Ruqayyah Snyder
Australia's petrol supply is dominated by imports, with about 90% of its petrol and diesel pumped at the bowser imported from overseas, mainly Asia. The country has a history of oil discoveries and production, with the first oil discovery made near Lakes Entrance, Victoria, in 1924, and the first flowing oil found in 1953 by the West Australian Petroleum Pty Ltd (WAPET) joint venture. However, the number of local refineries has declined over the years, and Australia now has only two remaining oil refineries, with one facing an uncertain future. This has led to an increasing reliance on imported refined petroleum products, with the bulk of imports coming from Singapore, South Korea, Japan, China, and the US. The country's fuel supply chain is described as secure and resilient, but the lack of local refining capacity has made Australia vulnerable to disruptions in the global market, impacting prices and supply stability.
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What You'll Learn
Australia imports most of its petrol
Australia is heavily reliant on overseas imports for its fuel supply. While it does produce some crude oil domestically, estimated at around 350 barrels per day, the majority of this is exported. As a result, Australia imports about 90% of its petrol, with most of it coming from Asia, particularly Singapore, South Korea, Japan, China, and Thailand. This reliance on foreign sources has made Australia's energy situation quite fragile, as any disruption in supply from these regions can have significant consequences.
The country's fuel supply chain has undergone significant changes over the years. In the past two decades, many local oil refineries have closed down due to rising energy prices and labour costs, making it challenging to compete with larger facilities in the Asia-Pacific region. Consequently, these refineries have been converted into import terminals, further increasing Australia's dependence on foreign oil supplies.
The Australian government has recognized the need to bolster fuel security and has pledged support packages for the remaining local oil refineries. However, the country's fuel supply remains precarious, with only two operational oil refineries as of 2021.
The vulnerability of Australia's fuel supply was highlighted during an incident in Mallacoota in 2020. A bushfire disrupted the area's only road access, cutting off energy supplies and causing a collapse of the local system. This event underscored the country's fragile energy situation and the potential consequences of disruptions to its complex energy systems.
While Australia does not rely on Russian oil imports, the country is still affected by global events and market forces that influence fuel prices. The war in Ukraine, for example, led to a significant increase in fuel prices across Australia, despite the country's primary oil sources being in Asia.
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Australia exports most of its crude oil
Australia exports most of the oil it produces. In 2023, the country exported around 16 billion litres of crude oil. While Australia does produce some crude oil domestically (about 350 barrels per day), the majority of this is exported. Australia's crude oil exports have steadily declined over the past decade, with the volume exported in 2024 being approximately 15.28 thousand megaliters. The largest recipients of Australia's crude oil exports are Indonesia and Singapore.
Australia's oil sector is dominated by international companies, including Apache, BHP, Chevron, ConocoPhillips, ExxonMobil, Santos, Shell, and Woodside. The country's upstream activities (exploration, appraisal, development, and construction, and production of oil and gas) are largely carried out by these international companies, with most onshore and offshore production licenses issued to multiple parties in joint ventures.
Despite being a significant oil producer, Australia's local production is declining, and the country is becoming increasingly reliant on imported refined petroleum products to meet its energy needs. Australian refineries import about 83% of the crude oil they process from more than 17 countries, mainly in Asia (40%), but also Africa (18%) and the Middle East (17%).
The country's fuel security is precarious, with Australia's geographically dispersed oil supply chains making them vulnerable to disruptions. The ongoing tensions in the South China Sea threaten Australia's major supply route for oil due to its geopolitical position between the US and China. Additionally, the vulnerability of supply lines through Indonesia has been recognised, and the country does not have the mandated 90-day stockpile, making it susceptible to disruptions in access to fuel.
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Australia's fuel supply chain is vulnerable
The Australian Government has acknowledged the importance of ensuring access to fuel while also transitioning to net-zero emissions. They are actively engaging with manufacturers, importers, wholesalers, retailers, and distributors to ensure the market is functioning properly and supply chains are delivering. The government has also implemented measures to support domestic fuel security, improve fuel quality, and protect consumers and the economy from supply disruptions.
Despite these efforts, Australia's fuel supply chain has been described as fragile by some experts. Dr Anthony Richardson, a researcher at RMIT University, highlighted the country's reliance on imports, stating that Australia imports about 90% of its fuel. This high level of dependence on foreign sources makes the country vulnerable to disruptions, as evidenced by the Mallacoota bushfire in 2020, which cut off the area's only road access and disrupted energy supplies.
Furthermore, Australia's geographically dispersed oil supply chains mean there are multiple potential points of disruption around the world. The country sources fuel from over 70 countries, and while this provides some flexibility, it also increases the number of potential vulnerabilities. For example, ongoing tensions in the South China Sea threaten Australia's major supply route for oil, and the country's position between the US and China adds geopolitical complexities.
To address these vulnerabilities, Australia has established a national fuel reserve through the Fuel Security Act 2021, which includes a minimum stockholding obligation. This reserve can be released to the market during supply disruptions, emergencies, or unexpected increases in fuel demand. However, Australia currently falls short of its International Energy Agency (IEA) obligations to hold 90 days' worth of oil stocks, making the country's fuel supply chain vulnerable to unexpected disruptions.
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The government is supporting local refineries
Australia is almost entirely reliant on overseas imports for its fuel. While it does produce some crude oil domestically, around 350 barrels a day, much of this is exported. The country sources most of its fuel supply from Asia, particularly Singapore, South Korea, Japan, China, and the US. This heavy reliance on imports has made Australia's energy situation quite fragile.
Recognizing the need to strengthen fuel security, the Federal Government has pledged to support Australia's remaining oil refineries. In fact, the government has committed to a $2 billion support package for the local oil industry, which is crucial for maintaining sufficient reserves of petrol and diesel for national security. This move comes after two out of the four remaining refineries announced their closures in 2021, leaving only two refineries operational in the country.
The government's support package aims to prevent further closures and ensure the viability of the local oil industry. However, it is worth noting that Australia's fuel supply chain has been described as precarious due to the declining local production and increasing imports. This shift has made the country more vulnerable to disruptions in the global market, with prices fluctuating dramatically in response.
While the government's intervention is a step towards securing fuel supplies, Australia's energy future remains uncertain. The country's fuel security is influenced by various factors, including geopolitical tensions, natural disasters, and the actions of oil-producing cartels like OPEC. Additionally, the government's efforts to balance emissions reduction targets and the potential impact on petrol prices add further complexity to the situation.
Despite the challenges, the Federal Government's support for local refineries demonstrates a commitment to addressing fuel security concerns and ensuring the continued availability of petrol and diesel for Australians.
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Joint ventures are important in the industry
Australia is a major producer and importer of petroleum products, with Western Australia being the largest contributor to the country's production. The petroleum industry in Australia is dominated by several international companies, including Apache, BHP, Chevron, ConocoPhillips, ExxonMobil, Santos, Shell, and Woodside.
Joint ventures are important in the petroleum industry as they facilitate risk-sharing and allow businesses to specialize and accomplish maximum development in a given field. According to a 2009 report by the Australian Government's Productivity Commission, joint ventures are beneficial as they "allow smaller businesses to be involved in production without raising the large quantities of capital required to develop a field alone." This is particularly relevant in Australia, where over 80% of gas reserves and over 95% of oil reserves are located offshore, requiring significant investment for exploration and extraction.
One example of a successful joint venture in the Australian petroleum industry is the North West Shelf Venture, which comprises BHP, BP, Chevron, Shell, Woodside Petroleum, and a 50:50 joint venture between Mitsubishi and Mitsui & Co. Each company holds an equal one-sixth shareholding in the project. Another notable joint venture is between Australian energy company Santos and ExxonMobil, which resulted in the Angore LNG project in Papua New Guinea. Santos operates multiple joint ventures with significant LNG production and has secured supply agreements with companies in Japan.
In addition to international collaborations, there have also been several domestic joint ventures within Australia. For instance, in 2003, Caltex Australia entered into a joint venture agreement with supermarket retailer Woolworths, leading to the co-branding of service stations as Caltex Woolworths. Ampol, the largest transport energy distributor and retailer in Australia, was formed through the merger of Caltex Petroleum Corporation and Pioneer International. This merger resulted in the WAPET oil and gas exploration joint venture, which was later replaced by Chevron Australia Pty Ltd.
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Frequently asked questions
Australia produces some crude oil domestically, about 350 barrels per day, but the majority of this is exported. Australia's fuel supply mainly comes from Asia, with around 25% coming from Singapore.
Australia sources the majority of its fuel supply from Asia, with Singapore, South Korea, Japan, China, the US, Malaysia, and Thailand being the main suppliers.
Australia has two remaining oil refineries, located in Brisbane and Geelong. Historically, there were eight oil refineries in the country, but the gradual disappearance of local oil refining capacity has seen fuel storage levels drop dramatically.
