Australia imports approximately ninety per cent of its liquid fuel requirements. This is not a temporary feature of the supply landscape. It is the structural condition of how the country meets its fuel needs — and one of the most consequential strategic vulnerabilities in the national economy.
The numbers
The headline figure is widely cited but worth restating in full context. Australia consumed approximately 56 billion litres of petroleum products in 2024-25. Domestic refining produced roughly 6 billion litres of that — less than 11 per cent. The balance was imported as finished product or refined offshore from Australian crude that was exported, then bought back as fuel.
This figure is not a single year's anomaly. It is the trajectory of two decades. In 2000, Australia operated seven refineries producing the substantial majority of national fuel demand. Today, two remain — Lytton in Queensland and Geelong in Victoria — and their combined output represents a fraction of what the country consumes.
Why it happened
The contraction was not the result of a single decision. It was the cumulative outcome of decades of refining-sector economics: scale advantages favouring giant Asian and Middle Eastern refineries, ageing Australian infrastructure, environmental compliance investment requirements, and a long-running policy environment that treated refining as a commercial choice rather than a strategic capability.
The result is that closing a refinery was always a commercially defensible decision in isolation — even as the cumulative effect of those decisions produced a national position that, in aggregate, is strategically untenable.
What it means
The consequence is exposure. Australia holds limited strategic fuel reserves relative to its consumption. Domestic distribution networks are dependent on continuous resupply. Any sustained disruption to the international refined-product trade — whether from geopolitical conflict, shipping route closure, refining-capacity events in Asia, or sanctions cascades — would land first and hardest on a country that does not refine its own fuel.
This is not a hypothetical. The COVID-19 supply shocks, the post-2022 European energy reordering, and intermittent tanker freight disruptions in the Red Sea have each demonstrated the brittleness of the international fuel trade. Each was a small foretaste of a sustained event.
The case for domestic processing capability
The argument for restoring domestic downstream capability is not nostalgic. It is strategic. The case is that:
- Sovereign capability provides optionality. A country that can process its own crude is one that can adapt to disruption rather than be subject to it.
- Domestic processing reduces the export-then-import inefficiency. Australian crude refined in Australia avoids the freight, refining-margin, and currency exposure of the export-and-buy-back cycle.
- Resilience requires diversity of capability. A national system that concentrates processing into a small number of locations is structurally more exposed to disruption than one with broader geographic and operational diversity.
- Domestic infrastructure compounds the upstream resource economy. Australia's onshore resource provinces produce crude that is currently exported because there is no domestic processing capacity to take it. That changes with downstream capability.
What Queensland Downstream is building toward
Queensland Downstream is building processing capability with the long-term view that domestic downstream infrastructure is a strategic priority for Australia. Our work is in development. The detail of what we are building, where, and at what scale, is shared with counterparties and partners under confidentiality.
What we will say publicly is the position: domestic processing capability matters; sovereign downstream infrastructure has a credible role in the answer; and Queensland is the right place to build.
Queensland Downstream publishes Insights to contribute to the public discussion of Australia's downstream petroleum sector. The views expressed here are those of Queensland Downstream and are not a substitute for advice from a qualified professional. Nothing in this article is an offer, prospectus, or solicitation under the Corporations Act 2001 (Cth).