Australia’s reliance on just two oil refineries has been slammed as a “disgrace” after one went up in flames overnight.
Viva Energy’s Corio refinery at Geelong – which supplies about half of Victoria’s fuel and 10 per cent of the country’s – was rocked by an explosive fire on Wednesday night, with emergency services battling to bring the blaze under control.
Former Environment Minister Tanya Plibersek on Thursday said the fire had “reconfirmed our view about self-sufficiency for Australia”.
However, since 2000, the number of oil refineries in Australia has fallen from eight to just two, six of which Labor says were shuttered under Coalition governments.
ExxonMobil’s Port Stanvac refinery in South Australia was the first to go, ceasing operations in 2003 before permanently closing in 2009.
Reporting at the time suggested the refinery was losing significant amounts of money and was no longer viable.
A few years later, Shell closed its Clyde oil refinery on the Parramatta River, and a year later, Caltex did the same with its Kurnell refinery at Botany Bay.
The reason for the closures was a similar story: Shell cited heavy costs of maintaining the large Clyde cite, as well as competition from Asian mega-refineries, upon which Australia is now heavily reliant.
A 2013 report by the House of Representatives Committee on Economics warned that while Australia’s oil refining capacity would reduce with the closure of the Clyde and
Kurnell sites, but that government’s 2012 energy white paper “provides a more optimistic outlook”.
“The EWP (Energy White Paper) argues that effective supply chains to a range of competitive markets will provide for Australia’s fuel needs,” the committee stated.
“At the same time the EWP suggests that the aim of self-sufficiency is misplaced and could be a costly goal.”
The committee noted a whopping $9.5bn had been invested by oil refining companies into Australian refineries over the decade to 2012, but that they faced challenges from Asian competitors.
“Australia’s refining industry is undergoing structural change in response to strong competitive pressure from larger and newer Asian refineries, which continue to lower the break-even benchmark that our refineries compete against,” the white paper stated.
“The domestic pressure of high local costs, coupled with a high exchange rate, is expected to keep Australian refineries under pressure for some time.”
The closures did not stop there.
In 2015, BP shuttered its Bulwer Island refinery in Queensland.
Then, in 2021, it also converted its Kwinana, Western Australia refinery into an import terminal, with ExxonMobil doing the same with its Alton, Victoria site.
The reason for the closures, coming at the height of Covid: “continued growth of large-scale, export-oriented refineries throughout Asia”, according to BP.
Those closures left just two remaining sites: Ampol’s Lytton Refinery in Brisbane and Viva Energy’s Geelong Refinery in Corio.
However, with Covid dampening consumption and talk growing of the green energy transition, focus on refining capability largely fell to the wayside until the United States’ and Israel’s surprise attack on Iran on February 28, and the Islamic Republic’s de facto closure of the Strait of Hormuz.
The closure of the strait, through which about a fifth of the world’s crude transits, put pressure on Asian refineries and, in turn, raised concerns about Australia’s.
Australia has sought to strengthen agreements in the region, with Anthony Albanese travelling to Malaysia, Singapore, and Brunei, as well as diversifying supplier, including getting more fuel from the United States.
Ms Plibersek said the Albanese government had “made it a priority to keep the two remaining refineries open”.
The Coalition has for weeks sought to needle the government over the number of remaining refineries, with the Opposition Leader Angus Taylor on Wednesday claiming it was the former government that “saved the last two refineries”.
“We need to put Australians first,” he said.
“We need to have more fuel in this country. We need to drill more to get more out from under the ground.
“But, that won’t happen while this Labor government is in place because they don’t believe in it.
Australian Workers’ Union Victorian Branch President Ross Kenna, speaking on Thursday from the Geelong site, said “it is a disgrace” that Australia had been left with just two refineries.
‘We do need to invest in this sort of sovereign capability,” he told Sky News.
“The union movement has been pushing that entire time to try to ensure that these sort of industries don’t go by the wayside.”
