The Issue: Why Australia could soon build its first refinery since the 1960s

Australia is more likely to build a new oil refinery than most people realise, according to one of the country’s leading energy analysts.

The assessment, from Sydney based MST Financial’s Saul Kavonic, comes six weeks after the Federal and Western Australian governments announced an initial study into construction of a large-scale petrol refinery.

“I think there’s a very real chance that Australia builds a new refinery,” Kavonic says.

“The risk and conflict scenarios ahead of us are different. They’re elevated now. There’s now strong national security reasons to have sovereign supply chains, particularly in fuels.”

If the refinery proceeds, it would be the first built in Australia since the 1960s and would reverse a two decade trend of refinery closures.

From eight refineries, the country now has just two - Queensland’s Ampol refinery and Victoria’s Viva energy plant.

Kavonic spoke with 7NEWS podcast The Issue just before Iranian backed Houthi militants seized a strategic port city and a key island to give them a new opportunity to threaten oil traffic through the Red Sea.

With the six-month disruption of the Strait of Hormuz unresolved, conflict is now an issue in both of the region’s two main channels for oil exports.

As well, he regards the Russia Ukraine war is problem for global oil supplies that will grow with time.

“We’re seeing Ukraine make big advances in its drone strike capabilities. and that’s seeing them launch a continued succession of attacks on Russian energy infrastructure, in particular refining infrastructure, going deeper and deeper into Russian territory,” he said.

“It’s impacting Russia’s exports of both fuel and ultimately crude to the point that Russia is now exporting about 10 per cent or 1 million barrels a day less.”

On how this trend will develop in coming months, Kavonic expects: “Ukraine’s campaign against Russia’s energy infrastructure to scale up and increase”.

Australia’s trend away from refining oil has left the country exposed to global events. Saul Kavonic clearly believes 2026 could be the year that reverses it.

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