Hobson Bay, Williamstown.

Too cosy: Mobil warning over new Williamstown development. Photo: Michael Rayner

A Williamstown residential development is dangerously close to Mobil's Gellibrand plant and could jeopardise operations and fuel supply to Victoria, the company has warned.

Evolve Development plans to transform the old Port Phillip Woollen Mills site into a residential centre including high-rise apartments and townhouses. It already has approval to build 120 apartments and seven townhouses.

Mobil's Altona refinery is spread over several locations, including the Gellibrand Tank Farm and Point Gellibrand Wharf, which are near the proposed development. The tank farm is a major hazard facility.

A VCAT hearing this week is due to a hear an appeal from Evolve after the local council did not approve stage 2, for 40 townhouses and 130 apartments.

In a statement of evidence, Mobil says it is concerned that development may impede the access of emergency services to the Gellibrand site.

''The area can be heavily congested and high-density residential encroachment, without appropriate upgrades to road sizing, has the potential to impede the safe evacuation of residents,'' it says.

It also warns that an emergency would create extra anxiety in the area that would see a greater demand for emergency services to deal with large masses of people, rather than the primary incident.

Mobil also has concerns about noise and light restrictions from new residents hampering its operation, possibly making the use of Gellibrand Wharf economically unfeasible.

''Any restrictions on berth usage would reduce Mobil Altona Refinery's throughput and threaten the refinery's ability to provide the Victorian marketplace with refined fuels, including petrol and diesel for road users and jet fuel for the airport,'' the Mobil statement says.

Evolve managing director Ashley Williams - businessman Ron Walker is a partner in the project - said the application had complied with all the planning controls implemented when the precinct was rezoned in 2012. He said Evolve was happy to go through the VCAT process and that stage 2 was well beyond the safety buffer for a hazardous facility.

Shadow planning minister Brian Tee said the situation had been plagued by government inaction.

''For three years the government has been reviewing the policy guidelines to deal with increasing development near Victoria's 41 major hazard facilities and nothing has been done,'' he said.

''This is a time bomb and I hope it doesn't take a catastrophic disaster to jolt the Minister for Planning into action."

A spokeswoman for Planning Minister Matthew Guy said the VCAT hearing would appropriately take evidence from all parties.