Middle East War Prompts Australia to Pursue First Refinery in 60 Years... Refining Competitiveness Key to Energy Security

Amid persistent instability in the global oil product supply chain, 'refining capacity'—the process of converting crude oil into gasoline or diesel—is emerging as a key indicator of energy security. The prolonged wars in the Middle East and between Russia and Ukraine have caused disruptions at major refining facilities. Damage to Russian refineries and China's restrictions on oil product exports have exacerbated market supply imbalances, leading to a rising trend in refining margins.

The Australian federal government launched a preliminary feasibility study on the 28th of last month for the construction of a new refinery in the Karratha region of Western Australia. This marks the first push for a new refinery in 60 years, signaling a shift in policy for Australia, which had previously scaled back refining facilities, towards expanding capacity to ensure energy security. Australia's move suggests that the competition to secure supply chains is intensifying due to instability in the global refining fuel market.

South Korea's four major refining companies possess a combined refining capacity of approximately 3.0 to 3.3 million barrels per day, ranking fifth in the world. Based on this capacity, they increased their oil product exports in the first half of this year. As the shortage of global refining facilities deepens, supply volumes from domestic companies with stable refining capabilities have increased. The refining industry is being re-evaluated as strategic infrastructure for national energy security, moving beyond simple crude oil refining.