By Cole Latimer
Gina Rinehart-backed Lakes Oil faced off with the Victorian government in court on Wednesday as it fights against the state’s ban on gas exploration.
The company has been in limbo since 2014 when the Victorian government called a moratorium on all onshore gas exploration until 2020.
Lakes Oil has carried out legal action to re-open Victoria to gas exploration and production.
Lakes Oil initiated legal action in 2016, waging an almost $3 billion battle, to fight the ban.
It has the backing of major shareholder Gina Rinehart through her business Timeview Enterprises, which holds about 13.75 per cent of Lakes Oil, while Ian Plimer - a director on Gina Rinehart's Roy Hill mining company and a noted climate change sceptic - also serves on oil junior's board.
The latest hearing will seek to rollback changes made to the moratorium in 2017, which Lakes Oil called illegal and expects to obtain a final decision from Justice Cameron Macaulay after the hearing of the current proceedings.
The company said the government cannot refuse to grant approvals for drilling by Lakes Oil on the grounds that its explicit commitment to operations are prohibited by the new variations to the Victorian Petroleum Act.
"We hope this paves the way for the next step in lifting the moratorium," Lakes Oil chairman Chris Tonkin told Fairfax Media, saying the case could be the canary in the coal mine for overturning the ban.
The company believes if the ban was lifted it could have gas flowing in under two years.
Victorian Minister for Resources, Tim Pallas, declined to respond as the matter is still before the courts.
The Australian Petroleum Producer and Exploration Association said Victoria's moratorium only hurts Victorians.
"This is an important project for Victoria that could provide the state with a new source of gas supply; it is disappointing that it has not been allowed to proceed," APPEA chief executive Dr Malcolm Roberts told Fairfax Media.
"Victoria could have new gas supply, instead it has litigation and the most expensive wholesale gas in the market."
Lakes Oil has permits for onshore exploration in Victoria in the Gippsland and Otway basins, and was preparing to drill at Otway before the ban was introduced. It believes its Wombat project, which had four wells drilled, could deliver 10 to 20 petajoules of gas per day for the next 20 years.
Mr Tonkin said the entire moratorium was misguided and a lack of communication from the Victorian government on the status of the ban exacerbated the situation.
“The baseline case is that the whole thing is a beat-up by activists, and they got state support,” Mr Tonkin told Fairfax Media.
“The government ministers refused to talk to us, it’s hard to get a dialogue with these parties if they aren’t even talking to you,” he said.
It expects the current legal proceedings to take three days.
“Lakes Oil looks forward to having this matter finalised so the company can quickly resume exploration activity and, on the basis of independent expert advice, prove up reserves of gas that can be very quickly brought online to help ease the gas and electricity price burdens presently plaguing Victorian industry and households,” Mr Tonkin said.