Geelong fire, Iran war expose Australia’s fragile fuel lifelines

April 18, 2026 — 5:00am

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This week, a massive fire broke out at Viva Energy’s Geelong refinery, one of only two refineries in this country. The refinery supplies half of Victoria’s fuel needs of petrol, diesel and jet fuel, and 10 per cent of the nation’s.

Viva Energy had increased production on fears of worldwide shortages of oil following the closure of the Strait of Hormuz by Iran. The fire has forced the refinery to cut production. At present, it is at 60 per cent of petrol production capacity, 80 per cent of diesel and 80 per cent of jet fuel.

At present, we have about 38 days of petrol in storage and 31 days for diesel. Australia, as a signatory to the International Energy Agency’s Agreement on an International Energy Program, is required to hold oil stocks equivalent to 90 days. In Australia, though, this has been a target rather than a reality for many years.

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Australia goes through 1.15 million barrels of oil a day. The Geelong refinery can process 120,000 barrels a day. The nation’s other refinery is in Brisbane. In 2003, Australia had eight refineries – one closed in that year, and from 2012, another five have closed. The emergence of much larger and cheaper operations in Asia, together with government reliance on the market, put paid to their viability. Hence, the 80 per cent importation of our national fuel needs. This also explains the recent visits to Singapore, Malaysia and Brunei by Prime Minister Anthony Albanese to shore up supply.

The refinery fire should, indeed must, concentrate the minds of governments and business on where exactly Australia should be in relation to its sovereign capacity, its reliance on factors, and countries, beyond its control and its ability to construct a framework of self-sufficiency – and if not that, then a robust defence against whatever ill winds blow our way.

The war in the Middle East and the Geelong fire have brought sharply into focus where Australia stands in the short term and the long term. At the end of last month, the national cabinet agreed to a fuel security plan to address the flow-on effects of the Iran war and its impact on fuel security and supply chains. While questions have been raised on the fire’s consequences leading to implementing the next stage of the plan, such as directing fuel to higher-priority uses, on Friday Albanese ruled it out while visiting the Geelong refinery with Deputy Prime Minister Richard Marles and Energy Minister Chris Bowen.

When asked if more refineries were needed, and if the fire had changed his mind about the fuel agenda, the prime minister said: “Nothing’s changed my mind. There were six refineries in Australia when we left office in 2013, and when we came back, there were two. That was an error.”

It is also an error at this crucial point not to take a step back and consider how best to look after the fears of people and businesses, and how to safeguard our security.

Ross Kenna, the Australian Workers’ Union state branch president, has urged government to “start taking fuel security seriously”. Investment in facilities had to be made. “Once you lose sovereign capacity, it’s hard to rebuild,” he said. “We are an island nation. We can do this ourselves; we have the capacity if we have the investment. So we do need to invest in these facilities, and make sure we hold multinationals to account.”

Geelong explosion adds fuel to the fire of our national anxiety

Sovereign capability is investment is security. A decade ago, the Abbott government’s white paper on energy threw that equation to the breeze: “The Australian government considers that supply reliability will be maintained because of the depth, liquidity and diversity of international crude and fuel markets.”

As Australians have adjusted their own energy consumption with a rush to electric vehicles as the world began to change, so too must governments move with the times.

Bowen, while not committing to more storage facilities, said this week that the government would look into the nation’s fuel requirements before the budget, which is due next month. “Obviously, when you get through any sort of major shock like this, you look back and say, what could be done better?” he said. One answer to that question would be an increase in storage capacity. But that’s an expensive task.

Bowen says meeting Australia’s commitment to 90 days’ worth of fuel storage, to honour its IEA commitment, would cost an estimated $20 billion over four years. That’s no small investment and must be carefully weighed up, but increasing storage capacity at some level must be top of mind.

The Geelong fire, along with the uncertainty of oil supplies arising from the war, has also clearly illustrated another form of security: that of people in their daily lives. A study of 20,000 people by the National Security College at the ANU found that most respondents felt that the nation in giving away its self-sufficiency had opened up its vulnerabilities as an island, relying on overseas supply chains. People were fearful that the supply system had “fragile arteries”, according to report author Rory Medcalf.

Gero Farruggio, the head of Australian research at independent energy analyst Rystad, said this week that Australia had “the unenviable distinction of being one of the most import-dependent nations in the world for refined fuel products, while simultaneously holding some of the lowest strategic reserves of any developed economy”.

It is not enough. The government must set in train a process to turn this ship around.

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© The Age