Australia to study first new oil refinery in decades amid fuel-security concerns
Australia's federal and Western Australian governments are preparing to fund a $4 million pre-feasibility study for a proposed large-scale oil refinery in Western Australia. The plan would examine whether the country could build its first new refinery in decades, in a move framed as part of a wider response to fuel vulnerability and energy security. The proposal is linked to Perth-headquartered Perdaman, which would build the facility if it proceeds.
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The announcement is expected to be made by Prime Minister Anthony Albanese and Western Australian Premier Roger Cook. According to the supplied material, the study is part of a broader $15 billion federal package aimed at securing fuel supply and energy sovereignty. The project would be the country's third large-scale petrol refinery, if it goes ahead, and would be assessed at an early stage before any construction decision.
Australia's refining sector has shrunk sharply over the past two decades. The supplied rows say there are now only two refineries operating in the country, in Brisbane and Geelong, after a series of closures over the past 25 years. One row also notes that BP closed its Kwinana refinery in 2021, while the loss of Melbourne's Altona refinery and the looming Kwinana closure have raised concerns about the country's ability to maintain fuel supplies in a crisis.
The proposal comes as the Australian government responds to renewed concern about global oil markets following conflict in the Middle East. Treasury officials warned in a weekend briefing that the collapse of a ceasefire meant oil prices were likely to remain high in the near future, and said the oil market was now more vulnerable because it had weaker buffers against future supply shocks. Treasurer Jim Chalmers said the escalation posed "a substantial threat to global inflation".
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The immediate economic backdrop has already affected households and markets. The supplied material says petrol and diesel prices rose by 25 cents and 50 cents a litre this month respectively, while financial markets were pricing in a one-in-three chance of a Reserve Bank rate rise on 11 August. Brent crude also fell more than US$10 a barrel on Monday to about US$87 after a pause in fighting over the weekend, showing how quickly prices have been moving.
The Western Australian government has already taken steps to manage fuel supply risks. Roger Cook appointed a Fuel Supply State Controller in March to respond to fuel supply issues in the state during the Middle East war. In April, the state government said it would invoke emergency powers to force fuel companies to share supply chain information, saying the move would help it allocate fuel where it was needed most, including regional Western Australia.
The refinery proposal also reflects the long decline of Australia's domestic fuel-processing capacity. The supplied rows say Australia had eight oil refineries just over two decades ago, but many closed after being judged economically unviable. That has left the country heavily dependent on imported liquid fuels, with one row saying imports now account for about 90% of supply, making the system more exposed to international disruptions.
What remains unclear is whether the pre-feasibility study will lead to a viable project, how much a refinery would ultimately cost, and whether it would require ongoing government support to compete with cheaper overseas providers. The supplied material says building a new refinery would cost billions of dollars. The next key step is the study itself, which is intended to test whether the proposal can strengthen fuel security without creating a long-term financial burden.
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