The Australian commonwealth and the Western Australian government will fund a $4 million early-stage feasibility study into the construction of a new large-scale petrol refinery, according to claims. The proposed project in Western Australia could represent the first new oil refinery built in the country in 60 years.
The project would be constructed by Perdaman, the multinational behind a $4.5 billion fertiliser plant in the Pilbara. This follows the 2021 closure of a BP oil refinery in Fremantle, south of Perth. Currently, only two local refineries are in operation: Ampol’s Lytton refinery in Brisbane and Viva Energy’s facility in Geelong. Australia now imports approximately 90% of its liquid fuels.
Economic pressures and Middle East tensions
Australian Treasurer Jim Chalmers warned that the recent escalation of the Middle East conflict posed 'a substantial threat to global inflation'. Treasury officials also warned that oil prices were likely to remain high in the near future.
The international oil crisis was sparked by regional tensions in the Middle East. On Monday, Brent crude fell by more than US$10 a barrel to approximately US$87. Domestic costs have risen this month, with petrol and diesel prices increasing by 25 cents and 50 cents a litre, respectively.
Government response and fuel security
The federal government’s $10.7 billion fuel security package includes $10 million to support feasibility studies for potential projects. The package also funds a $7.5 billion facility to secure extra fuel and fertiliser shipments during the Middle East conflict, and $3.2 billion to build an extra 1 billion-litre reserve of diesel and jet fuel.
Prime Minister Anthony Albanese stated that building national resilience makes Australia less vulnerable to global events and said the project would help build sovereign capability on fuel. Energy Minister Chris Bowen described plans to increase domestic refining capacity as 'a sensible and prudent response to secure our energy security'.
As economic uncertainty continues, financial markets were pricing a one-in-three chance of a Reserve Bank of Australia rate hike on 11 August.