Australian government to discuss options with refiners

The Australian federal government will meet with representatives of the remaining domestic oil refineries this week to discuss a package of measures, designed to keep as many of them open as possible as losses mount with reduced demand because of the impact of Covid-19.

The negotiations have come too late for BP, which has already announced that it will begin to convert the country's largest refinery, its 146,000 b/d Kwinana in Western Australia, to an import terminal by the end of April.

The ruling Liberal-National government in Canberra aims to persuade the other three refineries to keep operating as part of its fuel security measures. Australia's government unveiled plans in September to subsidise refineries, with taxpayers to pay A1.15¢/litre (0.8¢/l) for refined products produced. But some of the firms have complained that it is insufficient to keep them operating.

ExxonMobil's 90,000 b/d Altona refinery in Victoria state is operating at a loss because of the impact of Covid-19 on fuel demand. It has warned that the six-month government consultation period over the subsidies is too long given the short-term challenges faced by the industry. Ampol, formerly Caltex Australia, is reviewing its 109,000 b/d Lytton refinery in Queensland, while Viva Energy is examining the long-term viability of its 128,000 b/d Geelong refinery in Victoria as margins are hit by slumping demand and regional overcapacity.

By Jo Clarke