By Matt Keogh MP

10 November 2020

Back in 2011, Australia had liquid fuel reserves well over the 90-day International Energy Agency requirements.

But over the last 10 years, three of Australia’s seven fuel refineries have closed and now the largest remaining refinery has announced it will close its doors next year.

Three years ago, with Australia’s reliance on imported fields increasing and about 45 tankers on their way to Australia every day, the Turnbull government announced that it would start meeting its IEA obligations through stock holding agreements with foreign entities (ie: field held or available offshore).

But concern was felt by many in the Parliament that this approach was leaving Australia vulnerable to supply chain shocks.

COVID-19 has demonstrated that such supply chain disruptions are not just a theoretical possibility. Unfortunately, the solution offered up by the Morrison Government was to acquire fuel reserves stored in the United States. Understandably, Australians widely condemned such a solution as ineffective.

In September this year, the Prime Minister and his Energy Minister, Angus Taylor, announced they would design a system for a production payment that recognises fuel security benefits that would improve our sovereign onshore refinery capacity and secure the viability of the industry.

To quote him directly, the Prime Minister said, “Fuel security underpins our entire economy. Not only does it keep Australia moving, the industry supports thousands of people across the country and this plan is also about helping keep them in work. Like all sectors of the economy, the COVID-19 pandemic is having an impact on Australia’s fuel industry. The events of 2020 have reminded us that we cannot be complacent. We need a sovereign fuel supply to shield us from potential shocks in the future.”

I couldn’t agree more, but the Government’s proposal was already being criticised as too little and too late. By October refiners were voicing their concerns that the process was taking too long and Ampol began to consider permanently closing its Brisbane refinery.

So it turns out, of all the photo-op but no follow through policies of this Government, fuel security has had the shortest shelf life, with BP announcing late last month that it would be closing Australia’s largest remaining refinery in Kwinana early next year. And it may not be the last.

This highlights the Morrison Government’s utter failure to deliver fuel security for our nation. It’s a failure to ensure adequate fuel reserves, a failure to secure refining capability and a failure to protect Australian jobs.

Given the ongoing dialogue between the Morrison Government and refiners for months now about securing their ongoing viability and our nation’s fuel security, there is no doubt the Government has known about the pending closure of the BP Kwinana refinery for some time.

So why hasn’t it done something to try to fix it?

The BP Kwinana refinery holds a special place in the hearts of West Australians.

When it was built more than 65 years ago, the WA Government also built a town site to house construction workers and plant operators — that became the Kwinana town centre that we know today.

The refinery was the catalyst for the Kwinana strip that is now home to many essential WA resources and bulk handling businesses which contribute so much to our economy today. A community that started because of BP, is now being left high and dry by its decision.

There are more than 600 jobs at stake here, but it also must be noted that even now with BP still in the market, Australian refineries already only provide 40 per cent of Australia’s fuel needs, with the rest being imported.

The Federal Government must act now to save these jobs and shore up our fuel supplies in our national interest. It should be working with BP to find alternatives to enable the refinery to continue to operate under it or another party.

Fuel security is a responsibility of the Federal Government.

This is yet another example of the Morrison Government making an announcement with no follow through.

This opinion piece was first published in the West Australian Newspaper on Tuesday 10 November 2020