A two billion dollar fuel security package from the Federal Government will support Australia’s last two oil refineries in Queensland and Victoria.
The package is aimed to assist in the recovery from the pandemic, secure fuel stocks, lock in jobs and protect Australians from high fuel prices.
It comes after BP’s October announcement of the closure of the Kwinana refinery in Western Australia. Four months later ExxonMobil then announced plans to close its Altona refinery plant.
The package will protect 1,250 jobs at the two refineries and create 1,750 construction jobs.
Prime Minister Scott Morrison said in a statement earlier investment in the nation’s ability to produce better quality fuels would improve air quality and save an estimated $1 billion in health costs.
“This is a key plank of our plan to secure Australia’s recovery from the pandemic, and to prepare against any future crises,” the Prime Minister said.
“Shoring up our fuel security means protecting 1,250 jobs, giving certainty to key industries, and bolstering our national security.”
A Fuel Security Service Payment will see refineries receive up to 1.8 cents per litre of fuel produced if the margin they make per barrel produced reaches $7.30. If the margin made per barrel reaches $10.20 then no payment will be made.
The government will provide $50.7 million to implement and monitor the Fuel Security Service Payment. In a worst-case scenario, the payment will cost $2.047 billion to 2030, however, the government said this is not expected to be the case as the economy recovers.
Minister for Energy and Emissions Reduction Angus Taylor said that Australia’s economy is reliant on fuel.
“Fuel is what keeps us and the economy moving. That is why we are backing our refineries,” Minister 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 COVID-19.”
The plan will also see $302 million provided to support major refinery infrastructure upgrades for the production of better quality fuel. Infrastructure upgrades will allow for low sulfur fuel production to be brought forward from 2027 to 2024.
The Fuel Security Bill will be introduced to Parliament in the coming weeks, with the aim for the Fuel Security Service Payment to begin from July 1, 2021.
Photo: Oil refinery demolition Coryton by Sludge G available HERE and used under a Creative Commons Attribution. This image has not been modified.