Australia Studies First New Refinery Since 1960s, Backs 2.3-Million-Tonne Fertiliser Plant
The Albanese government's A$15 billion energy resilience package covers refinery feasibility, fuel reserves and a Perdaman fertiliser facility aimed at cutting import dependence.
Australia's federal and state governments announced on Tuesday (2026-07-28) that they would commission a feasibility study for what would be the country's first new oil refinery since the 1960s, with Prime Minister Anthony Albanese backing the project alongside industrial group Perdaman. The study, covering potential sites including Karratha in Western Australia, carries A$4 million ($2.8 million) in initial government funding.5
The move came in direct response to the Iran war's exposure of Australia's dependence on imported fuels. A country that had already lost its domestic refining capacity found itself scrambling for diesel and aviation fuel when Middle Eastern supply lines tightened, and the government has since moved on multiple fronts to prevent a repeat.5
The refinery study sits within a broader A$15 billion package, Resources Minister King confirmed on radio on Tuesday (2026-07-28) morning. King said the study would look at various sites for a possible refinery. That package spans emergency fuel procurement, strategic reserve building and domestic production capacity, on a scale Australia has not attempted in the energy sector for several decades.5
Perdaman is already central to the fertiliser component. The company's proposed Western Australian facility, which has received A$475 million in government loans, is designed to produce up to 2.3 million tons of fertiliser a year — enough to cover a significant proportion of Australia's annual domestic consumption, according to the company. Whether the project can translate approved funding into operational output on schedule is a separate matter.5
The urgency behind those numbers is visible in commodity price pressures. Atlantic Council analysis from late May 2026 estimated the Iran crisis alone could add as much as $1.3 billion to Australian farmers' urea costs. Ukrainian strikes on Russian fertiliser infrastructure had already cut Russian ammonia exports by roughly 80 percent before the Iran disruption took hold, according to the same analysis.2
On liquid fuels, Canberra had already turned to emergency procurement well before any refinery study was mooted. By mid-May 2026, Australia had secured three shipments of jet fuel from China totalling more than 600,000 barrels, expected to arrive from early June, on top of 600,000 barrels already secured through the Fuel and Fertiliser Security Facility, the prime minister's office said.1
The AUD 7.5 billion ($5.34 billion) Fuel and Fertiliser Security Facility includes an AUD 3.2 billion allocation for a government-owned reserve of around one billion litres of diesel and aviation fuel. That strategic stock is designed to provide short-term buffer. The refinery study addresses the longer gap in domestic production.1
Australia's fuel vulnerability had surfaced earlier than the Iran crisis. A powerful cyclone that struck Western Australia in early 2026 disrupted production at the country's two largest LNG facilities, operated by Chevron and Woodside, at a point when global supply was already constrained by the Middle East conflict, according to reporting from March (2026-03-27). Australia is the world's second-largest LNG exporter, yet domestic fuel users were exposed regardless.3
Domestic gas pricing has, to this point, remained relatively contained. Large producers held back from raising gas prices aggressively during the crisis, Australian Energy Regulator data showed, cited by ABC News in April (2026-04-20), in contrast to their behaviour after the Ukraine war. The framework governing domestic gas supply obligations was still being finalised at that stage, and exporters appeared to be going to considerable lengths to avoid a repeat of the post-Ukraine price surge.4
The feasibility study is a long way from a final investment decision. Refinery construction runs into billions of dollars well beyond the initial A$4 million study cost, and Karratha is not the only site under consideration. Perdaman's fertiliser plant, better funded and further advanced, still faces the operational timeline risks common to large greenfield projects. Farmers paying elevated urea costs and airlines relying on Chinese jet fuel cargoes are watching a supply environment that remains heavily dependent on imports, regardless of what the government signals about the decade ahead.5,1,2