APA Group (ASX:APA) welcomed the Australian Energy Regulator's decision to approve APA's proposed AU$213 million expansion of the South West Pipeline in Victoria, according to a Friday Australian bourse filing.

Work will begin immediately on the delivery of the pipeline expansion, with the procurement of compression units targeted for the end of July.

The regulator also approved AU$31 million for APA to move ahead with additional early works to maintain the option for potential future looping of the South West Pipeline and Brooklyn-Lara Pipeline.

The proposed expansion will allow more gas to be injected into the Victorian Transmission System (VTS) to address projected gas shortfalls in the state on peak winter days starting from 2029.

It includes two new compressor stations at Pirron Yallock and Stonehaven that will allow additional gas from the Otway Basin in Port Campbell, and Lochard's Iona underground gas storage facility.