SYDNEY -- Australia plans to provide up to about 2.4 billion Australian dollars ($1.87 billion) to save its oil-refining sector, cajoling its last two refineries into staying open at least until 2027.
The deal, announced Monday, comes as news of closings by multinationals stokes concerns about the nation's fuel security. BP said last October that it would convert its Australian refinery into an import terminal, with Exxon Mobil following suit in February.
This leaves domestic companies Ampol and Viva Energy Group as the last players standing. All eyes had been on whether they would keep their facilities running amid fierce competition from cheaper imported oil products from China and elsewhere in Asia.
Canberra's rescue package includes up to nearly AU$2.05 billion in variable subsidies to the refineries and up to AU$302 million for infrastructure upgrades. The government will also pay up to 1.8 Australian cents per liter to bolster refineries' earnings in down times.
"Shoring up our fuel security means protecting 1,250 jobs" across Ampol's refinery in Lytton and Viva Energy's refinery in Geelong, Prime Minister Scott Morrison said in a statement issued Monday. The deal will also create another 1,750 jobs in construction, according to the government.
The package was welcomed by Ampol, which indicated last October that all options were on the table, including a shutdown.
"We are pleased that the [federal and Queensland state] governments have recognized the challenges faced by the local refining industry which includes competition from large-scale international refineries and the impacts of COVID-19," CEO Matthew Halliday said in a statement Monday.
"Today's announcement by the federal government provides important and welcome structural support to the refining sector in Australia," Viva Energy CEO Scott Wyatt said that day.