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Kwinana refinery closure to shrink Australian-made fuel market by one-fifth

But he said this reliance could hurt the state and the rest of the country down the track if supply chains were disrupted.

“The issue we have currently is that there is insufficient storage capacity,” he said.

“In 2019-20, Australia only had stockholdings of diesel oil to last 20 days, automotive gasoline to last 25 days, and aviation turbine fuel to last 26 days.

“So in the event of supply chain disruptions … Australia could find itself undersupplied, which could lead to significant security concerns or economic issues.

“The mining, agriculture and transport sectors are significant contributors to the economy and all are heavily dependent on having secure fuel supplies.”

Mr Thomson said with Kwinana closed, Australia would have just three refineries in operation which have a combined capacity lower than a single average refinery in Asia.

Crude oil and natural gas prices are expected to rise this year, providing some much-needed support to refineries, but IBISWorld still forecast more would close with only one refinery taking the federal government up on a recent production payment incentive.

BP announced the closure of the terminal in October, blaming cheaper fuel producers in places like Asia and the Middle East.

About 590 jobs will go as a result of the closure and the facility will be converted into an import terminal when production stops.

A modification to the state agreement was made on October 28, 2020 to allow the change.

A state government spokeswoman played down concerns about fuel security and said the refinery was already almost fully reliant on imported crude oil.


“The refinery has successfully relied entirely on fuel imports in the past when it temporarily shut down every four years for maintenance work,” she said.

“The company has advised that it has sufficient capacity right now for the storage of refined products with additional tankage available if required.

“Under its State Agreement, BP is required to co-operate with the state to ensure that the supply of and distribution of petroleum (including aviation fuel) within Western Australia is not adversely affected in any material respect by the closure of the crude oil refining and the transition to a fuel import facility.”

The federal government’s fuel security policy includes a proposed $200 million fuel security package for new storage facilities.

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