“Makes no sense:” Labor mulls third oil refinery as analysts urge faster push into EVs

Australia’s fuel excise cut is likely to come to an end on Sunday, the prime minister has hinted, as the federal Labor government also hints at a possible third refinery for the country – to the horror of some energy and climate experts.

Prime minister Anthony Albanese met with WA Premier Roger Cook to announce a $4 million pre-feasibility study into a new large-scale oil refinery at Karratha in the Pilbara. 

It would be built by WA industrial company Perdaman and could create thousands of jobs in a boost to the local economy if it goes ahead.

The facility would be the first new large-scale petrol refinery built in Australia since the 1960s and would join the nation’s two existing ones in Brisbane and Geelong. Ironically, it is in the same region where iron ore giant Fortescue is pushing to eliminate fossil fuels from its Pilbara mines as it aims for “real zero” by 2030.

Resources Minister Madeleine King said the refinery would still be reliant on imported crude oil. 

“The difference with crude oil, the unrefined product, is that it is storable for much, much longer (than relying on refined fuel),” Ms King told ABC Radio.  “This (would) make a great difference … to sovereign capacity – being able to have capacity on the west coast to refine crude oil into this product.”

The US-led war on Iran, launched in February, has caused global oil prices to skyrocket after the effective closure of one of the world’s most important oil corridors.

About one fifth of the world’s oil transits through the Strait of Hormuz. Fuel supplies, refining capability and fertiliser have all been impacted by the ongoing conflict in the Middle East.

But energy and climate analysts say it is not a good idea.

“When the need for a policy to replace diesel with electric vehicles is blindingly obvious – it improves security, its NPV positive, it reduces imports pushing up the value of our dollar, it’s fantastic for the environment, what does the Government do? It announce a new oil refinery….” David Leitch, principal at ITK and co-host of Renew Economy’s Energy Insiders podcast, wrote on LinkedIn.

“As usual short term politics and optics transcends the underlying need. Let’s bring back the wood cutter and the steam engine we can relive the glorious 1860s or is that the 1960s. Who cares about 2060, or even 2027.”

The Climate Council also expressed its dismay at the idea, saying it won’t shield Australia from rising costs and supply chaos from the Iran war because it could only ever provide a drop in the ocean of Australia’s fuel needs.

“We can save taxpayers $4 million right now, because we don’t need a feasibility study to know this doesn’t stack up,” said Greg Bourne, a Former Regional President of BP Australasia and Climate Councillor.

“Building a refinery makes no commercial sense, and that’s why so many refineries have already closed. Building a new refinery would cost billions, take up to a decade to build, and require ongoing subsidies to run it. All this public money for no noticeable reduction in our reliance on imported oil.”

“The real fix is needing less petrol and diesel in the first place, and that means electrification. Every electric car on our roads is fuel we never have to import or refine. That frees up supply, makes us more resilient to the next global oil shock, and cuts climate pollution at the same time.”

AAP reports that the investigation is the first agreement signed under the federal government’s $10 million support for feasibility studies into new or existing fuel refining capabilities, announced as part of a $15 billion fuel security package.

The coalition would support the new oil refinery, but wanted it paired with further work on fossil fuels.

“We also need to make sure we are opening up alternative fuel supplies here, not just you know oil and and gas, but also alternative fuels like biofuels as well,” National senator Bridget McKenzie told the ABC.

Cook said the new refinery would rebuild his state’s capacity to produce and distribute its own fuel including diesel for regional communities.

“While many Western Australians remain anxious about our state’s fuel security, we are doing everything it can to address these concerns by working with the Commonwealth to provide steady and experienced leadership,” he said.

Source: AAP