Australia’s precarious fuel security position has been thrown into sharp relief by escalating tensions in the Middle East, with Ampol chief executive Matthew Halliday asserting that recent global disruptions underscore the critical importance of retaining the nation’s last two oil refineries.
Speaking to ABC News Business, Mr. Halliday emphasised that the ongoing conflict involving Iran has highlighted Australia's significant vulnerability to international supply chain shocks, making the continued operation of the Lytton refinery in Queensland and Viva Energy’s Geelong refinery in Victoria more vital than ever. The comments come as the federal government prepares to review its multi-million dollar subsidy program designed to keep these facilities operational.
Geopolitical Storms Expose Soft Underbelly
The specter of conflict in the Middle East, a region pivotal to global oil supplies, has sent shivers through international markets and shone a harsh light on Australia's increasing dependence on imported refined petroleum products. Mr. Halliday stated that the conflict, which has seen attacks on shipping lanes and heightened uncertainty, served as a potent, real-world stress test for Australia's energy resilience.
Australia currently imports approximately 90% of its refined fuel, a figure that has steadily climbed over decades as local refining capacity dwindled. This reliance leaves the country exposed to price volatility, supply disruptions, and geopolitical blackmail. The Ampol CEO argued that while domestic refineries might not meet all of Australia's needs, their presence acts as a crucial buffer, providing a minimum level of supply insurance during times of crisis and helping to stabilise local pricing.
Subsidy Lifeline Under Scrutiny
The federal government’s Refinery Production Payment, a scheme introduced in 2021 to support local refiners, is currently under review. This initiative provides up to 1.8 cents per litre for locally refined fuel, a significant financial lifeline that has helped Ampol and Viva Energy navigate volatile market conditions and invest in their facilities. Mr. Halliday's statements are a clear signal to Canberra regarding the strategic imperative of continuing this support.
Critics of the subsidy argue that it is an expensive intervention in a declining industry, questioning its long-term viability and return on investment. However, proponents, including Ampol, contend that the cost pales in comparison to the potential economic and social fallout of a severe fuel shortage. A disruption to refined fuel imports could paralyse transport, cripple essential services, and devastate the national economy.
The Strategic Imperative of Local Capacity
Maintaining domestic refining capability extends beyond mere economics; it is increasingly viewed as a national security issue. In an era of escalating geopolitical tensions and increasingly complex global supply chains, the ability to produce a portion of one's own critical resources becomes a strategic asset. The Lytton refinery, for instance, processes crude oil into petrol, diesel, and jet fuel, supplying a substantial portion of Queensland's needs and playing a key role in the national supply chain.
Ampol has invested significantly in optimising its Lytton facility, focusing on efficiency and the production of higher-value fuels. The company, which purchased the refinery from Caltex Australia in 2020, has stressed its commitment to its ongoing operation, provided the policy environment remains supportive. As Australia grapples with the transition to renewable energy, the interim role of traditional fuel sources and the infrastructure supporting them remains a critical national conversation, with the shadow of global instability adding urgency to the debate.
