SYDNEY, Sept 14 (Reuters) – Australia will invest A$211 million ($153.50 million) to boost its domestic fuel storage capabilities while local refineries will be subsidised to stay open in business, as the government unveiled plans to secure its long-term fuel supply.
A coronavirus-driven demand slump has battered Australia’s oil refiners and sparked threats of closures, prompting the government to take measures to shore up the sector.
“The events of 2020 have reminded us that we cannot be complacent. We need a sovereign fuel supply to shield us from potential shocks in the future,” Prime Minister Scott Morrison said on Monday.
Morrison said Australia’s fuel security was essential for its national security.
Energy Minister Angus Taylor said the government will work with the refinery sector, which is under significant financial pressure hit by a slump in fuel demand due to coronavirus.
Australia’s Viva Energy Group, owner of Australia’s second-largest refinery, last week warned a full shutdown at its refinery in Victoria state was still on the cards citing a “dire long-term” outlook for the industry.
A “production payment” system was also announced on Monday to protect consumers from the around 1 cent per litre increase that modelling shows will hit fuel if all refineries close in Australia, Taylor said.
To receive this support, refineries will be required to commit to stay in Australia. ($1 = 1.3746 Australian dollars) (Reporting by Renju Jose; editing by Diane Craft)