Australia’s petroleum crisis

Australia’s oil security is being tested as we lose domestic infrastructure and international sources become tenuous.

Australia’s dependency on the Middle East for crude oil and ­refined products is modest.

The Iran-inspired oil crisis is ­arguably the biggest test for Australia’s petroleum security since a trio of the country’s oil refineries closed earlier this decade.

Australia is heavily dependent on imported crude oil and refined petroleum to meet its needs.

The country also has some of the most meagre fuel stockpiles among similarly import-reliant developed nations.

There are about 50 days’ worth of fuel and oil stored around the country, well short of the 90-day stockpile Australia had agreed to hold as a member of the International Energy Agency.

Australia’s refining capacity has shrunk considerably in recent years, with just four refineries ­operating here following a series of closures between 2012 and 2015.

While Australia is reliant on imports, its dependency on the Middle East for crude oil and ­refined products such as petrol, diesel and jet fuel is modest.

Instead, the biggest importers of refined products into Australia are South Korea (which imported $6.3 billion in the 2018 financial year), Singapore ($6.2bn of ­imports) and Japan ($3bn). ­Malaysia is the biggest importer of unrefined crude oil, accounting for $3.7bn of the $11.9bn of crude imported in 2018, while the ­United Arab Emirates, with $1.9bn of sales, is the only Middle Eastern nation with any material level of imports direct into Australia. But much of the refined products that emerge from South Korea, Singapore and Japan originate in the Middle East, meaning any broader disruption of oil shipments through the Gulf would eventually be felt by Australia.

Graeme Bethune, chief executive of consultancy ­EnergyQuest, said Australia’s comparatively low fuel stockpiles would leave it reliant on the support of neighbours in the event of a major disruption.

“If we got into difficulties we would be highly reliant on the goodwill of the Japanese and ­Koreans to help us out, and possibly even New Zealand,” he said.

While Australia is a globally significant producer of oil and gas, relatively little of that production goes through domestic refineries.

Josh Frydenberg last year ordered a review of fuel security, with the ­latest National Energy Security Assessment due soon. The previous assessment warned in 2011 that Australia’s lack of self-sufficiency in liquid fuels made it “substantially dependent on global market outcomes and the global oil security situation”.