A lifeline has been thrown to two of Australia’s three remaining oil refineries, protecting 1250 jobs and locking in the nation’s fuel security, the federal government says.
A package detailed in the federal budget on Tuesday showed payments will be made to Ampol’s last remaining oil refinery in operation, Lytton in Queensland, and Viva Energy Australia’s refinery in Geelong, Victoria, when margins reach certain levels, linked to actual production of key transport fuels.
“This will mean that the refineries are only supported in downtimes, and will not receive government support when they are performing well,” the federal government said in a statement.
The scheme has been costed up to $2.047bn to 2030 in a worst-case scenario.
“This figure assumes that both refineries are paid at the highest rate over the entire nine years in COVID19-like economic conditions, which is unlikely as the economy recovers,” the government said.
The package also includes up to $302m to support major refinery infrastructure upgrades to help refiners bring forward the production of better-quality fuels.
Scott Morrison said the package would shore up Australia’s fuel security, and protect the jobs of 1250 direct employees across the two refineries and create another 1750 construction jobs.
“This is a key plank of our plan to secure Australia’s recovery from the pandemic, and to prepare against any future crises,” the Prime Minister said.
“Earlier investment in Australia’s ability to produce better quality fuels, including ultra-low sulfur levels, will also improve air quality and deliver an estimated $1 billion in lower health costs.
“Major industries like agriculture, transport and mining, as well as mum and dad motorists, will have more certainty and can look forward to vehicle maintenance savings and greater choice of new vehicle models.”
Energy Minister Angus Taylor said supporting the refineries would ensure Australia had “the sovereign capability needed to prepare for any event” and protect families and businesses from higher prices at the bowser.
The government will introduce the Fuel Security Bill to parliament in coming weeks.