MELBOURNE, April 13 (Reuters) - Viva Energy said on Wednesday its board has given the go-ahead for a A$300 million ($224 million) upgrade of its Australian refinery, with more than a third of the cost to be provided by the Australian government.

The upgrade is needed so Viva can produce ultra-low sulphur gasoline at its refinery near Melbourne, as agreed with the government last year under a $1.8 billion aid package to keep the country's two remaining refineries open at least until 2028.

The government confirmed on Wednesday it would provide A$125 million each to Viva and Ampol Ltd to revamp their refineries to start producing the cleaner gasoline by 2024.

Prime Minister Scott Morrison highlighted that saving the refineries protected 1,250 jobs and supported the creation of 500 construction jobs for refinery upgrades.

He also said keeping the refineries open was essential to protect the country from supply chain disruptions such as from COVID-19, Russia's invasion of Ukraine, and China's curbing of urea exports.

Separately, Viva said it would buy chemicals maker LyondellBasell's Australian arm for up to A$40 million paid over six years.

LyondellBasell Australia is the country's only producer of polypropylene, which is used to produce a range of plastic products from food packaging to bank notes. ($1 = 1.3419 Australian dollars) (Reporting by Sonali Paul; editing by Richard Pullin and Chris Reese)