Taxpayers to spend ‘hundreds of millions’ to save last fuel refiners
Energy Minister Angus Taylor is pushing Australia’s remaining two oil refiners to keep their petrol and diesel operations alive by offering to splash significant taxpayer funds on “production payments” and infrastructure upgrades.
With a potential national crisis brewing as fuel refiners consider closing aging production facilities and after the pandemic sapped demand for fuel, the government now finds itself under pressure to secure domestic sources of petrol and other fuels.
It is understood the funding deal has been in the works for some time, but wasn’t secured with the refiners in time for the budget.
While the budget papers haven’t given a dollar value for the payments “due to commercial sensitivities”, a government source told The Australian Financial Review they could be in the “hundreds of millions” of dollars.
Mr Taylor is negotiating the arrangemens as part of a nine-year strategy to “maintain Australia’s sovereign refining capacity and enhance national fuel security,” according to the budget papers.
Funding has been earmarked for the “introduction of a production payment to support domestic refiners”, and to provide “support, subject to consultation with industry, to assist the refiners to conduct infrastructure upgrades”.
Ampol is set to make a decision within the next few weeks on whether to keep open its Brisbane refinery, with analysts telling The Australian Financial Review it will need more than an interim subsidy to stay afloat.
The head of the other remaining facility, Viva Energy’s Geelong plant, indicated last week that several options are on the table, including a flat rate subsidy along the lines of the interim 1 ¢ per litre subsidy it already gets.
Industry experts are watching both companies closely after BP said it would shut its Kwinana refinery in Western Australia and ExxonMobile moved to close its Altona plant in Victoria.
Extracted from AFR