Australia's remaining refineries seek support amid fuel security concerns

The refinery, one of just two remaining in Australia, has survived changing owners, international competition and the pandemic. On April 15, a fire erupted in its alkylation unit, threatening the plant and the country's fuel security. No one was injured, and production has been gradually restored.

Australia once operated eight refineries. The remaining plants at Geelong and Brisbane produce about one-fifth of national demand; the country imports roughly 80 per cent of its refined fuel. The Geelong site also houses Australia's last polypropylene and bitumen manufacturing, supplies specialist aviation gasoline and produces industrial solvents.

Viva Energy chief executive Scott Wyatt said the crisis has shifted repeatedly. "It's kind of moved from being a crude problem to a refined product problem, and now it's a shipping problem," he said, referencing the war in the Middle East, which has choked key maritime corridors, triggered a supertanker shortage and driven freight costs up tenfold.

The Albanese government has responded with a $14.8 billion fuel resilience package, including a government-controlled reserve of diesel and aviation fuel, proposed increases to mandatory stockholdings and longer-term support for domestic refining. Energy Minister Chris Bowen has promised no refinery will close on Labor's watch.

But economists warn that stockpiling ever-greater quantities of fuel may not be the cheapest answer. Grattan Institute researchers estimate the proposed stockholding increases could require almost 4 billion litres of additional storage by 2050, with construction and operating costs approaching $17 billion. They recommend holding mandatory petrol stockpiles steady as electric vehicles reduce demand, repurposing existing tanks for diesel and aviation fuel, and accelerating electrification of heavy transport and mining. Those measures, alongside greater use of sustainable aviation fuels, could save consumers and taxpayers almost $4 billion, they estimate.

Energy analyst Tony Wood argued that building new oil refineries is neither economically viable nor a sensible answer to Australia's fuel vulnerability, given dwindling domestic crude reserves and competition from larger Asian producers. He said modest increases in fuel storage, particularly diesel, should be accompanied by accelerated electrification of cars, trucks and mining equipment to permanently reduce dependence on imported oil. For industries where electrification remains difficult, Wood said developing locally produced biodiesel and other low-carbon fuels should take priority over spending billions on new refining infrastructure.

The competing arguments expose the dilemma confronting Canberra: how to preserve critical industrial capabilities while preparing for an economy that ultimately needs less oil. Nor will arguments for taxpayer assistance be easily won amid an extraordinary financial windfall for both refineries from the conflict. In the first half of 2026, surging refining margins drove Viva Energy to a $452 million net profit, a $647 million turnaround from the previous year's loss, while Ampol's Brisbane refinery surged to $533.4 million. Yet both operators continue seeking long-term government support, arguing high current margins do not resolve multi-decade investment horizons.

The Australian Workers' Union argues losing the remaining plants would surrender irreplaceable industrial skills and expose vital supply chains. National secretary Paul Farrow said: "Without it, Australia stops. Our fuel security is our national security – but for a generation, Australia rarely treated it as the basic guarantor of our wellbeing that it is." The union is pushing for expanded domestic refining, larger reserves and a localised renewable fuels industry.

For Wyatt, securing certainty beyond 2030, when the existing refinery support arrangements expire, is key. "Nothing we do here happens quickly. These generally are big investments. They're multi-year investments." He argues Geelong's existing infrastructure and specialist workforce could also support the transition towards renewable diesel and other lower-carbon fuels. "The skills of the people here are irreplaceable."

The Geelong plant employs about 800 people, with hundreds more contractors. During major maintenance shutdowns, its workforce can swell to roughly 1500.