The Australian revealed in April the Albanese government had sounded out energy companies over the development of a new oil refinery as the Iran war exposed Australia’s vulnerability to damaging fuel shortages.
By June, the Prime Minister confirmed investigations into building a new oil refinery by Perdaman to “help strengthen energy security in Australia”.
Under the plan, the federal and WA governments will jointly fund the $4m pre-feasibility study, and estimate the project could create thousands of jobs and boost the local economy.
Perth-based Perdaman expects the feasibility study into a proposed world-scale refinery to take about six to eight months, examining whether a project long regarded as uneconomic can be justified.
Rough industry estimates suggest it could cost as much as $15bn.
Mr Rambal said he was absolutely confident that such a refinery – if built to global scale – would find a ready local market for the fuel it produced, dismissing concerns that growing sales of electric cars – and the move by major miners towards electric trucks and heavy vehicles – would strand any investment.
“If you see where the defence is going, and the numbers – which I can’t disclose – the numbers of defence using fuel itself asks for a refinery in the country. Imagine your submarines, your ships, and there’s no diesel fuel,” he told reporters.
“There’s more to this country than miners. Diesel is not going to go in the next five years. These refineries are for the next 20, 30, 40 years to come.”
The Indian-born businessman was a key figure in the construction of the ammonium nitrate plant – now operated by Norway’s Yard – on the Burrup. Yard’s plant now sits next door to Perdaman’s own urea plant, due for completion next year.
Mr Rambal confirmed that Perdaman would be prepared to commit its own money, but said assistance from state and federal governments would also be needed.
“What I’m talking about is self-sufficiency, which can compete with the international world,” he said.
The Perdaman founder is worth an estimated $5.23bn and ranked 28 on The List: Australia’s Richest 250.
Australia has just two operating oil refineries left: Viva Energy’s Geelong refinery and Ampol’s Lytton refinery in Brisbane — preserved only after the Morrison government introduced the Fuel Security Services Payment, recognising their strategic importance.
Australia relies on imports for more than half of its refined fuel consumption.
Better known for developing its multibillion-dollar urea project, the privately owned company has found itself in the spotlight for its newly aligned political ambition. Any new refinery would face the same competitive pressures from mega-refineries across Asia that contributed to the closure of domestic plants over the past two decades.
The Perdaman feasibility study will examine environmental approvals, engineering requirements and commercial viability before governments decide whether the proposal warrants further consideration.
Labor has shown a willingness to stump up funding for its bid to safeguard sovereign manufacturing capability with a growing list of interventions across the metals sector, including for Whyalla’s steelworks, Glencore’s Mount Isa copper smelter and Nyrstar’s operations at Port Pirie and Hobart.
The taxpayer support has fuelled concerns that governments are propping up unproductive and otherwise uncompetitive assets.
However, the circumstance of the Iran crisis and uncertainty over the length of the Strait of Hormuz standoff, through which a fifth of the world’s oil passes, has sharpened the government’s focus on its options including the potential for new manufacturing facilities.
Nick Evans travelled to the Pilbara as a guest of the Chamber of Minerals and Energy WA
