WA, FEDERAL GOVERNMENTS INVESTIGATE POTENTIAL FOR FIRST NEW OIL REFINERY IN DECADES

WA, federal governments investigate potential for first new oil refinery in decades

The Australian government is looking to build its first new oil refinery in decades. (AAP: James Ross)

In short:

The WA and federal governments will investigate building a new oil refinery to strengthen the country’s energy security. 

Both governments have announced a $4 million pre-feasibility study for the large-scale facility, which was proposed and would be built by Perdaman. 

Australia currently has two refineries, in Queensland and Victoria. 

Australia could build its first new oil refinery in decades, with the federal government set to investigate constructing a large-scale facility in Western Australia as part of its energy security response.

Prime Minister Anthony Albanese and WA Premier Roger Cook travelled to the WA mining hub of Karratha today to announce a $4 million pre-feasibility study, which would examine potential sites for the refinery.

Mr Cook said the sites being considered were predominantly located in the Mid West and the South West of the state. 

The ABC understands possible locations include Geraldton, Perth, Bunbury and Collie.

When asked whether Karratha could be in the running, Federal Resources Minister Madeleine King said “the north does make sense” but a proper investigation was needed to determine the location. 

Madeleine King says the location for the proposed oil refinery is yet to be chosen. (ABC News: Kimberley Putland)

“We haven’t decided on a location. That’s what a feasibility study is about, finding the best place, the most sensible place to pursue such a venture,” she said. 

First refinery to be built in 60 years

Mr Albanese said the facility would be the first oil refinery built in Australia since the 1960s.

“Building an oil refinery here on the west coast would obviously build our resilience as a nation, as well as particularly benefit Western Australia, which plays such a critical role in Australia’s economy,” he said. 

“It would create a major boost for local jobs and manufacturing along with our sovereign capability.”

The new refinery was proposed and would be built by Perth-headquartered Perdaman, a multinational organisation known for its fertiliser production operations. 

An oil refinery in Geelong is one of only two remaining in Australia. (AFP: William West)

There are just two oil refineries remaining in Australia, located in Brisbane and Geelong. 

WA location ‘makes sense’

WA Energy Minister Amber-Jade Sanderson said it made sense to build the the nation’s third refinery in Western Australia because it was the largest, most isolated state.

“We are thousands of kilometres from existing refinery capacity and we need to ensure that we have ongoing resilience in our fuel supply chain,” she said.

Ms Sanderson said the refinery would also complement the state’s resources, agriculture and transport industries.

The pre-feasibility study for the new refinery is part of a $10 billion package from the federal government to secure the nation’s fuel security and energy sovereignty.

Energy analyst Saul Kavonic told 102.5 ABC Perth that Australia needed to shore up its crude oil supplies to keep the refinery running.

“From a fuel security and economic security and a national security standpoint, there’s a very strong case to say that Australia needs more refining capacity, but also more oil supply to go into that refining capacity,” he said.

Mr Kavonic said crude oil could potentially be sourced from the Bedout Basin off WA’s coast and from the Taroom Trough in Queensland.

Refinery could cost $15 billion

Mr Kavonic estimated a “modern, reasonably sized” facility, aimed at doubling Australia’s refining capacity, would cost around $15 billion, and he predicted the government would need to “top up” funding for the project with taxpayer dollars.

The loss of Melbourne’s Altona refinery, on top of the looming Kwinana closure in Perth, raise fresh concerns about the nation’s ability to maintain fuel supplies in a crisis, writes Gareth Hutchens.

He said that could come in the form of direct investment or through the government guaranteeing a minimum level of revenue over the project’s life span to ensure its viability.

In 2021, BP closed its oil refinery in Kwinana, south of Perth, which was the country’s largest.

“I think if you could rewind the clock back now, governments would have taken a very different approach and wouldn’t have allowed Kwinana to close,” Mr Kavonic said.

Just over two decades ago, Australia had eight oil refineries. Many then closed after being deemed economically unviable.