Lochard Energy is already well advanced in delivering the initial Heytesbury Underground Gas Storage (HUGS) Project, which is due for completion by the end of 2026.

The HUGS Project will increase Iona’s delivery capacity from 570 terajoules per day to 615 terajoules per day and expand total storage to 26.2 petajoules, further strengthening the facility’s ability to respond to winter peaks and supply disruptions.

However, Lochard Energy cautioned that to continue expanding the Iona facility beyond 615 terajoules per day, a clear pathway is required to expand capacity on the South West Pipeline (SWP), which links Iona to the Victorian Gas Transmission System.

“As events during the winter of 2025 showed, withdrawals from Iona can be constrained on certain high demand days due to pipeline limitations,” Mr Jessen said.

“This situation will be even more acute when the HUGS expansion is completed at the end of this year, as Iona’s withdrawal capacity will materially exceed capacity on the pipeline.”

“We’re ready to continue expanding Iona to meet growing demand, but timely investment in the South West Pipeline capacity that connects the IGSF to the Victorian market is essential to ensure the market can fully access that storage when it’s needed most. Whilst we note the regulatory processes currently underway, we are conscious that pipeline expansions typically take years to deliver, so firm commitments to the size and scope of the SWP expansion need to be made very soon,” Mr Jessen added.

Lochard Energy continues to work constructively with pipeline operators, market and government bodies, customers, First Nations peoples, landowners, local communities and stakeholders to progress HUGS and the potential HUGS2 expansions.

Media Enquiries

Vani Chiavone, Senior Manager Communications
Lochard Energy
Phone: 0421 878 929
Email: [email protected]

Above: Iona Gas Storage Facility (IGSF) and connecting pipelines