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Australia refinery closures raise fuel import reliance

  • Spanish Market: Crude oil, Oil products
  • 10/02/21

ExxonMobil's decision to convert its 90,000 b/d Altona refinery in Australia to an import terminal means half of the country's refining capacity has been earmarked for closure in the last few months, moving Australia closer to complete reliance on oil product imports.

ExxonMobil announced today it would close the Altona refinery in Victoria state, citing the impact of declining domestic crude production, the need for future capital investments and the competitive supply of products into Australia. The decision comes after BP said in October it would halt operations at its 146,000 b/d Kwinana refinery in Western Australia by the end of April and convert the plant into an oil product terminal.

This will leave Australia with just two refineries — Ampol's 109,000 b/d Lytton and Viva Energy's 128,000 b/d Geelong plants. Ampol is considering the future of Lytton, potentially leaving Australia with just one ageing refinery that will have the capacity to supply little more than 10pc of the country's 1mn b/d oil product market.

The closures, and the prospect of rising import dependence, undermine government efforts to provide financial assistance to the country's refiners, which have been hit by weak margins, lower demand and looming requirements for large investments to improve fuel standards.

Three refineries in Australia were already converted into import terminals between 2012 and 2015 (see table), with similar strategic reasons cited for the changes. Australian refineries are older and smaller than many other Asia-Pacific plants — reflecting their roots in 1940s-60s state government efforts to meet local demand, with little thought given to sales to neighbouring state markets or exports.

This has left operators facing significant upgrading costs to produce better quality fuels in line with standards in other developed countries and regional powerhouse China.

Trade flows

The refinery closures will cut Australia's crude imports but boost demand for oil products, particularly gasoline and diesel. Gasoline makes up about 60pc of Altona's fuel production, with diesel at 30pc, ExxonMobil says. Jet fuel typically accounted for around 10pc, although this fell last year because of tight restrictions on air travel to combat the Covid-19 pandemic.

Australia's four refineries produced an average of 371,000 b/d in January-November last year, or 78pc of their combined capacity of 473,000 b/d. Gasoline and diesel each accounted for around 37pc of total fuel output.

This indicates that domestic output accounted for around 42pc of total oil product demand of 890,000 b/d in the 11-month period. Demand was down by 17pc from the 2019 average of 1.05mn b/d, largely reflecting the impact of Covid-19.

Australia imported 546,000 b/d of oil products in the same period, down from 636,000 b/d in 2019. The country ships some of its imported and domestic refined products to nearby markets including New Zealand and small Pacific island states.

Gasoline imports were about 107,000 b/d of gasoline in 2020 with Singapore and South Korea the biggest suppliers, at 36,000 b/d and 21,500 b/d respectively. Imports are on the rise from India, which more than tripled shipments to Australia to 11,800 b/d last year from just 3,000 b/d in 2019. Imports from China were steady at just over 4,000 b/d last year.

China reliance

The closure of the two refineries will leave Australia even more dependent on product imports, and potentially more reliant on China, its largest trading partner.

China, which has been rapidly expanding refining capacity and product surpluses in recent years, expanded its share of Australian product imports to over 13pc in the July 2019 to June 2020 fiscal year from less than a 0.5pc share 10 years earlier. China accounted for over a quarter of Australian jet fuel imports and 15pc of diesel in 2019-20.

The prospect of increased energy imports from China come as trade tensions between Canberra and Beijing have increased. This has led China to reduce its purchases of Australian coal, potentially cutting Australia's energy trade surplus with China.

Australia's refined product output is likely to average 352,000 b/d in the 2020-21 fiscal year, according to the latest projections from government commodity forecaster the Office of the Chief Economist (OCE) made in December. The OCE has reduced its forecast for 2021-22 production to 324,000 b/d but may have to lower it again to reflect the closure of Altona when it releases its quarterly report next month.

The decline in domestic refinery capacity has come in line with lower domestic crude production, which averaged just 138,000 b/d in January-November last year — down from 327,000 b/d in 2010 and a peak of around 687,000 b/d in the 2000-01 fiscal year. Australia's upstream sector is now focused on producing gas as a feedstock for its LNG export sector, the world's biggest.

Australian refineries
PlantOperator StateCapacity '000 b/dStatus
Closed
WesternportBPVictoria34,000closed 1984
MatravilleTotalNew South Wales (NSW)45,000closed 1985
Port StanvacExxonMobilSouth Australia100,000mothballed 2003, demolished 2012
ClydeShellNSW100,000converted to import terminal 2012
KurnellCaltexNSW135,000converted to import terminal 2014
Bulwer IslandBPQueensland102,000converted to import terminal 2015
Total516,000
Planned for closure
AltonaExxonMobilVictoria90,000February 2021, announced conversion to import terminal
KwinanaBPWestern Australia146,000October 2020, announced conversion to import terminal
Total236,000
Remaining refineries
GeelongViva EnergyVictoria128,000operational
LyttonAmpolQueensland109,000decision due mid-2021
Total237,000

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16/05/25

US House panel votes down Republican megabill

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Washington, 16 May (Argus) — A key committee in the US House of Representatives voted today to reject a massive budget bill backed by President Donald Trump, as far-right conservatives demanded deeper cuts to clean energy tax credits and social spending programs. The House Budget Committee failed to pass the budget reconciliation bill in a 16-21 vote, with four House Freedom Caucus members — Ralph Norman (R-South Carolina), Chip Roy (R-Texas), Josh Brecheen (R-Oklahoma) and Andrew Clyde (R-Georgia) — voting no alongside Democrats. A fifth Republican voted no for procedural reasons. The failed vote will force Republicans to consider major changes to the bill before it comes up for a vote on the House floor as early as next week. Republican holdouts say the bill would fall short of their party's promises to cut the deficit, particularly because it would front-load increased spending and back-load cuts. The bill is set to add $3.3 trillion to the deficit, or $5.2 trillion if temporary provisions were permanent, according to estimates from the nonpartisan Committee for a Responsible Federal Budget. Some critics of the bill said the proposed cut of $560bn in clean energy tax credits is not enough, because the bill would retain some tax credits for new wind and solar projects. "A lot of these credits have been in existence for 30 or 40 years, and you talk about giveaways, we want to help those who really need help," Norman said ahead of his no vote. "That's the heart of this. Sadly, I'm a no until we get this ironed out." Negotiations will fall to House speaker Mike Johnson (R-Louisiana), who can only lose three votes when the bill comes up for a vote by the full House. But stripping away more of the energy tax credits enacted in the Inflation Reduction Act could end up costing Johnson votes among moderates. More than a dozen Republicans on 14 May asked to pare back newly proposed restrictions on the remaining clean energy tax credits. Ahead of the failed vote, Trump had pushed Republicans to support what he calls the "Big Beautiful Bill". In a social media post, he said "Republicans MUST UNITE" in support of the bill and said the party did not need "GRANDSTANDERS". The failed vote has parallels to the struggles that Democrats had in 2021 before the implosion of their push to pass their sprawling "Build Back Better" bill, which was later revived as the Inflation Reduction Act. Republicans say they will work over the weekend on a compromise. The House Budget Committee has scheduled another hearing at 10pm on 18 May to attempt to vote again on the budget package, but any changes to the measure would occur later, through an amendment released before the bill comes up for a vote on the House floor. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump says US will soon set new tariff rates


16/05/25
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Trump says US will soon set new tariff rates

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Kuwait's Kufpec gets OK to develop Indonesian gas field


16/05/25
16/05/25

Kuwait's Kufpec gets OK to develop Indonesian gas field

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JET Tankstellennetz an Investment-Duo verkauft


15/05/25
15/05/25

JET Tankstellennetz an Investment-Duo verkauft

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Erste Preise für CO2-Kosten im Verkehr ab 2027 bekannt


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Erste Preise für CO2-Kosten im Verkehr ab 2027 bekannt

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