News: VEA UPDATE 1-Australia proposes to pay refiners to stay open

• Australia to invest A$211 mln this year in fuel storage
• Plans to offer refineries "production payments"
• Refiners say too early to commit to keeping plants open

(Recasts, adds BP, Ampol, Viva comments)

Australia on Monday proposed to offer payments to keep the country's four remaining refineries open and said it would invest in building fuel storage as part of a long term fuel security plan unveiled on Monday.

The country's refiners have been battered by the coronavirus-driven collapse in fuel demand, racking up losses which they say threaten the future of their plants as they compete against much bigger refineries around Asia.

"The government is committed to a sovereign on-shore refinery capacity despite the threat to the viability of the industry," Prime Minister Scott Morrison said on Monday.

Looking to shore up fuel security, the government said it would include A$211 million in its upcoming budget to boost fuel storage, with a focus on diesel, which is crucial for farms, mines, trucks and back-up power.

"The events of 2020 have reminded us that we cannot be complacent. We need a sovereign fuel supply to shield us from potential shocks in the future," Morrison said in a statement.

The government said it would work with the industry to design a "refinery production payment" as an incentive to keep the four plants open. Were they to close, consumers would face a 1 cent per litre rise in fuel prices.

It was not immediately clear how much the government proposed to pay refiners to stay open.

BP Plc BP.L , owner of Australia's largest refinery, Viva Energy Group (VEA) , and Ampol Ltd (ALD) all welcomed the proposals but made no commitment to keep their plants open.

"Our refining business continues to face significant immediate challenges, and we look forward to working with both state and federal governments in the weeks ahead to address the short and long-term viability of our refinery at Geelong," Viva Chief Executive Scott Wyatt said on Monday.

BP and Ampol Ltd (ALD) said they needed to see details of the proposed measures to understand the impact on their businesses.

Exxon Mobil Corp XOM.N , operator of Australia's smallest and oldest refinery, had no immediate comment. ($1 = 1.3734 Australian dollars)