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$2b fuel security package hoped to keep remaining oil refineries in Australia

Australia’s two remaining oil refineries will be encouraged to stay put under a $2 billion plan aimed at shoring up the nation’s fuel security.

Under the federal government’s package, the two refineries — in Queensland and Victoria — will be offered up to 1.8 cents per litre of fuel they produce until 2030.

Prime Minister Scott Morrison said it would protect hundreds of jobs at both the Ampol refinery at Lytton and the Viva refinery in Geelong.

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

“Shoring up our fuel security means protecting 1,250 jobs, giving certainty to key industries, and bolstering our national security.”

A suburban oil refinery on a sunny day.
ExxonMobil announced plans to close its oil refinery in Altona earlier this year.(

ABC News: Jessica Longbottom

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Concerns about Australia’s fuel security were heightened after BP decided to close down its Kwinana refinery in Western Australia just months before ExxonMobil announced it was shutting its Altona plant in Melbourne’s west.

Experts have warned Australia is becoming increasingly reliant on imported refined fuel, while unions argue the nation could “grind to a halt” if maritime supply chains are disrupted by a conflict or natural disaster

Refinery upgrades expected to create jobs and better quality fuel

The government said the Fuel Security Service Payment would be linked to refining margins, meaning refineries would only be supported in “down times”.

Refineries will receive a maximum payment of 1.8 cents per litre when the margin they make per barrel of oil falls to $7.30.

The payment will decline to zero if margins increase to $10.20 per barrel.

Legislation will be introduced to Parliament in the coming weeks with the aim of introducing the payment by the beginning of July.

The measure has been costed at up to $2 billion to 2030 “in a worst-case scenario” assuming both refineries are paid at the highest rate for the entire nine years.

“Fuel is what keeps us and the economy moving. That is why we are backing our refineries,” Energy Minister Angus Taylor 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 COVID19.”

The package also includes about $300 million for refinery infrastructure upgrades to enable low sulphur fuel production.

The government expects the upgrades to create 1,750 construction jobs and to bring forward improvements to fuel quality by three years, from 2027 to 2024.

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