{"id":527748,"date":"2026-03-09T00:36:14","date_gmt":"2026-03-09T00:36:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/527748\/"},"modified":"2026-03-09T00:36:14","modified_gmt":"2026-03-09T00:36:14","slug":"refineries-face-rising-costs-amid-fuel-security-concerns","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/527748\/","title":{"rendered":"Refineries face rising costs amid fuel security concerns"},"content":{"rendered":"

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Australia\u2019s final two oil refineries are locked in negotiations with the Albanese government over an increase in taxpayer subsidies they say is critical for their survival, just as the war in the Middle East renews focus on the state of the nation\u2019s fuel security.<\/p>\n

The high-stakes talks come as Iran\u2019s effective closure of the Strait of Hormuz \u2013 a global choke-point for one-fifth of the world\u2019s oil supply \u2013 is pushing up petrol and diesel prices and stoking concerns about Australia\u2019s heavy reliance on imported fuels.<\/p>\n

\"TheThe 70-year-old Geelong oil refinery was the first of a wave of postwar refineries to come on stream in Australia. Today it is one of just two that remain.Nic Walker<\/p>\n

With the Commonwealth\u2019s existing support deal for local refiners due to expire in the middle of next year, the future of Viva Energy\u2019s Geelong refinery in Victoria and Ampol\u2019s Lytton plant in Brisbane hangs in the balance. At stake are the jobs of thousands of refinery workers, and Australia\u2019s ability to produce its own petrol, diesel and jet fuel in an increasingly volatile global market. The nation currently relies on imports to fill about 90 per cent of its liquid fuel needs.<\/p>\n

Negotiations over new government subsidies have been described as \u201cconstructive\u201d but refinery owners consider a swift resolution essential as their plants continue being strained by persistently volatile refining margins, casting a shadow over their viability. Sources close to the talks said the refiners were asking for adjustments to their subsidies to reflect the significantly higher costs they were now facing as a result of years of rising inflation.<\/p>\n

Viva Energy chief executive Scott Wyatt said the unfolding conflict in the Middle East had put the spotlight on liquid fuel supply and supply chain vulnerabilities, underlining the critical need to maintain refining capability within Australia.<\/p>\n

\u201cOver the past 15 years Australia has lost around 70 per cent of its local refining capacity, making it more important than ever to protect what remains,\u201d he said.<\/p>\n

The Geelong and Lytton refineries<\/a> \u2013 sprawling industrial sites that process crude oil into usable fuels \u2013 are the last ones standing in Australia following a decade-long exodus. The local industry has been struggling to compete with cheaper imports following the expansions of larger, lower-cost mega-refineries in South-East Asia.<\/p>\n

In 2021, travel bans to arrest the spread of COVID-19 dealt another crushing blow: wiping out fuel demand on an unprecedented scale and triggering the closures<\/a> of ExxonMobil\u2019s Altona refinery in Melbourne and BP\u2019s Kwinana facility in Perth.<\/p>\n

\"VivaViva buys crude oil from all over the world and turns it into petrol at the refinery in Geelong. <\/p>\n

To stem the full collapse of the industry, Ampol and Viva agreed at the time to a Fuel Security Service Payment \u2013 a subsidy of up to 1.8\u00a2 per litre for locally made fuel \u2013 in exchange for a commitment to remain operational until mid-2027. However, that safety net is now under review.<\/p>\n

Related Article\"Shipping<\/a><\/p>\n

Energy Minister Chris Bowen signalled the government\u2019s intent to support the continued operation of Australia\u2019s remaining oil refineries: \u201cWe back our refineries \u2013 unlike the Coalition, who let four close under them,\u201d he said.<\/p>\n

The refiners are expecting to be told of an outcome from the talks within the next three weeks.<\/p>\n

\u201cThe ongoing conflict in the Middle East has sharpened the focus on fuel security and the importance of maintaining a domestic oil-refining capability,\u201d an Ampol spokesman said. \u201cWe are confident that the government recognises the critical role refining plays in Australia.\u201d<\/p>\n

Viva Energy said its Geelong refinery was operating in a higher-cost environment than when the subsidy deal was struck in 2021. \u201cThis includes increased costs across energy, wages and construction,\u201d Wyatt said. \u201cWe will continue to work with the government to ensure the scheme remains fit-for-purpose and supports sustainable refining operations in Australia.\u201d<\/p>\n

Related Article\"Fire<\/a><\/p>\n

The outbreak of the war in Iran has intensified concerns over global supplies of crude oil \u2013 the natural resource refined into petrol, diesel and jet fuel \u2013 and is widely expected to push up prices for motorists in Australia, even if the conflict is short-lived. The cost of a barrel of oil<\/a> has surged more than 20 per cent since the fighting began, to about $US90, its highest mark in nearly two years.<\/p>\n

The longer the Strait of Hormuz disruption lasts, the greater the threat of higher prices at the petrol pump, experts said. Tom Allen, an energy analyst at investment bank UBS, said Australia was at risk of higher prices but was not in danger of a physical supply squeeze unless transit through the narrow waterway off Iran\u2019s south coast remained blocked for another month.<\/p>\n

The Albanese government last week confirmed Australia had enough petrol in storage to last 36 days, and enough diesel for 34 days, based on normal consumption patterns. The levels are the highest they have been in more than a decade but are still falling short of the International Energy Agency\u2019s benchmark recommendation for countries to have a 90-day stockpile.<\/p>\n

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning<\/a>.<\/p>\n

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\"NickNick Toscano<\/a> is a business reporter for The Age and Sydney Morning Herald.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"Save You have reached your maximum number of saved items. Remove items from your saved list to add…\n","protected":false},"author":2,"featured_media":527749,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-527748","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/527748","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=527748"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/527748\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/527749"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=527748"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=527748"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=527748"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}