Canberra, March 20 – The Australian government has reached an agreement to continue subsidizing the country's two remaining oil refineries, Energy Minister Chris Bowen announced on Friday.
Bowen said that the government and the operators of the two refineries have reached an agreement to amend the fuel security services payment, under which the government pays the refineries when oil prices do not cover operating costs.
Viva Energy's refinery southwest of Melbourne in the city of Geelong and Ampol's refinery in Brisbane produced about 20 percent of Australia's petrol, diesel, and jet fuel needs in 2025.
Bowen said that the payment cap will remain at 1.8 cents per liter under the amendment, but the trigger mechanism will be adjusted to make payments kick in at a lower price threshold.
In exchange, Bowen said that Viva and Ampol are progressing plans to keep operating the refineries into the 2030s.
"Ampol has also advised that it now has the confidence to maintain full production and defer planned maintenance work to increase onshore production while international supply chains are under pressure," he said in a statement.
The announcement was made amid significant disruption to the global oil supply driven by the conflict in the Middle East, but Bowen told reporters that the government has been negotiating with Viva and Ampol for six months.
He said that the government is not currently in a position where it needs to contemplate further measures to guarantee short-term domestic fuel supply, but that contingencies are being considered should the war continue into April and May, Xinhua news agency reported.
Earlier on March 13, Australia's energy minister had announced that the federal government will release up to 762 million litres of petrol and diesel from its domestic reserves amid the conflict in the Middle East.