Ports Minister Joe Tripodi said the project will see the construction of a second berth, doubling the capacity of the port handle the trade.
"The NSW economy continues to grow, increasing the demand for petroleum, chemicals and gases by almost 18 percent last financial year," Tripodi said.
"Almost 675,000 tonnes of bulk liquid moved through Port Botany last year – trade is expected to continue increasing and the NSW Government is moving to match demand.
Bulk liquid stevedoring company Vopak has prepared a development and environmental planning application to construct the new berth and double vessel capacity.
Tripodi said the project will see construction of a steel pier berth, marine loading arms, fire fighting equipment, onshore support facilities and pipelines from existing sites to the new berth as well as other infrastructure.
He said the environmental assessment had been prepared in consultation with industry, government and the local community, including the Botany Bay and Catchment Alliance, LaPerouse Precinct Committee and the Botany and Regional Environment Protection Agencies.
Vopak managing director Ron Dickinson said the new terminal was strongly welcomed by the chemicals industry.
"This development is a critical commitment by the NSW Government for the movement of liquids through the Sydney port," Dickinson said.
"This ensures a vital improvement in the state's energy security needs and facilitates cost-effective unloading, improving cost efficiencies of fuel delivery to NSW motorists and chemicals to local manufacturing sectors."