Two Oil Refineries Stand Between Australia and Total Fuel Dependency
Here's a number that should keep every Australian motorist up at night: two. That's how many oil refineries this country has left. Two refineries serving 27 million people across a continent the size of Western Europe. And both of them are being kept alive by government subsidies that start expiring in 16 months.
If that doesn't grab you, consider this. Back in the 1970s, Australia had more than a dozen refineries humming along from Perth to Sydney. We refined our own fuel, controlled our own supply, and didn't lose sleep over what was happening in Singapore or South Korea. Fast forward to 2026, and we import roughly 90 per cent of our liquid fuel. We've gone from energy independence to being arguably the most vulnerable developed nation on earth when it comes to fuel security. And it happened in barely two generations.
How Did We Let This Happen?
The decline reads like a slow motion demolition job. Port Stanvac near Adelaide shut in 2009. Shell's Clyde refinery in Sydney's west went dark in 2012. Caltex closed Kurnell in Sydney's south in 2014. Bulwer Island in Brisbane followed the same year.
Then came the knockout punches. BP's Kwinana refinery south of Perth, operational for 65 years, ceased production in 2021. ExxonMobil's Altona facility in Melbourne announced its closure shortly after. Both were converted into fuel import terminals. The irony is hard to miss: facilities that once made our fuel now simply receive it from overseas.
What's left? Ampol's Lytton refinery in Brisbane and Viva Energy's Geelong refinery west of Melbourne. Between them, they supply only a fraction of Australia's daily fuel consumption. Everything else arrives by tanker, mostly from refineries in Singapore, South Korea, Japan, and increasingly China.
The $2.3 Billion Keeping the Lights On
The only reason these two refineries still operate is a $2.3 billion taxpayer funded subsidy called the Fuel Security Services Payment. Introduced in 2021 after the government finally twigged that watching every last refinery close might not be the brightest strategic move, the FSSP essentially pays Ampol and Viva to keep refining.
In exchange, Ampol committed to keeping Lytton running until at least June 30, 2027. Viva extended its Geelong commitment to June 30, 2028. But here's what most people don't realise: these aren't permanent arrangements. They're life support with an expiry date.
Ampol's CEO Matt Halliday has been refreshingly blunt about it. He's publicly stated that Lytton could close before 2027 if refining margins stay persistently low. The company is in active discussions with the federal government about what comes after the current deal expires, including whether the refinery might pivot toward biofuels like renewable diesel and sustainable aviation fuel. But that kind of pivot takes serious investment, and investment requires certainty. Right now, there isn't much of that going around.
Viva Energy, for its part, has said it "continues to evaluate the future viability" of its refining operations. Not exactly a ringing endorsement of long term commitment.
What 48 Days of Fuel Actually Looks Like
To put Australia's vulnerability in perspective, the International Energy Agency requires member countries to hold oil stocks equivalent to at least 90 days of net imports. It's a baseline. A buffer against supply disruptions caused by conflict, natural disasters, or geopolitical standoffs.
Australia hasn't met that 90 day target since 2012. Recent figures from the Department of Climate Change, Energy, the Environment and Water put our stockholding at around 63 IEA days on average, though it has dipped as low as 48. At that low point, the country held roughly 20 days of jet fuel, 24 days of diesel, and 28 days of petrol. We were the worst positioned of the 27 net oil importing IEA member nations.
When you break it down, a major disruption to shipping lanes through the South China Sea or the Strait of Hormuz and Australia starts running into real trouble within weeks, not months. Our supply chain is heavily concentrated too. Over half of our imported refined petrol comes from just two countries: Singapore and South Korea. A refinery fire in Singapore isn't hypothetical. It's happened before.
So What Does This Mean at the Bowser?
You might be wondering what any of this has to do with the price you pay filling up in Parramatta or Cairns or Hobart. The answer is: more than you'd think.
When Australia refined a meaningful share of its own fuel, domestic production acted as a competitive check on import prices. Refineries also provided a physical buffer. If a shipment was delayed, local production could pick up some of the slack.
With domestic refining reduced to a trickle, we're entirely at the mercy of international refining margins, shipping costs, and the Australian dollar. When crude oil prices dip globally, Australians don't always see the full benefit because the cost of refining and shipping fuel from Asia eats into the savings. A weaker dollar makes it worse since we're buying fuel priced in US dollars.
This is partly why fuel prices here often seem disconnected from global crude prices. Wholesale petrol costs in Sydney and Melbourne are effectively set in Singapore, not by local supply and demand. Motorists in Darwin and regional Queensland feel this most acutely, because transport costs to remote areas amplify every cent of the import premium.
The Uncomfortable Catch 22
There's also an awkward tension with the EV transition that nobody in Canberra seems keen to talk about. Electric vehicles now account for over 13 per cent of new car sales in Australia, and petrol consumption dropped more than 10 per cent in 2025. In theory, declining demand should ease supply pressure. In practice, it makes the economics of refining even worse.
Lower domestic fuel demand means lower throughput for Lytton and Geelong, which means tighter margins, which makes the subsidy more important, which makes the whole arrangement more fragile. We're caught in a classic policy squeeze: we need refineries for security, but the market is making them uneconomical. We're subsidising them to stay open while simultaneously encouraging the transition that could shut them down.
What to Watch Over the Next 18 Months
Ampol's FSSP commitment expires in mid 2027. If the government and Ampol can't agree on terms for a post 2027 arrangement, Australia could be watching another refinery convert to an import terminal. That would leave the entire country relying on a single refinery in Geelong. One.
The government's review of refinery support is happening now, but details remain scarce. There's talk of biofuels and sustainable aviation fuel as potential lifelines, but these are transitions that take years and serious capital to implement.
For motorists, the practical upshot is straightforward. Australia's fuel supply is more precarious than most people realise, and the arrangements keeping it together are temporary. If you've ever wondered why bowser prices don't always follow global oil prices, or why filling up sometimes costs more than it seems like it should, the answer is partly structural. We dismantled our refining capacity over two decades and now we're paying the import premium every single time we fill up.
The fuel industry rarely makes headlines until something goes wrong. But with two refineries on subsidised life support and a compliance gap that's been open for over a decade, this is one story worth paying attention to. Especially before someone in Canberra decides the subsidies aren't worth it anymore.
*For a comprehensive, data-driven analysis of the crisis including state-by-state price tables and household cost calculations, read our Special Report: Petrol Prices Just Rose 31 Cents in Three Weeks.*
