David Gillespie, managing director of Jemena, said that while the war-driven disruption to international oil and gas markets made the situation more challenging, he was confident about the need for new external supplies, after approving the next chunk of capex needed to adapt its pipeline.

The move comes amid heightened worries about domestic energy security and a reliance on imports for liquid fuels, with Jane Norman, chief executive of domestic gas producer Amplitude Energy, set to warn on Tuesday that the nation is also in danger of “sleepwalking into import dependence” in natural gas.

“Australia faces a choice – develop our own gas resources and keep energy affordable and secure, or import LNG at global prices and replicate Europe’s crisis. There is no third option,” Norman will tell a gas conference in Sydney.

The debate comes as the Albanese government finalises plans to introduce a domestic gas reservation system on the east coast, and considers a windfall tax on the profits of big gas producers.

Shell’s country chair in Australia, Cecile Wake, will use the conference to warn against “easy solutions”, such as calls for a 25 per cent levy on LNG exports, price caps, and bans on new oil and gas projects.

Wake will urge the country’s political leaders to look through populist anti-gas, anti-business rhetoric and the pressures of the Middle East crisis, and focus on ensuring a well-supplied domestic gas market and a thriving LNG export industry.

“Increasing the fiscal burden on gas exports is not the answer,” Wake will say, adding that new tax would send a strong negative signal also to Australia’s regional trade partners who rely on the country’s LNG and clash with the government’s recent deal with Singapore on energy security.

Gillespie said that Jemena, which owns $12.4 billion of gas pipelines and electricity networks, hadn’t spent much time thinking about a windfall tax but called for decisions in the long-term interests of the market.

“Interventions as they relate to new policy direction should be very much focused on supply,” he said.

Gillespie said the need for new sources of gas in the south-east justifies the investment in reversing the flows on Jemena’s 797-kilometre Eastern Gas Pipeline, which has until now transported gas northwards to NSW from the Gippsland Basin fields off Victoria.

The Port Kembla terminal has been built by Squadron Energy, the private company of mining billionaire Forrest, but hasn’t come online as it has not signed up any customers.

But Gillespie said the terminal was “one of the only options” that the market will have in the balance of this decade to be able to bring meaningful new supply into the East Coast.

“It’s hard to pin exactly when Squadron will be bringing in their first cargo, but certainly from all of our engagement, we’re very confident that we’ll get services utilised both south and north, and that terminal will play a very important part of the supply solution.”

Jemena, owned by China’s State Grid Corporation and Singapore Power, expects to spend about $375 million to enable up to 200 terajoules a day of gas shipped into Port Kembla to flow south to Victoria in addition to the existing capacity to move 350 TJ a day northwards.

So far, it has spent $170 million on a pipeline link from Port Kembla to the Eastern Gas Pipeline and on work to reverse the gas flow.

Jemena’s support for LNG imports contrasts with larger rival APA Group, which is expanding its own east coast gas grid with a view to transporting gas produced within Australia. APA chief executive Adam Watson

argues domestic gas will be more economic than imported LNG.

But Gillespie said Jemena was fielding interest from potential customers to use the Eastern Gas Pipeline to transport gas south, particularly for later this decade when structural gaps start to arise in the market.

The terminal was not directly tied to international imports because gas could come from Queensland, the Northern Territory or Western Australia, he said.

Squadron Energy’s executive general manager, customer and energy markets, Walter Schutte, said demand for gas in the rapidly evolving east coast gas market would be more volatile, requiring more flexible infrastructure like the Port Kembla terminal to deliver large volumes of gas into NSW and Victoria during peak periods.

“LNG terminals like Port Kembla Energy Terminal can both lower the price customers pay for gas and delay supply shortfalls into the middle of the next decade,” Schutte said.

The debate around imports has been sharpened by last week’s warning from the Australian Energy Market Operator of the risk of gas shortfalls in Victoria starting in 2029 and as international gas markets have been shaken by the closure of the Strait of Hormuz, which has caused global prices to spike.

Meanwhile, damage from Tropical Cyclone Narelle is set to delay the restart of Chevron’s Wheatstone LNG project near Ashburton in WA by several weeks. Production has been restored at Chevron’s Gorgon and the Woodside-run North West Shelf venture.