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Immediate support for Australia's refineries and fuel security

14 December 2020

The Morrison Government is accelerating support for local oil refineries as part of its commitment to jobs, affordable fuel and Australia’s long-term fuel security.

The Government will provide relief to the refining sector by bringing forward the production payments announced as part of comprehensive fuel security package in the 2020-21 Budget, with support to begin on 1 January 2021. 

Minister for Energy and Emissions Reduction Angus Taylor said the Government was taking immediate and decisive action to keep our domestic refineries operating.

“The COVID-19 pandemic continues to place immense pressure on our refineries and the many Australians employed in the fuel sector,” Minister Taylor said.

“We have worked closely with the sector to design and implement our comprehensive fuel security package.

“The production payments will help the industry withstand the economic shock of this crisis, protecting local jobs and industry, bolstering our fuel security and shielding motorists from higher prices.”

The support will be provided through a minimum one cent payment for each litre of primary transport fuel (petrol, diesel, and jet fuel) from the major domestic refineries who continue operations in Australia.

The production payment reflects the fuel security benefits refineries provide to the Australian market. 

To receive the payment, refineries must agree to continue to operate for the duration of the program. Support is also contingent on refineries committing to an open book process and long-term self-help measures to further inform the development of the long-term package.

As part of the MYEFO process, the first six months of the production payment will be funded by the Australian Government, with the package worth $83.5 million. 

The long-term market mechanism for the production payment will come into effect no later than 1 July 2021. The Government is continuing to work with industry to finalise the market mechanism design in the coming months. 

This announcement builds on the Government’s previously announced actions to secure Australia’s long-term fuel supply and bolster local industry. The 2020-21 Budget announcement includes three elements: 

  • Investing $200 million in a competitive grants program to build an additional 780ML of onshore diesel storage;
  • Creating a minimum stockholding obligation for key transport fuels; and
  • Backing the refining sector through a market mechanism to deliver a refinery production payment.

Our plan will create 1,000 new jobs and protect workers in the fuel sector and in fuel-dependent industries including manufacturing, agriculture and transport.

The Morrison Government is committed to building-up our domestic capability to ensure it is appropriate for Australia’s future needs.

Media contact:

Minister Taylor's office: 02 6277 7120