Omari Gates
Australia is a net importer of oil, with around 90% of its petrol supply coming from overseas. The country has some domestic oil production, but the majority of this is exported. Petrol in Australia is either produced at one of two domestic oil refineries or imported directly in its finished product to a fuel terminal. This reliance on overseas petrol products leaves Australia's energy needs in a precarious position, as a major disruption in the areas from which it sources petrol and oil could have catastrophic consequences.
| Characteristics | Values |
|---|---|
| First oil discovery in Australia | Near Lakes Entrance, Victoria in 1924 |
| First commercial natural gas field in Australia | Dongara in the Perth Basin, Western Australia in 1964 |
| Number of oil refineries in Australia | 7 in 2020, 4 in 2022 |
| Retail downstream business dominated by | Ampol (1,900 stores across the country as of October 2022) |
| Percentage of petrol supply that is imported | 90% |
| Percentage of crude oil produced domestically | 12% |
| Countries that import petrol to Australia | Singapore, South Korea, Malaysia, China, the US, Japan, Thailand |
| Percentage of imported refined petrol that comes from Singapore | 51-53% |
| Percentage of imported refined petrol that comes from South Korea | 18% |
| Percentage of imported refined petrol that comes from Japan | 12% |
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What You'll Learn
Australia's oil discovery and production
Oil was first discovered in Australia in 1924 near Lakes Entrance, Victoria. However, Australia's first flowing oil was discovered in November 1953 by the West Australian Petroleum Pty Ltd (WAPET) joint venture at Rough Range on the North West Cape. In 1964, WAPET discovered the first commercial natural gas field in Western Australia at Dongara in the Perth Basin.
Australia is a major producer and importer of petroleum, with Western Australia contributing the most to the country's production of petroleum products. The petroleum sector in Australia is dominated by international companies, including Apache, BHP, Chevron, ConocoPhillips, ExxonMobil, Santos, Shell, and Woodside. Most onshore and offshore production licenses are issued to multiple parties in the form of joint ventures.
While Australia does produce some crude oil domestically, about 350 barrels per day, the majority of it is exported. Instead, Australia relies heavily on imports for its petrol supply, with about 90% of its petrol being imported from other countries. Most of the imported petrol comes from Asia, with around 25% from Singapore, and the rest sourced from South Korea, Malaysia, China, the US, Japan, and Thailand.
The imported petrol is either produced at one of two domestic oil refineries in Brisbane and Geelong or imported directly to a fuel terminal before being transported to petrol stations across the nation. Australia's Energy Minister, Josh Frydenberg, has acknowledged the country's increasing reliance on imported fuel due to the closure of domestic refineries and the decline in domestic oil production.
Despite this reliance on imports, Australia has stepped up its oil exploration efforts in recent years, particularly in the Bedout Sub-basin (Roebuck Basin) and the Great Australian Bight, with the aim of improving fuel security and reducing vulnerability to international disruptions.
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Petrol imports and exports
Australia relies heavily on imported fuel, with about 90% of its petrol supply coming from overseas. The country's domestic oil production has declined, and it has chosen to export most of its crude oil production. In recent years, Australia has increasingly imported refined petroleum products, with a 93.7% increase in imports between 2008-09 and 2018-19.
The bulk of Australia's imported petrol comes from Asia, with around 25% originating in Singapore. The remaining petrol is sourced from various countries, including South Korea, Malaysia, China, the US, Japan, and Thailand. Singapore acts as a trading centre for the Asia-Pacific region, and not all fuel from Singapore is necessarily refined there.
Australia's fuel supply chain is considered secure and resilient, with multiple points of entry and a flexible maritime supply chain. The country has many fuel product import terminals, and the diversity of suppliers ensures that disruptions at one source can be mitigated by alternative sources.
However, Australia's reliance on imported petrol has been highlighted as a potential vulnerability. The NRMA Fuel Security Report noted that a lack of fuel reserves and a "she'll be right" mentality could lead to difficulties in the event of a significant disruption. The country's fuel reserves have been criticised as being below the recommended three-month standard, with Australia having less than 50 days' worth of fuel stocks in 2018.
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Domestic refineries and import terminals
Australia relies heavily on imported fuel, with about 90% of its petrol supply being imported. The country has a limited number of domestic refineries, and the majority of its domestically produced crude oil is exported. This dynamic has shifted over time, with Australia importing less crude oil and more refined petroleum products.
There are currently two domestic oil refineries in Australia, located in Brisbane and Geelong. These refineries process crude oil into petrol and other petroleum products. However, the number of refineries in Australia has declined in recent years, with several refineries closing down and being converted into fuel import terminals. For example, the Port Stanvac Refinery was closed in 2009, and the Altona, Kwinana, and Kurnell refineries have also ceased operations, transitioning into import terminals.
The closure of domestic refineries has increased Australia's reliance on imported refined petrol, with Singapore being the largest supplier, providing 25% to 53% of imports. Other significant sources of imported petrol include South Korea, Japan, China, Malaysia, the US, and Thailand. This shift towards importing refined petrol has potentially increased the country's vulnerability to supply disruptions, as it is dependent on overseas refineries and vulnerable shipping routes.
To mitigate the risks associated with this reliance on imports, Australia has implemented strategies such as diversifying its sources and developing a flexible and resilient maritime supply chain. However, the country has been criticized for its lack of significant fuel reserves, falling short of the recommended 90-day oil reserve, which could leave it vulnerable to supply disruptions and their potential cascading effects on food, medication, and military capacities.
The Australian Petrol Statistics revealed that the country had only 23 days' worth of unleaded petrol reserves in case of an emergency. This shortage of reserves, coupled with the country's geographically dispersed oil supply chains, highlights the potential challenges and the need for a comprehensive fuel-security plan.
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Fuel retailers and downstream customers
Australia's fuel retailers and downstream customers are facing a challenging environment due to the country's reliance on imported petrol and oil. As of 2022, about 90% of Australia's petrol supply is imported, with the bulk of it coming from Asia, particularly Singapore, South Korea, Malaysia, China, Japan, and Thailand. This heavy reliance on imports leaves Australia vulnerable to international incidents and supply chain disruptions, as evidenced by the impact of the war in Ukraine on fuel prices.
The retail downstream business in Australia is dominated by Ampol, which has a wide network of stores across the country, including co-branded stations operated by EG Australia. However, the number of domestic oil refineries in Australia has declined, with a shift towards importing refined petroleum products instead of crude oil. As a result, there are concerns about the country's fuel security and resilience in the face of potential disruptions.
Australia's Energy Minister, Josh Frydenberg, acknowledged the increasing reliance on imported fuel due to the closure of domestic refineries and the decline in local oil production. The country has limited fuel reserves, falling below the recommended 90-day oil reserve, and the dispersed nature of its oil supply chains adds to the complexity and potential risks.
Despite these challenges, some experts argue that the flexibility and resilience of Australia's maritime supply chain should not be underestimated. They suggest that in the event of serious disruptions, Australia could switch suppliers or regions, and inventory could be rerouted by ship. However, the country's fuel retailers and downstream customers must navigate a landscape shaped by global events and geopolitical tensions, requiring careful planning and strategies to ensure a secure and stable fuel supply.
The vulnerability of supply lines through Indonesia and the tensions in the South China Sea further underscore the complex dynamics impacting Australia's fuel industry. With the country's fuel ports and supply chains potentially affected by various factors, the downstream sector must adapt and respond to these evolving challenges to secure their fuel sources and maintain operations.
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International incidents and fuel prices
Fuel prices in Australia are determined by a combination of global and local factors. International benchmark prices, influenced by the value of the Australian dollar relative to the US dollar, play a significant role in setting fuel prices. The strength of the Australian economy against the US dollar can impact the domestic price of fuel. Additionally, the costs incurred by fuel wholesalers and retailers, such as freight, insurance, transport, and storage, also factor into the pricing.
The pricing decisions made by wholesalers and retailers, along with the level of competition in different locations, can lead to fluctuations in fuel prices across Australia's five largest cities: Sydney, Melbourne, Brisbane, Adelaide, and Perth. These cities experience petrol price cycles, where prices gradually decrease for a period followed by a sharp increase, or vice versa. The ACCC closely monitors these price cycles and provides buying tips to help consumers save on petrol.
International incidents that impact the global supply and demand for crude oil can significantly affect fuel prices in Australia. For example, political tensions or conflicts in oil-producing regions can disrupt supply chains, leading to fluctuations in crude oil prices. Additionally, Australia's local oil refineries compete with imported petroleum products from highly efficient refineries in Asia, which means that international petrol prices directly influence the price of petrol in Australia.
It is worth noting that Australia has historically maintained relatively low petrol and diesel prices compared to other OECD countries, according to the Bureau of Resource and Energy Economics (Australian Petroleum Statistics) and the International Energy Agency (IEA). However, the Federal Budget reduction in fuel excise from March to September 2022 prompted the ACCC to closely monitor fuel prices, indicating a potential sensitivity to economic and political changes.
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Frequently asked questions
Petrol is made at one of two domestic oil refineries, in Brisbane and Geelong, or imported directly in its finished product to a fuel terminal.
Australia produces about 350 barrels of crude oil per day. However, the majority of this is exported.
Australia imports about 90% of its petrol supply.
Most of Australia's imported petrol comes from Asia, with around 25% coming from Singapore. The remainder is sourced from South Korea, Malaysia, China, the US, Japan, and Thailand.
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