The Morrison Government last week announced a boost to Australia’s long-term fuel security with assistance for the country’s refining sector.

The Government’s fuel security package is aimed at securing Australia’s recovery from the COVID crisis, securing sovereign fuel stocks and locking in jobs and protecting families and businesses from higher fuel prices.

Prime Minister Scott Morrison said self-sufficient refining capability was crucial for Australia as he announced support for the operation of the Ampol refinery in Lytton (Queensland) and the Viva Energy refinery in Geelong (Victoria). The package will protect the jobs of 1,250 direct employees across the two refineries and create another 1,750 construction jobs.

“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.

“Earlier investment in Australia’s ability to produce better quality fuels, including ultra-low sulfur levels, will also improve air quality and deliver an estimated $1 billion in lower health costs.

“Major industries like agriculture, transport and mining, as well as mum and dad motorists, will have more certainty and can look forward to vehicle maintenance savings and greater choice of new vehicle models.

The 2021-22 Budget initiatives include:

• A variable Fuel Security Service Payment (FSSP) to the refineries, funded by the Government, which recognises the fuel security benefits refineries provide to all Australians;
• Up to $302 million in support for major refinery infrastructure upgrades to help refiners bring forward the production of better-quality fuels from 2027 to 2024; and
• $50.7 million for the implementation and monitoring of the FSSP and the minimum stockholding obligation (MSO), ensuring industry complies with the new fuel security framework

The Government is also ensuring better quality fuel is provided across Australia earlier, working with the refineries to bring forward improvements to fuel quality from 2027 to 2024 by co-investing with domestic refiners to undertake the necessary infrastructure upgrades for low sulfur fuel production.

Accelerating the necessary major infrastructure upgrades will create up to an additional 1,750 construction jobs, bringing flow-on benefits to the Lytton and Geelong communities.

The Government will also accelerate the industry-wide review of the petrol and diesel standard to 2021 and work with both refineries on their plans to consider future fuel technologies and other development opportunities. This will include the refineries’ roles in the roll-out of future fuels, such as electric vehicle charging and hydrogen transport infrastructure.

AREEA welcomes refining support

The Morrison Government decision to help secure the country’s refining sector was an appropriate response to a challenging long-term issue, said Steve Knott AM, Chief Executive of Australian Resources and Energy Group AREEA .

“As the country continues its COVID-19 recovery, the government’s fuel security package gives certainty to key industries and employers reliant on fuels for day-to-day operations,” he said.

“Ensuring Australia has a strong local refining sector and capacity for sovereign fuel production is a matter of economic and national security. The loss of national refinery capabilities would have clear defence implications.

“These measures are vital to building sovereign capacity and will allay concerns about Australia’s fuel security during uncertain global economic times. Significantly more work will be required to ensure a viable and healthy Australian refining sector in the long term.”

“Australia’s refining capacity has been in decline for more than a decade, with the COVID-19 pandemic further accelerating the need for financial support for our two remaining refineries. Without this support, Australia would be at the mercy of imported fuels,” Mr Knott said.

“The government’s initiatives in this area will protect families and businesses from higher fuel prices. Following stronger than expected national figures, the result is further good news for employment, with 1250 direct jobs across the Lytton and Geelong refineries.”