Doorstop at Viva Energy Refinery - Geelong, Victoria

Government support for the refining sector

SCOTT WYATT – CEO, VIVA ENERGY AUSTRALIA: It's my great pleasure to welcome the Honourable Minister Angus Taylor, Minister for Energy and Emissions Reduction and also Victorian Senator Sarah Henderson as well, to Geelong today. It's always a pleasure to have them along and they've been great supporters of our business for a long period of time. This year has been particularly challenging for refining and for our site here at Geelong. COVID-19 has brought significant impacts in terms of reduced demand both locally and globally, which has put a lot of financial pressure on the refinery. It's created a great deal of uncertainty for our business. It has been wonderful to work with Minister Taylor and the Morrison Government through the course of this year on the challenges we face and the support the sector needs to both survive COVID-19, but also be a positive contributor to Geelong and to the country for many years ahead. I really appreciate the strong support that we've had from the Minister and also the pace at which he's moved things along. Today, to come into Christmas with a package which gives us certainty through the beginning of next year and a pathway to long-term viability, the refinery, is just fabulous Christmas present for our business and for everyone here at Geelong who have worked incredibly really hard through the course of this year to keep fuel supply to the country, despite the challenges we have faced. I know this will be really welcome news for the whole site and indeed, the whole company. So thank you Minister. 

ANGUS TAYLOR: Well, thanks, Scott. It's great to be here with you and with Sarah who is a great advocate for this region of Geelong and has been for many years and will continue to be a fierce advocate for the interests of and jobs of people around this region. It's been a tough year for refining, there's no doubt about that. It's been a tough year for so many sectors in Australia but refining has felt the brunt of it with lower global refining margins and, of course, substantially reduced offtake. That's been particularly here in Victoria. Several months ago, we announced a fuel security package as part of the budget which was focussed on making sure we have enough stocks, we have those supplies necessary to make sure that crucial industries for Australia have the fuel they need. Part of that included, of course, a refinery production payment, which is all about shoring up our refineries and recognising the role that our refineries play in fuel security in this country. Today, we're announcing that we're bringing forward that production payment to 1 January. It will begin from 1 January. It's a temporary payment, and will make way then for a long-term payment, which will then be in place by the middle of next year. This is absolutely focussed on making sure we have the fuel we need for our farmers, for our truckies, for our commuters, for our tradies. All of those industries that are so dependent on having a secure, reliable supply of fuel in this country. We've been lucky in Australia. We have had reliable, secure fuel. But we have to be in a position where, under any scenario, we are able to supply that crucial fuel for all Australians. Our refineries are a crucial part of providing that supply of fuel. This announcement is also about manufacturing jobs. And as a Government, we are absolutely committed to jobs in manufacturing, into our manufacturing sector in this country. We're also announcing today, providing support for the Portland smelter, to recognise the role it plays in securing up our electricity grid and particularly the flexibility it can provide. Again, crucial manufacturing jobs, in that case, in another part of regional Victoria, which we're focussed on, to make sure we have a secure electricity grid, just as we need to make sure we have a secure supply of liquid fuels for our essential industries here in Victoria and right across Australia. Now, Sarah has been a great champion for this business, for this operation, for these jobs and for this region, and I'll ask her to say a few words.

SARAH HENDERSON – SENATOR FOR VICTORIA: Well, good morning, everyone. Thank you Angus and to Scott. This is certainly a wonderful Christmas present for the people of Geelong. I want to particularly thank the Minister who has been absolutely wonderful and recognised the importance of fuel security here in this country. We know, Scott, that Viva Energy and the Geelong refinery, one of the biggest employers, private employers in Geelong makes such an important contribution to our region and to our country. So this is a really wonderful announcement for the 700 people who work here, for jobs for Geelong and, of course, for our entire manufacturing sector. This is the latest example of how our Government has stepped up to support manufacturing jobs in this region. We are a fine manufacturing city. We have so many great success stories, and this is the latest success story for Geelong. So I am absolutely delighted. This is a multi-million-dollar investment in this refinery after a very tough year. Of course, we know, we saw a 60 per cent decline in petrol sales as a result of COVID throughout the year. It has been a very, very tough time for the Geelong refinery. So this Christmas present is really welcome. Congratulations Scott, for everything that you do for our city and our region, all of your workforce. We're very proud to be supporting you and we're very proud of the way that we are standing up for manufacturing workers, not just here, but right across the nation. Thank you. 

JOURNALIST: How will you decide how the $83 million is split up between, I think, three refineries? Is that right? 

ANGUS TAYLOR: Yeah. So, the production payment is planned to be at least one cent per litre. The size of that payment will depend on the uptake and, of course, the production. So we'll be accounting for the production from 1 January. But as I say, the payment will depend on how much is included in the production payment process. But, you know, this is all about making sure we recognise the crucial role that refineries play. They provide fuel security for this country. The absence of refineries, we'd have to hold a lot more stock, and that's what we're recognising in this production payment. We do want to see more stock being held in this country, and there's other initiatives in that package, which we've already announced, but refineries are the best possible answer for fuel security in Australia. 

JOURNALIST: Are there amounts of jet fuel, petrol and diesel that you want produced in the six months under this package? 

ANGUS TAYLOR: Well, we'd like the refineries to keep producing at the levels they've been producing at. I mean, there's obviously been a change in the mix with a significant reduction in jet fuel, and Scott can talk to that more than me, but that's been because of obviously the offtake has changed dramatically. But we'd like to see the refineries going as hard as they can. There's obviously been an upgrade here in the last little while which puts this refinery in a good position to continue producing.

JOURNALIST: Did the Government get the timing wrong with this initial package given that you have had to bring the start date forward now?

ANGUS TAYLOR: Our plan was always to have the start date as soon as possible. We said that from the get go. The question was how best to do that, we’ve come up with a way to do that and the start date will be 1 January. So, this is good news, it makes it real and the permanent payment, then will be in place by the middle of the year. 

JOURNALIST: On the permanent payment, do you expect that to be above one cent per litre? 

ANGUS TAYLOR: Well, there's no expectation on that quantum yet, other than we said that we will support at least one cent per litre and that's been the position from the start. But, you know, it depends again on the uptake and who is involved. So, we'll work our way through that in the coming months. But, we've made it very clear, it needs to be at least one cent per litre. 

JOURNALIST: What sort of timeframe are you looking at for this production payment? 

ANGUS TAYLOR: The permanent- 

JOURNALIST: The long one. 

ANGUS TAYLOR: Yeah, the permanent system will be in place by the middle of the year. We'd like it to be as soon as possible, obviously, but the middle of the year is the deadline. 

JOURNALIST: But will that be set in place for the decade or? 

ANGUS TAYLOR: Yes. Yes, from then on, yes. It's not intended to be a temporary system. This is, look, the heart of this is recognising that for years, our refineries have played a special role in our energy system in this country. They provide the liquid fuels we need with a very secure source of supply for those essential industries. Obviously, that's an important role which we've taken for granted in the past. We can't take it for granted now, and we've seen from the pandemic just how crucial it is to make sure that our refineries are in a position where they're sustainable over the longer term. 

JOURNALIST: Will this have an impact on prices at the bowser for consumers? 


JOURNALIST: On the fuel reserve guidelines Australia's still falling short of the IEA's 90-day fuel guideline, and it's currently in the 30s. Why is that? 

ANGUS TAYLOR: We're actually at 85 days, that's not correct. You're excluding crude oil and other oil in the supply chain. But we're at 85 days as of October. So- 

JOURNALIST: Does that include -

ANGUS TAYLOR: It is still - let me finish – it is still a few days short of the 90. That's why we've actually been buying our first ever strategic fuel reserve. We've done it at record low prices. This is a good deal for taxpayers and difficult challenge with storing that, but we've found ways around that. And we're putting in place a mandatory minimum stockholding obligation with a 40 per cent increase in the diesel required to be held. Now, that's all about getting to that 90 days and with those initiatives, this suite of initiatives, we're confident we can get up to that 90 days.  

JOURNALIST: Is that 85 days all held in Australia though? 

ANGUS TAYLOR: It is as required by the IEA. It includes stocks on water approaching Australia, but it also includes crude oil which is usually ignored from the figures. But crude oil is a crucial part of our supply chain. I mean, this refinery we're at right now uses crude oil to produce diesel, jet fuel, gasoline and other products. So that crude oil is an essential part of it and the IEA makes that very clear. 

JOURNALIST: But surely that's a strategic issue if we are relying on shipping and we actually need these fuel reserves in an emergency, surely we can't rely on-

ANGUS TAYLOR: At the end of the day, we'd like more crude oil produced in this country. I mean, the only way to solve that problem is to have more crude oil produced in Australia. The Bass Strait has been challenged in recent years, the Cooper Basin is continuing to produce, that's an important source of supply. But, we'd like to see the Beetaloo Basin, which is offering great potential as a source of liquid fuels in the Northern Territory, opened up as quickly as possible. But that is central to our fuel security strategy, but it's also an enormous economic development opportunity for the Northern Territory. 

JOURNALIST: The diesel storage that's a part of this rescue package, when are the grants due to flow? 

ANGUS TAYLOR: Yeah. So, we'll have more to say about that in the coming weeks. The point I would make is that we're moving as quickly as we possibly can for a competitive grant process. It is a competitive grant process, which is all about making sure we get extra storages in place. $200 million will be our contribution to that, which we expect will be around a 50-50 contribution to getting the extra storages in place to support what will be a mandatory minimum stockholding, 40 per cent higher than the current typical stockholding for diesel. 

JOURNALIST: Just on other issues, Minister, if I can? Why wasn't Australia granted a speaking slot at the climate summit over the weekend? 

ANGUS TAYLOR: The Prime Minister spoke at the Pacific Island Forum and of course that was an important opportunity for us to demonstrate to the Pacific Islands, to our region, which is where our focus always has to be, that we're meeting and beating our targets. I mean, the track record of Australia in terms of meeting targets is almost unrivalled. We've beaten our Kyoto 2020 targets by almost a year's worth of emissions. We put out data last week that shows that we will reach our 2030 targets, our Paris target, without needing carryover. We've seen an improvement every year we've been in government on both our 2020 and 2030 targets, and we will continue to drive those outcomes to reduce our emissions. Now, the point I'd make about this more than anything else, the great challenge the world faces is how to do this and deliver it. Its delivery that matters and where Australia has been outstanding and will continue to be outstanding is in delivery. We've delivered in the past, we will deliver in the future. We've continually improved on our position. We don't set targets without a plan. We don't do that because that ultimately means that you have to put taxes in place and imposts on Australians that we don't want to impose on them. But, we will always deliver, as we always have. 

JOURNALIST: When you look at countries like Rwanda and Afghanistan that were invited to speak, is that an embarrassment for Australia, that we've been effectively snubbed? 

ANGUS TAYLOR: No, look, you know what? Our accountability is to the Australian people. We deliver to the Australian people. We answer to the Australian people. And that will always be our focus, as the Prime Minister made clear in the Parliament last week. So that's our focus. The Australian people want us to bring down emissions, but they want us to do it in a way where we don't slash jobs, where we don't impose taxes, where we use technology not taxation, and we're seeing it. Look, the reason we were able to put out numbers last week with a dramatic improvement in our emissions projections through to 2030 is because we're seeing the record uptake of household solar in Australia as the costs come down. And many people watching this now will have solar on their roofs and many more will in the coming years. Now we're seeing extraordinary levels of investment in household solar because the costs are coming down. This is technology, not taxation. That will continue to be our focus. It has worked in the past. It will work. 

JOURNALIST: Just on iron ore, if I can? Are you worried that China's, that that might be the next target for tariffs given that the Chinese are already worried about rising prices anyway? 

ANGUS TAYLOR: Look, the extraordinary trade between Australia and China in iron ore, which started many, many years ago is good for China and it is good for Australia. China needs the iron ore in their steel mills, they are the biggest producer of steel in the world. And of course, we are the biggest producer of high quality hematite iron ore in the world and that's a mutually beneficial relationship. It has been for a long time and it will continue to be for long time. We see that as a very, very positive thing and it's something we want to continue to, obviously, succeed with. And it's very much in China's interest that that trade continues, just as it's in our interest. 

JOURNALIST: Can we just ask about the electric vehicle strategy that is due to be released? I understand it's about a year overdue - when will that be released? 

ANGUS TAYLOR: Well, it'll be coming out in the coming weeks. Obviously, with COVID, there's been a switch of focus but this is still important and we announced in the budget over $70 million of funding for our Future Fuels Strategy. There will be a focus on enabling Australians to choose. That's what this is about. Australians will choose when they want an electric vehicle or a hybrid and they're doing it now and they will continue to. But we have to have the infrastructure in place, the charging infrastructure. Electric vehicles require more three phase power so that's going to require significant investment and support. Charging stations, fast charging has to be available in critical areas. We see a big opportunity in shifting fleets to electric vehicles reasonably early in the piece. But it will be Australians choosing, Australian businesses choosing and we'll enable that choice. That's our focus. We trust Australians to make choices about their sources of energy like household solar, their means of transport, whether it's hybrids or electric vehicles or traditional cars. They'll make that choice when it suits to them, and we need to make sure they can. 

Media contact:

Minister Taylor's office: 02 6277 7120