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Australia offers to subsidise its remaining refineries

  • Spanish Market: Crude oil, Oil products
  • 14/09/20

Australia's federal government has agreed to subsidise the country's remaining four refineries and spend A$200mn ($146mn) on boosting diesel storage to improve its liquid fuel security.

Australian taxpayers will pay A1.15¢ a litre of refined product produced in Australia under a deal to be finalised over the next six months. In return the refiners will commit to hold minimum stocks of gasoline and jet fuel in Australia to improve fuel security. Canberra will also spend A$200mn to build additional diesel storage capacity across Australia, as it continues its efforts to meet its IEA strategic reserves commitments.

The deal shows Australia's commitment to a domestic refinery industry, which has become largely unprofitable during the Covid-19 economic slowdown. The subsidy to the refineries will help pay for the upgrades required for the refineries to meet the lower sulphur limits of 10ppm (0.001pc) from 2027 and replace the current upper limits of 150ppm, bringing Australia in line with Europe, the US and China.

The upgrade to the Australian refineries to meet the new sulphur limit by 2027 is expected to cost around A$1bn, putting extra pressure on owners to convert the remaining refineries to import terminals instead of paying for the upgrade. The subsidy is designed to offset this cost and encourage more production and storage of liquid fuel product in Australia.

The refiners are yet to respond to Canberra's plans.

Australian refiner and marketer Viva Energy last week said it was considering closing its 128,000 b/d Geelong refinery near Melbourne because of the challenging long-term outlook. Fellow Australian firm Ampol is also reviewing the future of its 109,000 b/d Lytton refinery in Brisbane because of the highly uncertain market for refining in Asia-Pacific.

The other two refineries, ExxonMobil's 90,000 b/d Altona in Melbourne and BP's 146,000 b/d Kwinana in Perth, are also struggling to remain profitable and are operating below full capacity.

The combined capacity of the four operating plants is 473,000 b/d and is less than half of Australia's consumption, after BP's 98,000 b/d Bulwer Island in Brisbane, as well as Ampol's 135,000 b/d Kurnell and Shell's 75,000 b/d Clyde, both in Sydney, were closed during 2012-15.

The disruption to supply chains caused by Covid-19 has forced Canberra to focus on domestic sources and storage of liquid fuels to compliment deals signed earlier this year. It announced in May that it will spend A$94mn to store crude in the US Strategic Petroleum Reserve following a similar deal with Hungary.


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18/09/24

Citgo auction result delayed amid last-minute motions

Citgo auction result delayed amid last-minute motions

Houston, 18 September (Argus) — The US court-appointed special master overseeing the auction of US refiner Citgo plans to object to a last-minute motion from the Venezuelan government to delay the sale process by four months. The Republic of Venezuela and state-owned oil company PdV filed a motion on Tuesday seeking a four-month pause in the sale of its refining subsidiary Citgo, which is being auctioned off to satisfy debts owed by PdV. Special master Robert Pincus said in a court filing today that he intends to object to Venezuela's motion for a pause. The last-minute motion from Venezuela comes days after the US District Court for the District of Delaware was expected to announce results of the winning bidder. The court asked for a second extension to the auction process in August, delaying announcing a successful bidder to on or about 16 September with a sale hearing on 7 November. But Pincus is now dealing with last-minute legal challenges filed last week outside of the Delaware courts by so-called "alter ego" claimants seeking to "circumvent" the Delaware court's sales process and "jump the line" for enforcing claims against PdV, the special master said in a filing last week. Bidders for Citgo's 804,000 b/d of refining capacity, terminals, retail fuel stations and other plants expect the assets to be sold free and clear of future claims by PdV creditors. Unresolved legal liabilities could lower the value bidders are willing to pay for Citgo, decreasing the pool of money available to those owed by PdV. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US seeks to purchase 6mn bl for SPR


18/09/24
18/09/24

US seeks to purchase 6mn bl for SPR

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TMX is a fossil fuel subsidy of at least C$8.7bn: IISD


18/09/24
18/09/24

TMX is a fossil fuel subsidy of at least C$8.7bn: IISD

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Indian windfall tax on domestic crude output at zero


18/09/24
18/09/24

Indian windfall tax on domestic crude output at zero

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USCG updates ongoing lower Mississippi restrictions


17/09/24
17/09/24

USCG updates ongoing lower Mississippi restrictions

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