The petroleum refining and petroleum fuel manufacturing industry’s revenue is falling rapidly, with a decline of 16.7 per cent expected in 2015-16 alone, according to IBISWorld.
Industry revenue is estimated to decline at a compound annual rate of 7.7 per cent over the five years through 2015-16 to reach $19.1 billion.
IBISWorld Senior Industry Analyst Spencer Little says the industry is struggling, primarily due to intense and rising competition from new South-East Asian refineries.
These operations typically have higher output and lower costs than Australian refineries. These advanced refineries are also able to meet Australian fuel standards and this trend has made the Australian industry more vulnerable to import competition.
Imports are estimated to account for 53.8 per cent of domestic demand in 2015-16, and this is expected to rise to more than 55 per cent by 2020-21. Imports have grown strongly over the past five years, which has contributed to the industry’s weaker performance. Competition from South-East Asian refineries has also led to the closure of the Bulwer and Kurnell refineries, contributing to the steep revenue decline in 2015-16.
“Falling global oil prices have also had a negative effect on revenue, leading to reductions in fuel prices,” Mr Little said.
Industry players have therefore received less revenue for their refined petroleum products.