Australia is considering building its first new oil refinery in more than six decades as conflict in the Middle East exposes the country's heavy reliance on imported fuel.
Prime Minister Anthony Albanese announced on Tuesday (28 July) that the federal government and the Western Australia state government will jointly invest $2.78 million (A$4 million) in a feasibility study for the project.
If approved, the refinery would be built by industrial chemicals company Perdaman in Western Australia.
Albanese said the project could strengthen Australia's fuel security and make the country less vulnerable to overseas disruptions.
"The war in the Middle East... is having an impact here, like it's having an impact right around the world," he told reporters in Karratha.
"One of the things that building national resilience does is it makes Australia less vulnerable to the impact of events around the world."
He added that the study would determine whether the refinery is commercially viable.
"We want to make sure that we get the right location but we want to make sure as well that it's a project that stacks up, that can go forward," Albanese said.
Australia imports around 80% of the fuel it consumes, leaving it exposed to global supply disruptions.
The renewed conflict in the Middle East has increased concerns over fuel availability and rising energy costs. A recent Treasury briefing warned that the global oil market has become more vulnerable, with smaller buffers against supply shocks as oil inventories decline and refined fuel markets tighten.
The government says reducing dependence on imports has become a strategic priority.
Australia's refining industry has steadily declined over the past three decades as older plants struggled to compete with larger and cheaper refineries across Asia.
Most of the country's refineries were built during the 1950s and 1960s. Today, only two remain in operation: Ampol's refinery in Queensland and Viva Energy's refinery in Victoria. In 2000, Australia had eight operating refineries.
Western Australia has had no refining capacity since BP closed its Kwinana refinery in 2021 and converted the site into a fuel import terminal.
If the proposed project goes ahead, it would become Australia's first newly built oil refinery in more than 60 years and mark a significant shift in the country's approach to energy security.
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