Australia mulls first new refinery in 60 years amid Middle East war

Australia is considering building its first new oil refinery in more than 60 years, Prime Minister Anthony Albanese said on Tuesday, as the ongoing conflict in the Middle East disrupts global fuel supplies and underscores the nation's vulnerability. The proposed facility, to be developed by industrial chemical producer Perdaman in Western Australia, would significantly bolster the country's energy resilience if found feasible.

Fuel Security in Focus

Australia currently operates only two oil refineries, down from a peak of more than a dozen, leaving it heavily dependent on imports for petrol, diesel, and jet fuel. The war in the Middle East, a key source of global crude, has sent shockwaves through supply chains, highlighting the risks of relying on volatile overseas markets. “The war in the Middle East … is having an impact here, like it’s having an impact right around the world,” Albanese told reporters in Karratha, in Western Australia’s Pilbara region. He emphasized that building national resilience would make Australia less vulnerable to such global events.

Feasibility Study and Location

The federal government and the Western Australian state government have jointly allocated A$4 million (US$2.8 million) for a feasibility study of the refinery. The study will assess the technical and economic viability of constructing a large-scale plant, with Perdaman as the proposed builder. The location in the Pilbara region, known for its mining and energy infrastructure, offers potential synergies with existing industrial operations. The project represents a major shift from decades of refinery closures and could reverse Australia's dwindling domestic refining capacity.

Strategic Implications

If approved, the refinery would be the first new large-scale facility built in Australia since the 1960s. It would enhance sovereign capability in fuel production, reducing reliance on imports from Asia and the Middle East. Albanese framed the initiative as a step toward protecting the country from future supply shocks, aligning with broader efforts to shore up critical infrastructure. The project could also create thousands of construction and operational jobs, boosting the local economy in Western Australia.

Looking Ahead

The feasibility study is expected to take months to complete, with a final decision on the refinery likely in the next year. If it proceeds, construction would take several years. The outcome will hinge on cost analysis, environmental approvals, and market conditions. This move signals Australia's recognition that energy security requires domestic production capacity, even as the world transitions to cleaner fuels. The refinery, if built, could serve as a strategic buffer against geopolitical disruptions for decades to come.