Australia’s lubricant market is in an unusual bind. It is a mature market, with the features found in Europe and North America: a large passenger-car parc, multimodal public transport, agriculture, manufacturing, marine, aviation and energy infrastructure. It also has its idiosyncrasies, including an outsized mining industry operating in severe conditions and a fleet of heavy-duty trucks that traverses immense distances between cities.
Yet Australia is unusually dependent on international supply chains for the base oils and other raw materials used to manufacture finished lubricants.
That exposure became acutely visible in 2026, as disruptions to oil and petrochemical supplies from the Middle East tightened availability and pushed up base-oil prices. The Australian Lubricant Association warned that the country could face shortages of critical lubricants as international suppliers dealt with the disruption.
Nevertheless, the market is sizeable. Ken Research estimates that lubricant sales reached about 656 million liters in 2025, compared with 643 million liters in 2024, and puts the market value at about US$2.96 billion. It forecasts volume to reach about 700 million liters by 2032.
Applications
Automotive lubricants account for the largest share of consumption, at about 64% of the market. Engine oil is the largest individual product category, accounting for 38.35% of lubricant sales by product type.
The long-term government outlook points to declining automotive lubricant demand, as electric vehicles become more prevalent. It forecasts demand by 50 at have fallen to about 58% of the current level, reflecting the changing vehicle fleet.
Figure 1. Base-Oil Capacity Closures
| Plant | Location | API Group | Capacity | Closed |
|---|---|---|---|---|
BP Kwinana | Western Australia | Group I | ~120,000 t/y* | 2002 |
ExxonMobil | South Australia | Group I | ~245,000 t/y* | 2003 |
Shell Geelong | Victoria | Group I | ~145,000 t/y* | 2004 |
Caltex Kurnell | New South Wales | Group I | ~196,000 t/y* | 2011 |
Commercial trucks and off-road equipment add particularly heavy lubricant requirements because of their operating conditions, high utilization and maintenance schedules.
Mining is a key source of demand for blenders and essential to the wider Australian economy, contributing around 13% to GDP and 70% of export earnings. Australia’s mining industry is a major producer and exporter of iron ore, coal, lithium and other minerals, with large fleets of haul trucks, excavators, crushers, conveyors, mills and processing equipment operating for extended periods under severe conditions.
Mining lubricant demand extends well beyond engine oil. Suppliers offer gear oils, hydraulic fluids, compressor oils, chain oils, wire-rope oils, greases and open-gear compounds for mining operations.
Figure 2. Australian Rerefiners
| Rerefiner | Location | Used-oil processing capacity | Approx. feed capacity, t/y | Base-oil output | API Group |
|---|---|---|---|---|---|
Southern Oil Refining | Wagga Wagga, NSW | ~50 ML/y | ~43,000 | ~30 ML/y | Group I |
Northern Oil / Southern Oil | Yarwun, Gladstone, QLD | ~100 ML/y | ~86,000 | ~50 ML/y | Group I |
Totals | ~150 ML/y | ~129,000 | ~80 ML/y | Group I |
Industrial lubricants are expected to grow faster than automotive products in some segments. Mordor Intelligence forecasts annual growth of about 4% for industrial engine oils through 2030, although the growth rate depends on the product category and market definition.
Australia’s lubricant market broadly follows its industrial economy. Queensland and Western Australia account for substantial lubricant consumption, with mining activity driving demand for industrial and heavy-duty products. New South Wales also has a large industrial lubricant market. Government data cited by Ken Research show industrial lubricant sales in New South Wales were 365% higher than in Victoria in 2023-24.
Participants
Australia has a mix of multinational lubricant companies and locally owned manufacturers.
Viva Energy is the exclusive Australian licensee and supplier of Shell-branded fuels and lubricants. It makes, imports, blends and distributes lubricants through a national supply chain serving automotive, mining, transport, aviation, marine, manufacturing, defense and construction customers.
Castrol has a broad Australian portfolio covering passenger vehicles, commercial vehicles and industrial applications, including products for mining, metals, manufacturing and renewable energy.
Penrite is a 100% Australian-owned lubricant manufacturer. It operates blending facilities in Victoria and Queensland and says its current Australian production capability is 38.4 million liters annually, while its website also reports production of about 46 million liters a year.
The market therefore depends on a network of imported base oils and additives, domestic blending and manufacturing, storage terminals, distributors and workshops.
Base Oil Shortfall
Australia has no domestic virgin base-oil production. The country lost its last virgin base oil production when Caltex closed its Kurnell lubricating-oil refinery in New South Wales in 2011.
That leaves lubricant manufacturers and importers at the end of long international supply chains for virgin base stocks.
Australia now has only two operating crude-oil refineries, Ampol’s Lytton refinery in Queensland and Viva Energy’s Geelong refinery in Victoria. Neither produces conventional virgin lubricant base oil.
Lubricants also sit outside the government’s principal fuel-security framework, prompting the Australian Lubricant Association to call for greater attention to base-oil supply. The association has argued that base oils should receive greater consideration in Australia’s broader fuel and energy-security discussions.
That vulnerability became particularly relevant in 2026 as disruptions in the Middle East affected crude, petroleum products and petrochemical supply chains.
Australia’s domestic virgin base-oil industry disappeared in stages. BP closed its Kwinana lubricating-oil operation in 2002, ExxonMobil’s South Australian operation followed in 2003, Shell closed its Geelong base-oil operation in 2004 and Caltex closed Kurnell in 2011.
Rerefining
Australia has developed a substantial used-oil collection and recycling system through the Product Stewardship for Oil Scheme. Introduced in 2001, the scheme imposes a levy on oil-based lubricants and uses the proceeds to provide incentives for recycling and rerefining.
The scheme has created a significant domestic stream of recovered lubricant material. Government figures show that 318.5 million liters of waste oil were rerefined or recycled under the scheme in 2024-25, including 155.9 million liters of Category 1 rerefined base oil.
Government data show Category 1 re-refined base oil increased from 135.2 million liters in 2017-18 to 169.6 million liters in 2023-24, before falling to 155.9 million liters in 2024-25.
Category 1 is the highest quality rerefined oil recognized under the scheme and can be used as a base oil for lubricants, hydraulic oils and transformer oils when it meets the relevant specifications.
Australia has a significant domestic circular oil industry, but it does not replace the country’s dependence on imported virgin base oils.
The challenges to supply still hang over the industry’s head. It has the blending capacity and a well-developed used-oil collection and rerefining industry, but no domestic source of virgin base oil. That leaves the market exposed to movements in Asia-Pacific base oil supply, freight costs and geopolitical disruption. Unless domestic production returns, those risks are structural rather than temporary.
Demand is likely to remain broadly resilient through the end of the decade, with industrial and heavy-duty applications offsetting some of the decline in conventional automotive lubricants. The more immediate change may come not from how much lubricant Australia consumes, but from where its base oils come from and how much of the used oil can be returned to the supply chain. For a market at the end of the global supply chain, that distinction matters.
Simon johns is a Lubes’n’Greases managing editor. Contact him at Simon@LubesnGreases.com.