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Supporting domestic refiners to supply better quality fuel

JMR with Prime Minister Scott Morrison and Minister for Industry, Energy and Emissions Reduction Angus Taylor

Australia’s local refineries will receive support from the Morrison Government for major infrastructure upgrades to strengthen local production and supply better-quality fuels. This is part of the Government’s commitment to boost long-term fuel security, create jobs and protect Australian motorists from higher fuel prices.

Through the Refinery Upgrades Program, the Morrison Government is providing a combined $250 million in assistance to the two domestic refiners, the Ampol refinery in Lytton, Brisbane and the Viva Energy refinery in Geelong, Victoria.

These two $125 million grants will be matched by both refineries and will allow them to begin major construction works to upgrade their facilities. This will bring more than $500 million of public and private sector investment into these local communities.

The grants will enable the local production of ultra-low sulfur petrol products in Australia and allow the Government to bring forward the introduction of a new standard from 2027 to 2024.

This funding is part of the Government’s comprehensive fuel security package announced in the 2021-22 Budget, which has locked in both the refineries operations until at least mid-2027.

Prime Minister Scott Morrison said this investment was the next step in the Government’s focus on bolstering Australia’s sovereign capabilities in the face of challenging global pressures.

“My Government understands the importance of fuel security to this country. We know a secure supply of fuel keeps our truckies, miners and farmers moving across Australia,” the Prime Minister said.

“By locking in our refining capabilities and assisting them to upgrade, we are protecting the existing 1,250 refinery jobs and supporting the creation of around 500 more construction jobs across Lytton in Brisbane and here at Geelong.

“I understand the pressures Australian families and businesses are feeling at the pump, which is why we have temporarily halved the fuel excise. This tax reduction, along with our fuel security package, puts Australian motorists first – ensuring we have the local capabilities to produce fuel even in the most challenging of times and keep our economy running.”

Minister for Industry, Energy and Emissions Reduction Angus Taylor said the grants will not only support our local refining capability and safeguard fuel security, but also provide health benefits for Australians.

“Bringing forward the roll-out of ultra-low sulfur fuel from 2027 to 2024 will deliver significant health benefits for Australians through improved air quality. This is estimated to result in $1.02 billion in avoided health costs,” Minister Taylor said.

“These grants are the next step in the Morrison Government delivering on our commitment to support Australian domestic refiners to keep producing local fuel for Australian motorists.

“As well as enabling the production of better quality fuels, our landmark refinery production payments continue to provide taxpayers with lower than budgeted payments, with both refineries not needing any support in the second quarter.

“We will continue to ensure Australian families and industry can access the quality fuel they need, when they need it through our fuel security package.”

Senator for Victoria Sarah Henderson said the Morrison government’s $125 million infrastructure investment at Viva Energy Geelong refinery will further boost local jobs and improve the local environment.

“Bringing forward this vital infrastructure upgrade at Viva Energy’s Geelong Refinery, a major employer of some 700 people, is another major win for manufacturing and jobs in our region,” Senator Henderson said.

“This targeted upgrade will further boost local employment, increase domestic fuel security and improve air quality.  In contrast to the former Labor government which did nothing to invest in energy security or environmentally responsible fuels, this is another example of how the Morrison Government is building a strong economy and a stronger future for Australia,” Senator Henderson said.

The Department of Industry, Science, Energy and Resources has confirmed that Ampol and Viva will not receive any payment for the second period of the Fuel Security Services Payment. This follows on from quarter one, where only Viva received payment, totalling $12.45 million.

Refiners are paid a variable Fuel Security Services Payment based on the volume of key transport fuels produced in each quarter from July 2021.

The rate of payment is tied to external market conditions and other operating factors. The rate ranges between 0 and 1.8 cents per litre, limiting the downside risk only and not paying out when the refineries are performing well.

The Refinery Upgrade Program is a key part of the Government’s comprehensive fuel security package, announced in the 2020-21 Budget, to secure Australia’s long-term fuel supply by ensuring our sovereign refining capability meets our needs during an emergency and into the future.

This is in addition to the Morrison Government’s action to halve the fuel excise for six months to ease pressures at the petrol pump and cost of living concerns for Australian motorists.

These grants will cover up to 50 per cent of total eligible project expenditure. Projects are expected to be completed before the end of 2024.

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