Big energy companies would need to be incentivised to invest in Australian fuel production, an expert has warned, as the government pours cold water on reviving the nation’s refineries.
Energy Minister Chris Bowen has said restoring Australia’s retired oil refineries would be neither easy nor cheap, even as concerns grow over Australia importing around 90 per cent of its fuel.
The warning comes as conflict in the Middle East and uncertainty around the Strait of Hormuz sharpen concerns about Australia’s fuel security, with calls increasing for more domestic refining and oil production.
Australian National University supply chain expert David Leaney told Sunrise on Monday that while the minister was right about the scale of the challenge, ruling out refineries altogether would limit Australia’s ability to build sovereign capability.
He said reviving decommissioned refineries would be particularly difficult, as many had been effectively dismantled, making entirely new facilities a more realistic option.
Leaney said large energy companies would be interested in both refining and extraction opportunities, but would require significant government incentives to make those investments viable.
He said Australia’s relatively high wages, along with strict environmental and safety standards, were key factors driving up the cost of domestic production.
“It’s still cheaper for us to import our fuel of all types than it is to actually make it ourselves,” he said.
“It’s something that could be considered with the right circumstances for tax and investment in the long term,” he said.
Despite this, Leaney said the question of energy security could ultimately outweigh the financial hurdles.
“We’ve got great international relations, and that’s really been proved in the last six weeks with the supply that’s been guaranteed. But do we want more self-reliance in an increasingly uncertain world? I’d say yes,” he said.
