Federal budget commitment to Australia’s fuel security is a key plank in the nation’s recovery from pandemic, Prime Minister says.
Australian Budget Builds On Refineries Commitment
CANBERRA, Australia — The federal government’s fuel security package in last week’s budget will protect fuel stocks, retain existing employment and create future construction jobs, Prime Minister Scott Morrison says.
Building on an AU$ 211 million ($163.57 million) commitment in last October’s budget, the latest installment includes up to AU$ 302 million ($234.12 million) for major refinery infrastructure upgrades.
Morrison says locking in Australia’s fuel security will deliver benefits for all Australians.
“This is a key plank of our plan to secure Australia’s recovery from the pandemic and to prepare against any future crises,” he said.
He said the funding aims to maintain an autonomous refining capability in Australia by supporting the operation of the Ampol refinery in Lytton, Queensland, and the Viva refinery in Geelong.
The package will protect the jobs of 1250 direct employees across the two refineries and create another 1750 construction jobs.
“Earlier investment in Australia’s ability to produce better quality fuels, including ultra-low sulfur levels, will also improve air quality and deliver an estimated AU$ 1 billion ($0.78 billion) in lower health costs,” Morrison said.
“Major industries like agriculture, transport, and mining, as well as mum and dad motorists, will have more certainty and can look forward to vehicle maintenance savings and greater choice of new vehicle models.”
Minister for Energy and Emissions Reduction Angus Taylor said Australia’s economy was reliant on fuel.
“Fuel is what keeps us and the economy moving. That is why we are backing our refineries,” Taylor said.
The 2021/22 budget initiatives include a variable Fuel Security Service Payment (FSSP*) to the refineries, funded by the government, which recognizes the fuel security benefits refineries provide to all Australians.
Up to AU$ 302 million ($234 million) in support for significant refinery infrastructure upgrades to help refiners bring forward the production of better-quality fuels from 2027 to 2024.
AU$ 50.7 million ($39.30 million) for implementing and monitoring the Fuel Security Service Payment and the minimum stockholding obligation (MSO), ensuring the industry complies with the new fuel security framework.
The variable Fuel Security Service Payment has cost up to $2.05 billion to 2030 in a worst-case scenario, which assumes both refineries are paid the highest rate over nine years in Covid19-like economic conditions, which is unlikely as the economy recovers.
Minister for Energy and Mining Dan van Holst Pellekaan said in a statement that this agreement would contribute to South Australia achieving net-100 percent renewables by 2030 and becoming an exporter of renewables and gas to support the national electricity market.
“By securing this historic AU$ 400 million ($310 million) commitment, South Australia can grow our economy and exceed our emission reduction targets,” van Holst Pellekaan said.
“The joint commitment to develop hydrogen hubs in South Australia is a strong sign to our global partners in Asia and Europe that South Australia can lead the nation in this new industry.”
(Edited by Vaibhav Vishwanath Pawar and Ojaswin Kathuria)