According to Australian SBS television, on July 28 local time, Australian Prime Minister Albornes announced in the Western Australian city of Kalarra that the Australian government is considering building its first new refinery in over 60 years in order to improve the safety of fuel supply in the country. The recent conflicts in the Middle East have led to a tightening of overseas fuel supplies, highlighting the urgency for Australia to strengthen its energy independence.
Albanese said that the federal government will allocate $4 million with the Western Australia government to conduct a feasibility study for the refinery project. If the plan is feasible, the new plant will be located in Kalara, and it will be built by the industrial chemicals manufacturer Perdaman Group. The group already has a fertilizer plant worth billions of Australian dollars under construction in the same area.
He pointed out in his speech that Middle Eastern wars are affecting the Australian and global markets, and "enhancing national resilience can make Australia less vulnerable to events around the world."
This will be Australia’s first new oil processing facility since 1965. Most of Australia’s refineries were built during the 1950s and 1960s. Due to high operating costs, along with the emergence of large Asian refineries, most of them have been shut down over the past 30 years. In 2000, there were still eight refineries nationwide; today, only two are still in operation, located in Queensland and Victoria.
Currently, approximately 80% of Australia’s fuel needs depend on imports, mainly from South Korea, Japan, Singapore, Malaysia, and Taiwan region of China. After the military actions taken against Iran by the United States and Israel at the end of February this year, shipping in the Strait of Hormuz was disrupted, affecting Middle Eastern oil exports. The Australian Treasury’s briefing to Minister Chatham recently warned that the economic risks posed by the Middle East conflict are increasing, and the buffer space available in the global oil market to withstand supply shocks has narrowed.
MST Financial energy analyst Karvnik told Australian media on Tuesday that from an economic perspective, there is a reason why six of Australia’s eight refineries have been closed over the past 20 years. Even the two refineries that were finally closed, even with government funding, were unable to maintain operations. The outlook for the refining industry is challenging, but the construction of new refineries can still help mitigate supply risks.
Albanese's office stated in a statement that if the project is completed, the new refinery will create thousands of jobs and strengthen Australia's energy security, especially ensuring diesel supplies for communities in Western Australia.
