Australia weighs first new oil refinery in over 60 years to strengthen energy security

Australia is contemplating the construction of its first new oil refinery in over six decades, according to Prime Minister Anthony Albanese, as geopolitical tensions in the Middle East strain global oil supplies. This move aims to bolster the nation's energy security and reduce vulnerability to external disruptions. Albanese stated that should the project materialize, Perdaman, an industrial chemical producer, would spearhead the construction of a large-scale oil refinery in Western Australia.

The federal and state governments plan to allocate A$4 million ($2.8 million) towards a feasibility study to determine the optimal location and viability of the proposed refinery. Albanese emphasized that such a project would enhance national resilience and lessened Australia's susceptibility to global events impacting fuel availability.

Currently, Australia relies on foreign imports for roughly 80% of its energy requirements, underscoring the urgency to diversify its energy sources. The government's initiative to lessen its dependence on oil imports follows a Treasury report warning of heightened vulnerability in global oil markets due to reduced buffers against supply shocks.

The report highlighted the declining levels of global oil inventories and the potential tightening of refined fuel markets following the intensification of conflict in the Middle East. Australia's domestic oil refineries, predominantly established in the 1950s and 1960s, have faced increasing operational challenges and have largely been phased out over the past three decades.

Currently, only two refineries remain operational in the country, down from eight in 2000. Western Australia's sole remaining refinery was decommissioned in 2021 following BP's decision to repurpose its Kwinana facility as a fuel import terminal.