A recovery in oil prices late last year has resulted in the Morrison government paying only $12.45 million from a potential $2 billion fuel security package to help boost Australia’s fuel supplies.
The release of the Fuel Security Services Payment for the first quarter of 2021-22 showed Viva Energy received $12.45 million to keep its Geelong refinery in Victoria open.
But Ampol, which operates its Lytton refinery in Brisbane, did not receive any government subsidy, as oil margins picked up in the second half of the year.
Oil refineries that receive the Fuel Security Services Payment, which started in July 2021, must commit to staying open until mid-2027.
Ampol has committed to keeping its Lytton refinery open until the end of 2027, while Viva Energy said its Geelong refinery will stay open until at least June 2028.
The Morrison government was under pressure during the height of the COVID-19 pandemic about boosting Australia’s oil supplies and fuel security.
Although it has not been called upon too often, the potential $2 billion, 10-year security package is seen as a safety net to ensure local stocks are secured.
‘Working as intended’
Federal Energy Minister Angus Taylor said the fuel security package would keep Australia prepared for any emergency, increase onshore diesel supplies and lock in jobs for fuel-dependent industries.
“The results demonstrate the Fuel Security Services Payment is working as intended, with refiners only receiving support from the government when the refinery conditions are poor,” he said.
“In the case of Ampol, their margins have rallied to such an extent they do not need any support. Viva’s margins are also improving, with the payment well below the minimum maximum available.
“This means the Morrison government has been able to secure our local refineries while providing value for taxpayers with lower than budgeted payments.”
Refiners are paid a variable Fuel Security Services Payment based on the volume of key transport fuels produced in each quarter from July 2021.
The rate of payment is tied to external market conditions and other operating factors. The rate ranges between 0 and 1.8 cents per litre, limiting the downside risk only.
Extracted from AFR