Australia Is Down to One Working Refinery This Month

Somewhere between the bowser you used this morning and the tank in your car sits a supply chain most motorists never think about. Right now it's running on a single refinery.

Ampol shut down its Lytton refinery in Brisbane at the start of August for a major Turnaround and Inspection, the industry term for the full teardown, inspect and rebuild that every refinery needs every few years. It will be dark for roughly six weeks. That leaves Viva Energy's plant at Geelong as the only facility in the country actually making petrol and diesel until Lytton fires back up.

Two refineries becoming one for a month and a half would be a footnote in most years. This isn't most years.

The maintenance nobody wanted to do

Here's the fascinating part. Lytton was originally booked to go down in early June. Ampol deferred it, because the country was in the middle of a genuine fuel squeeze and switching off a refinery would have made things worse. That deferral kept roughly 300 million litres of petrol, diesel and jet fuel flowing into the domestic market through winter.

The bill for that decision comes due now. Ampol has flagged that the August to October window will remove about 300 million litres of production. Same number, just shifted three months along the calendar.

You can see why the company was in no rush. Lytton's refiner margin averaged USD 28.20 a barrel across the first half of 2026, up from USD 7.40 in the same period a year earlier. Nearly four times the margin. Refineries don't often get conditions like that, and turning one off in the middle of them takes discipline. But you can't defer a T and I forever. Pressure vessels, catalyst beds and heat exchangers all run on inspection clocks, and the regulator doesn't accept "the margins were excellent" as a reason to skip one.

Geelong has had its own year, mind you. A fire tore through the site on 15 April. Viva restarted the residue catalytic cracking unit, the heart of the petrol making process, on 23 June and pushed production back above 90 per cent of capacity. So the refinery now carrying the entire country has been running at full noise for less than two months.

How we got down to two

Going back a couple of decades, Australia had eight refineries. Kurnell in Sydney, Bulwer Island up in Queensland, Port Stanvac in Adelaide, Kwinana in Western Australia, Altona in Melbourne. One by one they closed, mostly because a plant designed in the 1960s couldn't compete with a Singaporean or South Korean mega refinery ten times its size.

By 2021 we were down to two, and Canberra stepped in with the Fuel Security Services Payment, essentially a subsidy to keep Lytton and Geelong breathing. Put that next to the rest of the developed world and Australia sits in unusual company. We import roughly 90 per cent of our refined fuel, about a quarter of it out of Singapore, with most of the balance from South Korea, Malaysia and Taiwan.

That arrangement worked beautifully right up until March, when the Strait of Hormuz effectively closed and shipping traffic through it collapsed by around 95 per cent. Singapore and Malaysia refine Middle Eastern crude. China, Vietnam and Thailand banned exports of refined product to protect their own supply. Australia, sitting at the end of the longest fuel supply line in the OECD, felt it within weeks.

The numbers tell it plainly. As of late July we held 43 days of petrol, 39 days of diesel and 34 days of jet fuel. Ships on the water heading our way had dropped to 44, down from 55 a fortnight earlier, a fall of 20 per cent. Forward orders for the following four weeks sat at 3.1 billion litres, down 31 per cent from the May peak.

The rule change sitting in your fuel tank

Now for the part almost nobody outside the industry has clocked.

Back in March the government temporarily relaxed the petrol quality standard, lifting the sulphur limit from 10 parts per million to 50. The stated reason was supply, particularly across regional Australia. The practical reason was Lytton. Petrol produced there at higher sulphur levels had been shipped offshore to countries with looser rules. Relax the standard and 80 to 100 million litres a month could be sold here instead.

That measure was meant to unwind on 1 September. It won't. The timetable was revised in April, and it now runs 50ppm through to 30 September, then a transitional 40ppm limit until 31 December, with the 10ppm standard returning on 1 January 2027. A temporary rule that has already been extended once. Worth keeping in mind when the next one gets announced.

Does it matter for your car? For the overwhelming majority of vehicles on Australian roads, no. Older engines were built for 150ppm regular unleaded and won't notice a thing. The vehicles worth a second thought are newer petrol cars fitted with a particulate filter. Volkswagen Group brands have historically restricted which models they'd bring here because of our fuel quality, and Skoda has stated its filters tolerate 50ppm but that those cars should run on premium. If you drive something recent and European, two minutes with the owner's manual is time well spent. Premium 95 prices are worth tracking if that turns out to be you.

What it means at the bowser

Capital city unleaded petrol averaged 193.6 cents a litre in late July, with diesel at 232.8. On 3 August the excise came back in full at 53.7 cents a litre, being the 16 cent discount restored plus 1.1 cents of CPI indexation.

Here's the bit that surprised me. The ACCC's monitoring report on 14 August found retail price rises across most locations landed below the excise change, because international benchmark prices were falling at the same time. Two forces pulling opposite ways, and motorists came out on the better side of it.

That's the immediate picture. The Lytton shutdown is planned, known and hedged. Ampol locked in replacement product out of Asia before pulling the switch, and Ampol stations aren't about to run dry over a scheduled turnaround.

What the shutdown does remove is slack. One refinery running, fewer ships inbound and stocks sitting on a plateau means the system has less room to absorb whatever comes next. If you want an early warning signal, watch diesel rather than petrol. Diesel days of cover are thinner, freight demand can't simply be deferred, and it's the fuel that moves every other thing in the economy.

Where this is heading

On 18 August the government released consultation papers on its $14.8 billion Fuel Security and Resilience Package. The headline items are a $3.2 billion government controlled reserve holding around a billion litres of diesel and jet fuel, a $7.5 billion facility through Export Finance Australia that has already underwritten 450 million litres of diesel and 100 million litres of jet fuel into Australian ports, an extra ten days bolted onto the Minimum Stockholding Obligation, and $10 million for feasibility work on expanding domestic refining.

Ten million dollars of feasibility studies against $14.8 billion for the package overall. Read that ratio however you like. A new refinery in Australia is a decade long proposition at best, and the honest interpretation is that we're buying storage and insurance rather than capacity. Storage you can build in three years. Refineries you cannot.

None of this shows up on the price board tomorrow. Fuel security is slow moving policy, and the day you notice it is the day it has already failed. Better to understand it now, while the only symptom is one quiet refinery in Brisbane sitting cold for six weeks.

Worth remembering: