Federal Energy Minister Angus Taylor is working with beleaguered oil refineries to protect the nation's fuel security amid the coronavirus crisis but has assured motorists there is no immediate threat to supply.
The nation's four remaining refineries are under pressure as profit margins collapse along with global fuel demand. Since the virus outbreak, petrol demand has fallen 50 per cent and jet fuel demand 70 per cent worldwide as airlines ground flights and people are urged to stay home.
Caltex has brought forward a temporary shutdown of its Lytton refinery for maintenance work as the coronavirus puts pressure on profit margins. Credit:Dan Peled.
Fuel giant Caltex cited cashflow problems and margin pressure when it announced on Monday it would temporarily shut its Lytton refinery in Brisbane from May for extended maintenance work, while Viva Energy on Thursday said it was deciding whether to proceed with a $100 million investment to prolong the life of its Geelong refinery.
Mr Taylor said the federal government was working with the major petroleum refiners "to better understand their current challenges and to guarantee the security of Australia's liquid fuel".
He stressed Australia had a "highly reliable fuel supply" and the decisions about the two refineries would "not hinder our immediate fuel security".
"Australian motorists can be assured there is a good supply of fuel products in the market at lower prices. There is no need to panic buy," he said.
The pressure facing refineries and the potential for disruption to international ports and shipping from coronavirus restrictions have prompted calls from Labor and the national motorists' peak body for the government to consider measures to secure local refining capacity.
Australia imports around 90 per cent of its fuel. A report last year by the federal Energy Department found while Australia's four refineries were "expected to remain viable in the foreseeable future", their continued viability "depends on the investment strategy of individual companies".
Global demand for refined fuel was expected to peak in the 2030s and it was "unlikely that new oil refineries in Australia would ever be economical", the report said.
NRMA spokesman Peter Khoury said it viewed disruption to domestic refining as a reason to reconsider government policy.
"We remain concerned that our refining capacity is falling in Australia; we don't want narrow margins to dictate when refineries are closed," he said.
"There's a great temptation to import refined product due to the economies of scale in Asian refineries and so on, but that has to be weighed up against the national interest.
"But I stress that to motorists today this means nothing. In fact, there are tankers backed up around the world due to oversupply."
Labor energy spokesman Mark Butler said fuel security was an "extremely important issue" for Australia and the government "need to develop a clear plan that explains how Australia will safeguard and modernise its existing refining capacity, especially as refiners face the impacts of the current pandemic".
Sign up to our Coronavirus Update newsletter
Get our Coronavirus Update newsletter for the day’s crucial developments at a glance, the numbers you need to know and what our readers are saying. Sign up to The Sydney Morning Herald’s newsletter here and The Age’s here.
Source: Read Full Article