One mid-size marine fuel tanker carries the equivalent of 1,000 truck tankers, so replacement supplies cannot be transported from other states in the event of a disruption to these ports or ships.
In April, the Department of Industry and Science released the Energy White Paper (EWP). The department had received numerous submissions prior to finalisation from a broad range of industry groups and individuals.
When it comes to transport fuels, the report noted that Australia imports around 80 per cent of the crude oil it refines into liquid fuels and around 44 per cent of the refined liquid fuels used in Australia. It recorded the fact that around 75 per cent of our oil production is exported, most of which is sourced from off the north-west coast of Western Australia.
The EWP notes that, due to declining east coast production, domestic refineries on the east coast now mostly rely on imported feedstock.
Due to closures, the number of domestic refineries has been reduced from six in 2012 to four in 2015. This reflects the comparative disadvantages of Australian refineries, including ageing, small size and labour and construction costs.
The report notes that new opportunities remain for growing Australia’s liquid fuel supplies in the long-term, citing new discoveries being made, including that of oil in WA’s Canning Basin in 2014.
In the section of the EWP that covers the transport fuel sector, the comment on supply is positive, with the finding that the Australian Government considers supply reliability will be maintained because of the depth, liquidity and diversity of international crude and fuel markets, combined with the existing Australian stockholding and at-sea tanker arrangements of commercial companies.
Despite the view on security of supply and longstanding contribution to global energy security as a major net energy exporter, Australia’s current oil stock holdings fail to meet its obligations under the International Energy Agency (IEA) treaty.
Current estimates are that meeting the IEA obligations would require an investment of several billion dollars in stocks and storage infrastructure over a decade. The federal Government will decide during 2015 how to address this compliance issue. It could be noted, perhaps cynically, that we are now in June.