Australia is considering building its first new oil refinery in more than 60 years, Prime Minister Anthony Albanese announced on Tuesday, as the ongoing war in the Middle East disrupts overseas fuel supplies and adds pressure on the country to strengthen its energy security.
Albanese said the project would help build national resilience and reduce Australia’s vulnerability to future supply shocks. If it proves feasible, the refinery would be built in Western Australia by industrial chemical producer Perdaman.
Speaking to reporters in Karratha, Western Australia, Albanese said the conflict in the Middle East is being felt across the world, including in Australia, and that strengthening domestic capacity would help shield the country from similar disruptions in future.
The federal government and the Western Australian state government will jointly fund a A$4 million (US$2.8 million) feasibility study to assess the project, Albanese said, adding that the priority is finding the right location and ensuring the project is commercially viable before moving forward.
Australia currently imports around 80% of its fuel needs and has been working to secure alternative supplies since the outbreak of the Iran war. The push to reduce reliance on imported oil follows a Treasury report warning that global oil markets have become increasingly vulnerable, with weaker buffers against potential supply shocks.
According to a briefing given to Treasurer Jim Chalmers over the weekend, global oil inventories have declined since the conflict intensified, and refined fuel markets could tighten further in the coming months.
Most of Australia’s domestic refineries were built in the 1950s and 1960s but have shut down over the past three decades due to high operating costs and competition from large-scale refineries in Asia. Only two refineries remain operational nationwide: Ampol’s facility in Queensland and Viva Energy’s plant in Victoria, down from eight in the year 2000.
Western Australia has had no operating refinery since 2021, when BP converted its 146,000-barrel-per-day Kwinana plant into a fuel import terminal.
