Australia announces feasibility study for first new oil refinery since 1965, backed by A$4 million in government funding

Prime Minister Anthony Albanese on Tuesday announced a feasibility study for a new oil refinery in Karratha, Western Australia — a project that would be the first oil-processing plant to open in Australia since 1965. The study is backed by A$4 million ($2.6 million) in government funding and will be carried out in partnership with industrial company Perdaman Group.

The announcement comes as Australia confronts the limits of a domestic fuel supply that currently meets less than a fifth of national demand.

Government and Perdaman Group launch refinery feasibility study

The federal government is splitting the A$4 million ($2.6 million) study cost with the Western Australian state government. If the project moves forward, Perdaman Group would build and operate the facility. Perdaman is a closely held company owned by billionaire Vikas Rambal, who’s already been investing heavily in the Pilbara region.

When the Iran war led to the closure of the Strait of Hormuz, global supply tightened fast, and Australian consumers felt it through price spikes in April and May.

If the refinery gets built, it’d mark a real turning point for Australian industrial policy. No new oil refinery has opened in the country since 1965 — more than six decades during which the sector kept shrinking.

The Iran conflict and fuel shortages exposed Australia’s import dependency

Australia’s fuel vulnerability got hard to ignore earlier this year. When the Iran war led to the closure of the Strait of Hormuz, global supply tightened fast, and Australian consumers felt it through price spikes in April and May.

The country currently runs just two oil refineries, both on the east coast, and together they supply less than one-fifth of the national fuel demand. That’s a thin margin for a country of Australia’s size and geographic isolation.

The existing refineries make things more complicated — they already import roughly three-quarters of their feedstock from overseas. Australia does produce some domestic crude oil, but output is limited. Any new refinery, including the one being studied in Karratha, would still depend on imported oil to operate. That dependency isn’t unique to Australia, but it does mean the country has limited buffers when global supply chains get disrupted. The Iran war made that reality hard to look away from.

Refinery projected to create jobs and improve diesel supply for regional communities

The Karratha site isn’t a random pick. The city sits in the Pilbara region, home to many of Australia’s largest iron ore mines and close to major natural gas production. That existing industrial density makes nearby fuel processing a more practical proposition than it might be elsewhere.

If the refinery goes ahead, the government expects it to create thousands of jobs — a significant boost for an area that’s productive but geographically remote. One specific goal is improving diesel supply for regional Western Australian communities, where the fuel keeps everything running, from mining equipment to transport logistics.

Resources Minister Madeleine King also flagged a practical point about crude oil versus refined fuels. Crude can sit in storage for extended periods without degrading, while refined fuels have a limited shelf life. In a crisis, that distinction matters considerably.

“You can bring it in and have it sit in a vessel for some amount of time before you need to refine it,” King said in a radio interview Tuesday. “And that’s a critical difference in times of crisis.”

Experts question whether a new refinery would resolve fuel security challenges

Not everyone’s convinced the project would fix the underlying problem. Rick Wilkinson, CEO of energy research firm EnergyQuest, pointed out that even the former BP refinery at Kwinana—which closed in 2021—relied on imported oil to function.

“Adding another refinery to Western Australia is unlikely to solve Australia’s domestic fuel supply challenges,” Wilkinson said. His argument is straightforward: if the feedstock still has to come from overseas, you’re still exposed to the same global supply disruptions. Processing capacity increases, but true energy independence doesn’t.

That concern highlights the gap between energy resilience and energy self-sufficiency. The feasibility study sits within a broader A$15 billion ($9.8 billion) government package aimed at strengthening Australia’s energy resilience — a goal that’s more modest than full independence but arguably more realistic. Minister King confirmed that multiple sites remain under consideration, suggesting the Karratha announcement is the start of a process, not the finish line.

Perdaman Group’s broader industrial footprint in Western Australia

The oil refinery study isn’t Perdaman’s only major project in the Pilbara. The company is also building a multibillion-dollar fertilizer plant in the region, expected to come online around mid-2027, with the capacity to produce up to 2.53 million tons of fertilizer per year—a significant share of Australia’s total annual usage. That facility has already received A$475 million ($310 million) in government loans, reflecting the scale of public investment in Perdaman’s industrial ambitions.

Both projects point to a deliberate government strategy: reduce Australia’s reliance on imported industrial and energy inputs by building domestic production capacity, according to the Prime Minister of Australia. The fertilizer plant targets agriculture’s dependence on overseas crop inputs. The potential refinery targets fuel security.

Whether either project fully delivers on those goals is still an open question. For now, the feasibility study is the next step—a structured assessment of whether a new refinery in Karratha is technically and economically viable and what it’d actually take to make it happen.

Kelly Lippke

Kelly is an experienced writer with 15 years of experience exploring the big stories that shape our world, from tech breakthroughs and space exploration to climate, energy, and the fascinating quirks of science. She has a talent for turning complex ideas into sharp, memorable insights that stay with readers long after they’ve finished reading.