Can Australia Actually Bring Oil Refining Back Home?

Australia makes about a fifth of the petrol, diesel and jet fuel it uses, at two refineries that receive public money to keep running. The 2026–27 Budget put $14.8 billion into fuel security and $10 million of that into studies on more refining capacity. Public money so far has bought stored fuel and covered losses, not a new plant, and no government has published what one would cost.

Two refineries are left, and they make about a fifth of the fuel

Australia runs two large oil refineries: Viva Energy's plant at Geelong in Victoria and Ampol's at Lytton in Brisbane (Australias Fuel Security). Together they made 12 billion litres of petrol, diesel and jet fuel in 2025, which the energy minister describes as about 20 per cent of what the country needs in a year and "critical for our energy security" (Securing Australias Fuel Sovereignty). The federal energy department's page, updated on 18 August 2026, calls them "Australia's two refineries".

Two is fewer than there were. The Australian Institute of Petroleum counted four still running on 1 September 2017 and saw "no indications of any plans to close" them (Australian Crude Production And Refining). Two of those four became fuel import terminals in 2020 and 2021, and BP closed its Fremantle refinery in 2021; falling profits and cheaper imported fuel were the reasons given (Australias Liquid Fuel Security Budget Update).

Support arrives only when the margin falls

The Refinery Upgrades Program pays up to $125 million a refinery to cut sulfur in petrol to 10 parts per million, and up to $26 million a refinery to cut aromatics, a group of compounds in petrol, under standards that began in 2025 (Securing Australias Fuel Sovereignty). The other scheme, the Fuel Security Services Payment, pays only when refiners lose money: nothing when a published measure of the refining margin sits at or above $15.90 a barrel, and at most 1.8 cents a litre when it falls to $13.04.

The trigger was updated in March 2026 and the cap stayed at 1.8 cents; the minister called the old design flawed because refiners drew payments only twice since 2021. On the 2025 volume of 12 billion litres, 1.8 cents a litre comes to about $216 million a year — arithmetic on the cap, not a published figure.

In return, Ampol and Viva are working on plans to keep operating into the next decade, and Ampol told the government it was confident it could keep producing at full rates. A report published on 29 July 2026 said both were asking for a much larger federal subsidy after a multimillion-dollar rise in profits during Middle East conflict, and wanted long-term support guaranteeing a return rather than only limiting losses; the amounts and the length sought were not disclosed (Oil Refiners Chase Sweeter Support Deal Despite Surging Profits P60Ic0).

The Budget money buys stored fuel

The 2026–27 Budget's fuel security measure provides about $7.5 billion for Export Finance Australia's strategic reserve function, underwriting about 600 million litres of diesel and about 100 million litres of jet fuel as at mid-May 2026 (Australias Liquid Fuel Security Budget Update). It provides $3.2 billion for a 1 billion litre reserve of diesel and aviation fuel, $10 million for feasibility studies into new or expanded refining capacity, and a commitment to raise minimum stockholding obligations to 50 days. Those two reserve and underwriting lines come to $10.7 billion; the full package carrying them was put at $14.8 billion in the Budget (Fuel Supply And Security), after the Prime Minister's office announced it in May 2026 at "more than $10 billion" (Government Securing More Fuel Reserves Australian Fuel Security And Resilience Package). The Budget measure names no site for a new refinery and gives no construction cost.

The department's update on 18 August 2026 says the government was consulting on the package, and the National Fuel Security Plan stood at level 2, "Keep Australia moving" (Australias Fuel Security). The minister says diesel storage runs to more than 3.7 billion litres across more than 90 terminals, and that $1.1 billion has gone into low carbon liquid fuels (Securing Australias Fuel Sovereignty).

A third refinery is a $4 million study

The Commonwealth and Western Australia agreed to fund a $4 million early-stage study into what would be Australia's first new oil refinery in 60 years and its third large petrol refinery (Potential For First Australian Oil Refinery In 60 Years As Treasurer Braces For Inflation From Middle East War). Perdaman, the company behind a $4.5 billion fertiliser plant in the Pilbara, would build it with private money and says it could be eligible for taxpayer help such as cheap loans.

No decision has been made, no funding is committed beyond the $4 million study, and no construction timetable or daily capacity in barrels has been stated. Building a new refinery would cost billions and would probably need continuing government support to stay competitive, according to the reporting. The department's fuel security page does not mention a new refinery (Australias Fuel Security).

The cost problem that closed the others has not changed

The industry's own assessment, published in 2017, said no new refinery had been built in an industrialised country in more than twenty years (Australian Crude Production And Refining). It said Australian refineries carry operating and capital costs that rule the country out of major new projects, put the cost of a plant at the smallest efficient size at at least US$5 billion, and said high coastal shipping costs make distribution from a single central plant uncompetitive against imported cargo. It also said the closures in Sydney and Adelaide caused no harm to supply reliability or to prices in those markets.

That assessment is nine years old: it does not cover the two-refinery position of 2026, the payment scheme, the March 2026 change to its trigger, or the Western Australian study, and it carries no capital cost estimate from the 2020s.

Where the fuel comes from instead

In 2023–24, 79 per cent of the refined petroleum products used in Australia were imported, and another figure puts imported liquid fuels at about 90 per cent; the two use different bases in different years and do not reconcile (Australias Liquid Fuel Security Budget Update). In 2025, 17 per cent of the feedstock going into Australian refineries came from Australian sources. South Korea, Singapore and Malaysia supplied nearly 60 per cent of imported crude and liquid fuels combined.

Share of Australia's imported crude and liquid fuels by source country, 2025 (Parliamentary Library)

Middle East crude accounts for about 70 per cent of what Singapore and South Korea import, and the Strait of Hormuz carried nearly 34 per cent of global crude oil traffic in 2025. The Parliamentary Library concludes that domestic action can improve resilience to shocks, but exposure to international markets and supply chains remains a key feature.

Petrol prices rose 25 cents a litre and diesel 50 cents a litre in July 2026.

What the official figures do and do not show

Australian Petroleum Statistics 2026 publishes monthly national and state figures on petroleum product sales, exports and imports of petroleum products and crude oil, crude oil production, refinery input and output, and product stocks (Australian Petroleum Statistics 2026). Extracts run from January 2026 to July 2026, with July the most recent. The landing page carries no refinery capacity or production volume in its text; those sit inside the monthly spreadsheets.

What the record shows

Australia can keep the refineries it has. Both are running, both are paid when margins fall, and both owners say they plan to operate into the next decade (Securing Australias Fuel Sovereignty). Australia can build a third, and the only live proposal is a study with no site, no cost and no date (Potential For First Australian Oil Refinery In 60 Years As Treasurer Braces For Inflation From Middle East War). The money points one way: $10.7 billion for reserves and underwriting, inside a $14.8 billion package, against $10 million for studies on refining capacity (Fuel Supply And Security).

Nothing about the chemistry of refining is the obstacle. The obstacle is everything around it — the cost of moving fuel along the coast, the cost of building big enough to compete, and the price of a cargo from Asia (Australian Crude Production And Refining). Those are the terms on which the last plants closed.

The case for making fuel at home rests on exposure, not price: three countries supply most of the imports, and one strait carries about a third of the world's crude. A country can answer that by buying storage or by buying refineries. On the figures published up to September 2026, Australia is buying storage.

Nothing here is financial, legal or investment advice. Every figure is published by its named source and carries the date it was published; figures may since have changed.