Australian federal and state governments and industrial company Perdaman Group will study the feasibility of a new oil refinery in a move to rebuild domestic capacity after the Iran war highlighted the nation’s dependence on imported fuels.
Prime Minister Anthony Albanese Tuesday announced a study for a new refinery in Karratha in Western Australia, backed by A$4 million ($2.8 million) of government funds. The project, which would be built and operated by closely held Perdaman Group, would be the first oil-processing plant to start in the nation since 1965 if it goes ahead.
If built, the refinery would create thousands of jobs and help fuel security — especially in supplying diesel for regional communities in Western Australia, according to a statement from the prime minister’s office. Karratha is in the Pilbara region where many of the nation’s iron ore mines are located, and is also close to natural gas production facilities.
Australia currently has just two oil refineries that are able to supply less than a fifth of its fuel needs, which led to price spikes in April and May as the closure of the Strait of Hormuz tightened global supplies. While the nation produces some of its own crude, output is limited — meaning any new processing plant would still be reliant on imports.
“Even when there was a refinery at Kwinana in Western Australia, it still relied on imported oil,” said Rick Wilkinson, chief executive officer of industry consultant and research firm EnergyQuest, referring to a BP Plc facility that closed in 2021. “The two remaining refineries on the east coast already import approximately three-quarters of their feedstock from overseas — adding another refinery to Western Australia is unlikely to solve Australia’s domestic fuel supply challenges.”
While Australia would have to import oil to be refined, that’s more secure as crude can be stored for a long time whereas refined fuels have a shelf life, Resources Minister Madeleine King said Tuesday.
“You can bring it in and have it sit in a vessel for some amount of time before you need to refine it,” she said in a local radio interview. “And that’s a critical difference in times of crisis.”
Perdaman — owned by billionaire Vikas Rambal — is also building a multibillion-dollar fertilizer plant in the region, which is expected to come online around the middle of 2027 in a move designed to lower the agriculture sector’s reliance on imports for its vital supplies of crop inputs. The facility will be able to produce as much as 2.3 million tons of fertilizer a year — a significant proportion of Australia’s annual usage, according to the company.
That project has been supported by A$475 million in government loans, according to a statement from the prime minister’s office. The study announced Tuesday is part of an A$15 billion package to strengthen Australia’s energy resilience, and would look at various sites for a possible refinery, King said on radio on Tuesday morning.