British energy giant BP announced in October it would permanently shut down one of Australia’s last remaining oil refineries, its 65-year-old Kwinana plant in Perth and convert the site into a fuel import terminal, saying the refining business was not economically viable.

The owner Geelong oil refinery, Viva Energy, has also considered shutting down its 65-year-old refinery after losses blew out to nearly $80 million. It said last week it had entered into agreements with two consortia including Japan’s Mitsui, France’s Engie and trading giant Vitol, to begin importing cargoes of liquefied natural gas (LNG) at the site from as early as 2024.

At Ampol’s Brisbane refinery, the situation is bleaker after losses spiralled to $141 million this year. Ampol told investors last month it was examining options including permanently closing the plant, which employs 500 staff, and converting the site to a fuel import terminal.


Industry had warned since the government announced the support in October that the proposed six-month consultation timeframe was too long given the immediate challenges.

Federal Energy Minister Angus Taylor said the COVID-19 pandemic had continued to place immense pressure on refineries and jobs in the fuel sector.

“We have worked closely with the sector to design and implement our comprehensive fuel security package,” Mr Taylor, who will announce he is bringing forward the 1c payment system by six months in Geelong on Monday, said.

“The production payments will help the industry withstand the economic shock of this crisis, protecting local jobs and industry, bolstering our fuel security and shielding motorists from higher prices.”

Under the scheme, if fewer than three refineries participate the rate of the payment will increase in a bid to create competitive tension in the market and increase incentive to stay.

The long-term market mechanism for the payment, first announced at around 1.15 cents per litre in October, will come into effect no later than July 1 next year. The government is working with industry to finalise the details, as legislation will be introduced early in 2021.

The Australian Workers Union, representing refinery staff, has urged state and federal governments to do “whatever it takes” to maintain local refining.

Amid criticism from Labor, Mr Taylor has consistently said the future refining sector in Australia would not look like the past and normal competitive processes would always play a part in determining which refineries had a long-term future.

Opposition energy spokesman Mark Butler has accused the Coalition of overseeing a massive drop in domestic refining capacity over the past seven years, claiming it has plummeted by 40 per cent.

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