The Albanese government has announced a $4m feasibility study with the Western Australian government for a new oil refinery in the Pilbara region, but leading climate policy experts say it would be an investment in 'dinosaur technology' that would require public subsidies and do little for fuel security.
Experts question economic viability
Greg Bourne, a councillor at the Climate Council and former regional president of BP in Australia, said any potential refinery was unlikely to be economically viable. 'From a commercial point of view, you’ve got to be able to make sure you’re going to get a profitable return over the next 20, 30 years,' Bourne said. 'Australia is beginning to get more into renewables and if you look forward 10 years, you start saying less oil and gas are going to be needed, and if you look forward 20 years, you say it’s just not worth [it].'
Prof Frank Jotzo, director of the Centre for Climate and Energy Policy at the Australian National University, criticised the plan at the Clean Energy Summit in Sydney, saying investing in an oil refinery would send 'a big signal against the clean energy transition'. He told Guardian Australia a new refinery would probably need government subsidies to compete with more efficient mega refineries in Singapore and south Asia.
Fuel security and declining domestic production
Australia's domestic crude oil production 'continues to decline rapidly, and without new commercial discoveries, production is projected to cease within the next 7 years', according to Geoscience Australia's 2025 commodity resource report. Baethan Mullen, chief executive of the Superpower Institute, said that meant a new refinery would likely exclusively refine imported crude oil, doing little to improve Australia's sovereign capability. His institute's analysis shows Australia is 95% reliant on foreign fuel imports, with only 4% refined locally from Australian crude oil.
Mullen noted that diesel products are the main need, particularly in Western Australia's mining and agriculture sectors. However, condensate—a byproduct of gas extraction that is used for some petrol—is generally not used to make diesel. 'So a refinery built on the west coast, close to the North West Shelf, is still likely to need to import crude oil to make diesel, and that doesn’t make us any more fuel secure than we are now,' he said.
Industry decline and alternative investments
Six of Australia's eight oil refineries have closed since 2003, leaving only two operating. Jotzo argued that subsidies should go to next-generation zero-emissions liquid fuels instead. 'If you want to subsidise anything, then subsidise the next generation of technologies that is there to produce zero emissions liquid fuels,' he said. 'If there are state and federal subsidies, that should be on new technology rather than some dinosaur tech that could still be there in 50 years’ time.'
Mullen echoed that the economics no longer stack up for Australian refineries competing with larger Asian facilities. 'Our analysis would suggest it’s not going to be a viable prospect … it’s fairly well understood by people who analyse these markets that the answer is not in rebuilding refining capacity here.'
