Running on empty: Altona oil plant closure sparks fuel security warnings
Unions and business have sounded the alarm over Australia’s fuel security after the closure of one of the country’s last oil refineries, ExxonMobil’s operation in Melbourne’s west, was announced this week.
The nation could be down to just one plant producing petrol, diesel, jet fuel and other petroleum products for the local market by the middle of the year, with grave doubts over the survival of Queensland’s only remaining operation.
The future of what will be Victoria’s last refinery, Viva Energy in Geelong, now depends on state and federal government support, the company said on Wednesday, the day after the announcement of the closure of ExxonMobil’s operation at Altona.
There were also concerns of knock-on effects for several other large manufacturing businesses in Melbourne’s west when the 72-year-old refinery, which is slated to operate for at least another six months, shuts.
There are now just four oil refineries operating in Australia, down from 10 in 2010, and two – Altona and BP’s Kwinana in Western Australia – have confirmed their closures.
The future of Ampol’s operation outside Brisbane is officially under review by its owners, with closure a real possibility – an outcome that would leave Viva, which employs 300 people at its site on the shores of Corio Bay, as the nation’s last surviving refinery.
The Australian refineries are ageing and small in comparison with their international competitors, according to a report by the federal Parliamentary Library published in December, with Energy Minister Angus Taylor noting the same month that the local operations were returning “small margins” for their owners that had been further reduced by the COVID-19 pandemic.
Viva was the only plant to take up Mr Taylor’s $83 million refinery survival package – part of a broader $2.3 billion effort to shore up Australia’s fuel production and storage capacity – which would have paid producers 1¢ for each litre of fuel they manufactured onshore.
The company would not commit on Wednesday to the long-term future of refining at the Geelong plant, where it plans to develop a giant natural gas import terminal, saying it was working with the Australian and Victorian governments on the “long-term sustainability” of the refining operation.
”While refining remains very challenging, Viva Energy remains committed to working with the federal government to implement the fuel security package, and with the Victorian government on investments to improve the competitiveness and long-term sustainability of our refinery,” the company said in a statement.
“There is a lot that needs to be finalised, but we are making good progress and are encouraged by the support we are receiving from government, our business partners and the broader community.”
The Australian Industry Group and the Maritime Union of Australia both warned on Wednesday that the Altona closure was a blow to the nation’s fuel security.
Australian Industry Group chief executive Innes Willox warned of “our severe fuel insecurity”.
“Not only is Australian refinery capacity plunging, but most of the oil comes from overseas,” he said.
“Any future disruption to global supply chains would see Australia rapidly grind to a halt unless we take far-sighted action.”
The Maritime Union’s assistant national secretary Jamie Newlyn called for urgent federal government action to keep Geelong and Ampol’s operation, in Lytton outside Brisbane, open.
“More than 90 per cent of Australia’s refined fuels are coming from overseas, leaving the nation seriously exposed to any crisis that impacts on maritime supply chains,” he said.
Energy Minister Mr Taylor said on Wednesday that he and his colleagues were working with the remaining refineries to secure Australia’s supply of locally refined fuel.
“The Morrison government is committed to enhancing Australia’s fuel security and is working closely with the refineries to ensure their continued operations in this country,” he said.
A spokesman for the Andrews government said it had “encouraged the Commonwealth to support the viability of Australia’s refinery sector”.
“We continue to engage with Viva about its proposals for a number of energy efficiency projects to be developed at Geelong,” he said.
In Altona, chemical company Qenos – which employs about 500 workers and contractors locally and which uses feedstock from ExxonMobil in its production processes – said news of the refinery’s closure was disappointing but it was too early to say how its operations would be affected.
”Our thoughts are with those people, especially ExxonMobil refinery employees, who will be affected by the decision,” Qenos said in a statement.
“It’s still very early days in terms of what the decision means more broadly to Qenos.”
Two other large local manufacturing plants, Dow Chemical and BASF, which also use ExxonMobil feedstock, did not respond to requests for comment.