Australia's Oil Refinery Plan Faces Skeptical Eyes Amid Uncertain Demand

Australia's plan to build its first oil refinery in 60 years faces significant challenges. The proposal, announced by Prime Minister Anthony Albanese and Resources Minister Madeleine King, involves a A$4 million pre-feasibility study for a new refinery to be built by fertilizer and urea maker Perdaman.

The move is aimed at reducing Australia's dependence on imported fuels in the aftermath of global energy market disruptions. However, experts question its feasibility due to uncertain long-term fuel demand and a builder with little experience in refining.

Analyst Kevin Morrison from the Institute for Energy Economics and Financial Analysis (IEEFA) noted that building a new refinery would not change Australia's reliance on crude oil imports. 'It is hard to see how it improves Australia's fuel security position,' he said.

The high cost of a new refinery, often several billion dollars, may require government financial support for the project. Rystad Energy's head of Australasia oil & gas research, Krishan Pal Birda, expects some form of public support unless miners and fuel marketers are prepared to sign long-term take-or-pay contracts.