Viva Energy will need to spend $300m to reach 2024 target, already achieved by world leaders
The Geelong refinery to spend up to $300m introducing low-sulpher petrol into the market three years earlier than originally planned.
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Viva Energy will spend between $50 and $70 million this year to speed up the transition to cleaner transport fuel as low-sulphur fuel is expected to hit bowsers in 2024.
But the transition lags about about five years behind years behind Northern America where the transition to low-sulphur fuel has already been made.
Viva Energy’s refining general manager, Dale Cooper, said Viva’s spend of about $300m would bring forward its transition to low-sulphur fuel from 2027 to 2024.
“Three or four years ago North America went to less than 10 parts per million in gasoline,” Mr Cooper said.
“(Australia) is catching up with the rest of the industrialised world. If you’re going to remain in the refining business, you’re going to have to make this investment (in low sulphur fuel) because otherwise you won’t have a gasoline product to sell.”
Australian gasoline is currently refined at 150 parts per million but is due to drop to 10 parts per million from 2024 after the federal government pledged to spend $250m at the country’s remaining refineries at Geelong and Brisbane.
The refiners will spend $250m of their own money to aid the transition, and Viva will build a low-sulphur fuel refinery facility at its Geelong base that will cover an area of about 40m by 80m.
During peak construction at Geelong the project will employ up to 300 people in addition to the more than 700 people permanently employed at the refinery.
Asked if the federal government was investing in fossil fuels beyond a level that was sensible,
Prime Minister Scott Morrison, in the Corio electorate for the second time in five days on Wednesday, said: “We’re not going to tell people what choices to make. It’s up to them, what choices they want to make.”
Energy Minister Angus Taylor said the transition to low-sulphur fuel would open the door for Australia to import more vehicles from Europe that had low exhaust emissions.
“We’ve seen rapid uptake of hybrid vehicles, for instance, here in Australia. And we’ll continue to see those lower emissions vehicles going to share.”
Labor’s climate change spokesman Chris Bowen said the party supported the government’s fuel security package which the transition to low sulphur fuel is part of.
Australian Conservation Foundation’s Economy and Democracy Program Manager Matt Rose said the government money for oil refineries would slow the transition to clean fuels.
“This is another short-sighted move to prop up fossil fuels when the climate crisis demands a completely different approach,” Mr Rose said.
“Australia has a golden opportunity to become an energy independent country by using our vast renewable energy resources to power our cars and trucks.
“Recent research shows Australian governments are spending $22,000 a minute on fossil fuel subsidies.
“People in Australia don’t want their hard earnt taxes going towards last century’s fuels.”
Viva’s $250m federal low-sulphur fuel deal
The Geelong refinery will be handed $125 million by the Morrison government as it moves to introduce cleaner petrol into the market by 2024.
Under a $250m deal with the Commonwealth, Viva Energy will match the government money, and commit $125m to upgrade its facility to bring forward production of ultra-low sulphur petrol from 2027 to 2024.
Prime Minister Scott Morrison said the government would also commit $125m to Australia’s other refinery at Brisbane, and both investments would secure Australian fuel production and supply in the face of global uncertainty.
“These investments also protect the 1,250 existing refinery jobs and support the creation of around 500 more construction jobs across Lytton in Brisbane and Geelong,” Mr Morrison said.
A government spokeswoman said the funding would create 300 construction jobs in the Geelong region.
Mr Morrison said the government support for the refining sector meant fuel could be produced “even in the most challenging of times” to keep the economy running.
“Cutting the fuel tax and this fuel security package put Australian motorists and businesses first.
“Our plan for a stronger future locks in Australia’s refining capabilities and will ensure upgrades are made to improve the quality of our fuel.”
Energy and Emissions Reduction Minister Angus Taylor said the government money would support refining capability, safeguard fuel security and provide health benefits for Australians.
“Bringing forward the roll-out of ultra-low sulphur fuel from 2027 to 2024 will deliver significant health benefits for Australians through improved air quality. This is estimated to result in $1.02 billion in avoided health costs,” Mr Taylor said.
“These grants are the next step in the Morrison Government delivering on our commitment to support Australian domestic refiners to keep producing local fuel for Australian motorists.
“We will continue to ensure Australian families and local industry can access the quality fuel they need, when they need it through our fuel security package.
“As well as enabling the production of better quality fuels, our landmark refinery production payments continue to provide taxpayers with lower than budgeted payments, with both refineries not needing any support in the second quarter.”
Due to improved margins in recent months, Viva will not receive government support for refining fuel for Australian uses in the last quarter of 2021.
It comes after Viva was paid $12.45m by the federal government for refining work it completed in the September quarter last year.
Liberal candidate for Corangamite Stephanie Asher said the government funding would deliver more jobs to the region, a cleaner environment and better health outcomes — all objectives of her local plan.
Victorian Liberal Senator Sarah Henderson said the funding would help secure about 700 jobs at the Geelong refinery.
“This targeted upgrade will further boost local employment, increase domestic fuel security and improve air quality,” Ms Henderson said.
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