Australia is considering establishing its first local oil refinery

Australian Prime Minister Anthony Albanese said yesterday that Australia will consider establishing its first new oil refinery in more than 60 years, in light of the pressure caused by the war in the Middle East on supplies coming from abroad, which highlights the urgent need to enhance energy security.

Albanese added, “The project will help strengthen Australia’s resilience and sovereign capacity in the field of fuel, and may protect the country ⁠from future supply shocks.”

He pointed out that if the project proves its feasibility, Perdaman Industrial Chemicals will build the new large-scale oil refinery in the state of Western Australia. Albanese told reporters from the city of Karratha in the Pilbara region of Western Australia: “The war in the Middle East has an impact here, and it also has an impact around the world.”

He added: “One of the things that building national resilience achieves is that it makes Australia less vulnerable to the impact of events around the world.”

A government statement said that the federal government and the Western Australian state government will together spend four million Australian dollars ($2.8 million) on a feasibility study for the refinery.

Albanese continued: “We want to make sure that the appropriate location is chosen, but we also want to make sure that it is an economically viable project that can be moved forward with.”

Australia relies on imports to meet about 80% of its fuel needs, and is striving to secure supplies in light of the war with Iran. The government’s move to reduce its dependence on oil imports comes after an Australian Treasury report warned that the global oil market has become more vulnerable “with weak margins of protection against supply shocks.”

The ministry said in a briefing to Treasury Secretary Jim Chalmers at the weekend that “global oil stock levels have declined since the escalation of the conflict in the Middle East, while refined fuel markets face the risk of further tightening.”

Most of Australia’s domestic oil refineries were built during the 1950s and 1960s, but rising operating costs and the emergence of huge refineries across Asia forced a number of them to close over the past three decades.

Ampol’s Queensland refinery and the Viva Energy facility in Victoria, both in the east of the country, are the only facilities currently operating, compared to eight refineries in 2000.

Western Australia’s only refinery was closed in 2021, after BP decided to convert its facility in Kwinana, which has a capacity of 146,000 barrels per day, into a fuel import station.