14/12/2020 - 12:00

Kwinana refinery 'should not close'

14/12/2020 - 12:00


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Kwinana refinery 'should not close'

The Australian Workers' Union has called on the federal government to help save BP's Kwinana Refinery after a new industry support package was announced this morning.

BP announced in October it would close its Kwinana refinery and turn it into an import terminal, resulting in the loss of hundreds of jobs. At the time, BP said an oversupply of fuel and sustained low refining margins meant the plant was no longer viable.

But Australia's three remaining oil refineries were thrown an economic lifeline today after also being pushed to the brink of collapse by the coronavirus pandemic. Tough travel and business restrictions have triggered a plunge in demand for oil and petroleum products. 

Energy Minister Angus Taylor has offered the refineries $83.5 million of taxpayer cash. The production payment will offer one cent per litre for jet fuel, petrol and diesel and is contingent on refineries keeping their doors open and agreeing to an "open book" policy with the government to continually assess their financial standings.

AWU National Secretary Daniel Walton, who led a delegation to Canberra this month to push for refinery support, said the package showed Australia could and should retain its fuel refining capacity.

"BP claims it has to shutdown Kwinana, but the reality is it's just a preference based on the company's commercial interest. There is absolutely no reason BP cannot continue operating Kwinana profitably with these support measures in place," Mr Walton said.

"Our governments can't allow BP to completely call the shots on what is a crucial sovereign capacity. Our leaders should put a hard choice to BP: either keep Kwinana running as a fuel refinery or hand it over to someone who can."

Mr Taylor said the refineries played an important role in ensuring Australia's fuel security.

He said agriculture, manufacturing and transport workers needed guaranteed access to petrol and diesel.

"The COVID-19 pandemic continues to place immense pressure on our refineries and the many Australians employed in the fuel sector," Mr Taylor said on Monday.

"We have worked closely with the sector to design and implement our comprehensive fuel security package."

Mr Taylor is continuing to work with the refineries to finalise longer term production payments, which are expected to be introduced in the middle of next year.

An aluminium smelter is also being offered $76.8 million worth of taxpayer cash to stay open beyond 2021.

Under the terms of the four-year deal, Alcoa will be required to dial down its Portland smelter if the Victorian power grid comes under pressure during summer heatwaves.

In exchange, the federal government will ensure it is paid for the load shedding.

Mr Walton said the federal government had done the right thing by supporting the refineries and had acted in the national interest.

"On behalf of the thousands of AWU members who refine fuel in Australia I commend the government for listening and for acting. Today's announcement is a hugely important step," Mr Walton said.

"Being able to make our own fuel is a critical sovereign capability. Without it, we are completely at the mercy of trade routes that are threatened by potential international conflict or pandemics.

"... Obviously the industry is highly dynamic and we will keep working with our members, employers, and the government to ensure these policies are continuously reviewed and calibrated to ensure Australia retains its fuel refining capacity."



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