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Australia must boost its refining capacity and shore up fuel security in the light of COVID-19

April 30, 2020

The AWU is working with industry leaders and governments to ensure the country’s oil refining and storage industry is not only maintained, but that it is expanded.

The global pandemic has laid bare the precarious state of Australia’s fuel security and the urgent need for the country to develop stronger domestic capability and resilience.

Australia has the lowest fuel reserves of any member nation of the International Energy Agency, and over the last financial year had an average of just 23 consumption days of petroleum in storage, 20 days worth of diesel, and 25 days of aviation fuel. This is dangerously low and could put Australia at significant risk if there was any disruption to the international supply chains.

A global supply disruption would not only cripple our refining industries it would also impact many other core industries including chemical and plastic production, agriculture and mining. Without liquid fuels, Australia would grind to a halt within days – unable to feed, transport or protect ourselves.

Members of the Australasian Refineries Operative Committee (AROC) and the AWU are now calling on the Government to develop a national action plan to increase Australia’s stockpile of liquid fuel and expand its refining capacity. Representatives met last week to discuss the current state of the industry.

They revealed:

  • The global slow-down has led to refineries undergoing maintenance or partial shutdowns and that over the coming months this will result in a 40% reduction in national refining capacity.
  • The recent deal between the US and Australia to allow Australia to access to vast crude oil reserves of the SPR and storage entitlements is not a long-term solution. COVID-19 has demonstrated that if supply chains are disrupted this arrangement would be fundamentally flawed because it depends upon international transit.
  • If Australia wants to achieve real fuel security, internal capacity needs to be urgently built up.

Daniel Walton, National Secretary of the AWU, said Australia faced the very real prospect of running out of fuel unless action was taken now.

Mr Walton said: “COVID-19 has served as a warning. Any disruption to the global energy supply chain would leave Australia very isolated especially as we have very low reserves already. The knock-on effect would be catastrophic and affect every single part of our economy, as well as our national defence.

“The positive news is this has been a wake-up call to industry and our political leaders who now understand the threat and are taking it seriously.”

The AWU says the priority now must be on delivering a solution to increase Australia’s storage capacity.

AWU Oil and Gas IRG Chair, Mick Denton – who also chairs the AROC group – called on the government to get serious on the question of fuel security.

Mr Denton said,  “Crude oil prices are at a historic low and we should be taking advantage of that. We should be securing the crude we need, refining it in Australia and then storing it for future use. We will be working with industry and the government to deliver a practical solution that not only solves our fuel security problem, but that guarantees a productive future for our refineries and the thousands of members employed in the sector. This is a national security matter and we need to get on top of it urgently.”

AROC advocates on behalf of workers in the oil, gas and petroleum sector and provides expert on the ground advice about Australian refining capacity and future needs.

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