Last year there was some news “The Australian government said on Wednesday it would invest A$1.1 billion ($735 million) in the development of a low-carbon fuels industry”.
Do tou know more about,this? Are the current refineries getting any part of that for modernization etc? Or is that for completely new competition that would also, in a sense, screw up the capital cycle?
This looks like government trying to stimulate investment into biofuels which is taking agricultural waste (article uses sugar cane and canola as examples) and converting into ethanol to use as alternate to petrol/diesel.
From my understanding modern engines are designed to work off refined petroleum and even established biofuel industries like in the US - they are only using ethanol et al as a very small (5-10%) top up fuel… and only for certain engines. So my guess is this industry will take a long time (decades) to develop and technologically there seems to be some roadblocks to get through. But any new technology like this or batteries/electric will take away demand for petroleum products.
That’s a nice overview. Given the potential volatility of margins amd the lack of an export market, I’m more inclined to consider the US gulf refiners, who benefit from low cost gas to power them ( otherwise flared) and ‘captive’ South American crudes to transform. BUT they also trade richly after recent events!
Agree, the US refiners are a much cleaner expression… for more reason than one. Caveat being a US export ban (or domestic reservation) would kill margins for domestic refiners as there is excess capacity. Not saying that’s going to happen tho trump has made it clear that domestic gasoline prices are something important to him… and it is one lever.
Last year there was some news “The Australian government said on Wednesday it would invest A$1.1 billion ($735 million) in the development of a low-carbon fuels industry”.
Do tou know more about,this? Are the current refineries getting any part of that for modernization etc? Or is that for completely new competition that would also, in a sense, screw up the capital cycle?
https://www.reuters.com/sustainability/climate-energy/australia-promises-735-million-launch-biofuel-industry-2025-09-17/
This looks like government trying to stimulate investment into biofuels which is taking agricultural waste (article uses sugar cane and canola as examples) and converting into ethanol to use as alternate to petrol/diesel.
From my understanding modern engines are designed to work off refined petroleum and even established biofuel industries like in the US - they are only using ethanol et al as a very small (5-10%) top up fuel… and only for certain engines. So my guess is this industry will take a long time (decades) to develop and technologically there seems to be some roadblocks to get through. But any new technology like this or batteries/electric will take away demand for petroleum products.
A good read regarding the refining sector, in particular US refiners https://hfirideas.substack.com/p/public-us-refiners-strong-fundamentals?utm_source=share&utm_medium=android&r=cvi86
This is fantastic. Thank you 🙏
That’s a nice overview. Given the potential volatility of margins amd the lack of an export market, I’m more inclined to consider the US gulf refiners, who benefit from low cost gas to power them ( otherwise flared) and ‘captive’ South American crudes to transform. BUT they also trade richly after recent events!
Agree, the US refiners are a much cleaner expression… for more reason than one. Caveat being a US export ban (or domestic reservation) would kill margins for domestic refiners as there is excess capacity. Not saying that’s going to happen tho trump has made it clear that domestic gasoline prices are something important to him… and it is one lever.