Taxpayers to bear brunt of Morrison’s $2bn pledge to oil refineries

By

May 18 2021
Share

Taxpayers are set to be on the hook for up to $2 billion over the next decade as the government commits to protecting two oil refineries.

The Morrison government is looking to secure Australia’s sovereign fuel stocks by committing to maintain a self-sufficient refining in Australia by supporting the operation of the Ampol refinery in Lytton (Queensland) and the Viva Energy refinery in Geelong (Victoria).

Tuesday’s budget revealed that the government would introduce a production payment to support domestic refiners and direct support for the refiners to upgrade their infrastructure, but the cost of both was “not for publication” due to “commercial sensitivities”.

Tuesday’s budget announced a payment for domestic refiners and direct support for refineries although it did not go into details due to ‘commercial sensitivity’.

The government has since announced that the direct support will be at a cost of $302 million for infrastructure upgrades to help bring forward production of better-quality fuels from 2027 to 2024.

The variable fuel security service payment will see refineries paid a maximum of 1.8 cents per litre when the margin drops to $7.30 a barrel.

The payment will drop to 0 cents when the margin hits $10.20 a barrel, meaning refineries are only supported in downtimes and will not receive government support during the good periods.

All up under a worst-case scenario, the Australian taxpayer will have to pay $2.05 billion to keep the two refineries open, although their production could save drivers 1 cent a litre when they fuel up.

The Prime Minister said it would help all Australians through reducing fuel costs while projecting jobs, with 1,250 direct employees across the two refineries, and adding 1,750 jobs during the construction phase.

“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,” Mr Morrison said.

“This next stage in our plan for Australia’s recovery will create jobs and make our country more self-sufficient and secure.”

The government will also accelerate the industry-wide review of the petrol and diesel standard to 2021, including a consideration of aromatics levels. This aims to create a Euro-6 equivalent petrol and diesel standard that are appropriate for Australia.

The government will work with both refineries on their plans to consider future fuel technologies and other development opportunities. This will include the refineries’ roles in the rollout of future fuels, such as electric vehicle charging and hydrogen transport infrastructure.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

Most read

Age Pension increase prompts Australians to review their finances

Latest Podcast

Rest strengthens investment strategy with seasoned executive appointment

Resources

There is $17.5 billion in lost and unclaimed super across ...

Invest