Government announces $250 million grant for Australian oil refineries

Scott Morrison has announced grants of a combined $250 million to shore up Australia's domestic oil supply, it has been revealed today.

The Prime Minister used his third day of election campaigning to share the news that the cash injection will be split equally between the Ampol facility in Brisbane, QLD, and the Viva Energy refinery in Geelong, VIC, for major upgrades.

Speaking in Sydney on Wednesday, he said a number of factors were behind the move, including the on-going war between Russia and Ukraine.

"COVID-19, the Russian war in Ukraine and trade restrictions have disrupted global supply chains and Australia is not immune," he said.

"Oil refineries literally fuel a stronger economy and these investments will help keep our truckies, miners, defence force and farmers moving across Australia."

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The Federal Chamber for Automotive Industries (FCAI), which has long been campaigning for Australia to have better fuel, said: "Reducing the amount of sulfur in our petrol is an important step in allowing internal combustion engines to run as efficiently as possible. We are hopeful the Government will extend this approach to aromatic levels in order to bring Australia in line with Europe."

The announcement follows a series of investments in the oil industry, with the recent cut to the fuel excise to lower prices amounting to around $3 billion, and a further $2 billion package for the refineries revealed in May last year.

At the time, the Morrison Government unveiled a plan to prop up the two facilities in Geelong and Brisbane by offering up to 1.8 cents per litre of fuel they produce until 2030.

The ‘Fuel Security Service Payment’ would be linked to refining margins, meaning refineries would only be supported when the margin they make per barrel of oil falls to $7.30. The payment will decline to zero if margins increase to $10.20 per barrel.

The estimated $2 billion cost would be a worst-case scenario, assuming both the Viva refinery at Geelong and Ampol refinery at Lytton are paid the highest rate for the full nine years.

That particular package is due to come into effect in July this year.

But not everyone has reacted well to today's news, with Australia's electric vehicle sector reeling from yet another investment in oil – saying "the EV industry remains ignored".

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Sinopec refinery

"Australia is capable of producing abundant clean electricity and that electricity could be powering our trucks and cars. But we have a Prime Minister who's more interested in subsiding foreign oil and that's tragic," said Electric Vehicle Council chief executive Behyad Jafari.

"It's incredible that an Australian Government in 2022 could be spending [a total] $6 billion propping up oil, while not even bothering to construct a competent plan for the electrification of Australia's fleet.

"Everyone now knows that the future of Australian transport is electric. We should be doing everything possible to rapidly electrify not just consumer vehicles, but trucks and commercial fleets.

"But instead of moving us toward the future, the Morrison Government is choosing to spend taxpayer money on propping up the failing oil industry. It's frankly dismaying for everyone who understands where the world is headed.

"If the EV industry was allocated even a fraction of the money spent on oil subsidies we could be cleaning our city air, lowering our carbon emissions, and breaking our dependence on foreign oil."

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The Morrison Government has also thrown funding at alternative fuels in recent weeks, declaring in latest Federal Budget it is to spend $1.5bn on the local hydrogen industry.

While funding for the Australian Renewable Energy Agency (ARENA) was increased to a total of $250 million in February, the total budget is less than 12 per cent of the money provided to the hydrogen industry.

Australia’s burgeoning hydrogen industry already supplies the fuel to Japan, while a hydrogen superhighway was announced between Victoria, New South Wales, and Queensland, with the aim to reduce emissions produced by long-haul heavy commercial vehicles.