Up to $2b for domestic fuel security

The Government has rolled out a range of additional measures aimed at shoring up Australia’s domestic fuel reserves, including payments of up to $2 billion to Australia’s last two remaining oil refineries to ensure their future.

Announced as a part of the 2021-22 Federal Budget, the Fuel Security Service Payment will see the refineries receive up to 1.8 cents per litre when the margin they make on a barrel of oil drops to $7.30.

The payments will begin from July 2021, and will assist the Viva Energy refinery in Geelong (Vic) and the Ampol refinery in Lytton (Qld). The support comes following the closure of BP’s Kwinana operation in WA and the announcement earlier this year by ExxonMobil of the closure of its refinery in Altona, in Melbourne’s west.

These latest measures follow on from a $211 million investment in securing Australia’s domestic fuel reserves announced in September 2020.

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“This is a key plank of our plan to secure Australia’s recovery from the pandemic and to prepare against any future crises,” said Prime Minister Scott Morrison.

Mr Morrison said the fuel security package would also protect 1250 jobs and create a further 1750 construction jobs.

The assistance payments will be in place until 2030, while the rate at which they’re paid is geared to the refineries’ profitability. The package has been costed at $2 billion in a “worst case scenario”, assuming both operations will receive the maximum rate for the full nine years.

The measures also include $302 million for infrastructure upgrades at the two refineries to allow them to produce low-sulphur fuel, and $50.7 million to establish a new fuel security framework.

Federal Energy Minister Angus Taylor highlighted the crucial role fuel plays in underpinning Australian business and wider society.

“Fuel is what keeps us and the economy moving; that is why we are backing our refineries,” he said.

“Supporting our refineries will ensure we have the sovereign capability needed to prepare for any event, protect families and businesses from higher prices at the bowser, and keep Australia moving as we secure our recovery from COVID-19.”