New tax-funded subsidies for the remaining Australian oil refineries are urgently needed on Jan.. Moved forward to January as international travel bans demand for fuel and sends out domestic industry tends to shutdown and job losses.
The federal government will announce Monday that it will accelerate taxpayer-funded production payments by at least a cent for every liter of gasoline, diesel or jet fuel produced by large domestic refineries that continue to operate in Australia.
BP has announced that it will close the 65-year-old Kwinana oil refinery in Perth and convert the site into a fuel import terminal.
A value greater than $ 2 is expected to receive payment. 3 billion over a 10 year period, the refineries must agree to continue operating for the duration of the program. Support depends on a commitment to an open book process and long-term self-help efforts to further advance the development of the package.
The government argues that keeping refineries open will suppress fuel prices, and the modeling suggests that when production ended, wholesale prices would rise nearly 1 ¢ per liter, which adds up to $ 4. 9 billion over a decade.
British energy giant BP announced in October that it would permanently shut down one of Australia’s last remaining oil refineries, the 65-year-old Kwinana plant in Perth, and convert the site into a fuel import terminal. The refining business is not economically viable.
Geelong oil refinery owner Viva Energy has also considered closing its 65-year-old refinery after losses dropped to nearly $ 80 million. Last week, the company made agreements with two consortia, including the Japanese company Mitsui, the French company Engie and the trading giant Vitol, to import loads of liquefied natural gas (LNG) at the site as early as 2024.
The situation has worsened at the Ampol refinery in Brisbane after losses rose to $ 141 million this year. Ampol told investors last month that options were being examined, including permanently closing the 500-employee plant and moving the site to a fuel import terminal.
The industry had warned since the government announced support in October that the proposed six-month consultation period was too long given the immediate challenges.
Federal Energy Minister Angus Taylor said the COVID-19 pandemic has continued to put enormous pressure on refineries and jobs in the fuel sector.
« We have worked closely with the industry to design and implement our comprehensive fuel security package, » said Taylor, who will announce that he will bring the 1 ¢ payment system forward by six months in Geelong on Monday.
« The production payments will help industry withstand the economic shock of this crisis, protect local jobs and industry, strengthen our fuel security and protect drivers from higher prices. «
The first six months of the production payment will be funded by the federal government with a package worth $ 83. 5 million.
If less than three refineries participate, the program will increase the payment rate to create competitive tension in the market and increase the incentive to stay.
The long term market mechanism for payment first announced at 1am. 15 ¢ per liter in October will be paid no later than 1. Enter into force next July. The government is working with industry to finalize the details as the legislation will be introduced in early 2021.
The Australian Labor Union, which represents refinery workers, has urged the state and federal government to do everything possible to keep the local refinery running.
Amid criticism from Labor, Taylor consistently said that the future refining sector in Australia would not look like the past and normal competitive processes would always play a role in determining the long-term future of refineries.
Daniel Walton, head of the Australian Workers’ Union, who led a delegation to Canberra this month to urge support for the refinery, said the package shows that Australia can and should maintain its fuel refining capacity.
« Being able to make our own fuel is a critical sovereign skill. Without them, we are completely at the mercy of the trade routes threatened by potential international conflict or pandemics, « said Walton.
Mr Walton said the package underscores why BP’s decision in October to shut down the Kwinana fuel refinery in WA should not be accepted.
« BP claims Kwinana needs to shut down, but in reality it’s just a preference based on the company’s commercial interests. There is absolutely no reason BP Kwinana cannot continue to operate profitably with these support measures, « said Walton.
Opposition energy spokesman Mark Butler has accused the coalition of overseeing a massive decline in domestic refining capacity over the past seven years, claiming it has fallen by 40 percent.
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Rob Harris is the National Affairs Editor for The Sydney Morning Herald and The Age at Parliament House in Canberra
Refinery, Oil Refinery, Petroleum, Angus Taylor, Payment, Viva Energy Australia
World News – AU – 1 ¢ -a liter subsidy to keep refineries open and save jobs
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