Australia is heavily reliant on refined fuel imports from South East and North Asian suppliers. Much of that supply comes via shipping that moves through or close to the increasingly contested South China Sea.
Over the past 10 years, three of Australia’s oil refineries have closed and domestic production has decreased by a third as remaining fields become exhausted.
As a member of the International Energy Agency (IEA), Australia has committed to holding a minimum of 90-day stocks of fuel reserves but has failed to meet those levels since 2012.
At present, Australia has, in effect, no strategic fuel reserve stocks, places no stockholding obligation on industry nor has a lead “fuel governing body” beyond the Department of the Environment and Energy’s role in strategically managing national fuel stocks.
Australia exports 75% of its own crude oil production, and imports the majority of its refined and crude requirements from Asia (40%), Africa (18%) and the Middle East (17%).
Ensuring a continuous supply of fuel is a national priority and, in 2018, the Joint Parliamentary Committee on Intelligence and Security stated fuel security to be an issue of national importance.
To date, the Australian Government has assessed that there is insufficient “threat” to Australia’s fuel supply requirements to warrant establishment of Government Fuel Reserve Stockholdings nor introduce mandatory stockholding requirements on industry.
All this comes despite the fact that Australia continues to be in breach of IEA obligations on fuel reserves, coupled with the increasing threat to global shipping lanes in the South China Sea and Middle East.
The Australian Government did commission a review into Australia’s Liquid Fuel Security and the Department of the Environment and Energy’s Interim Report was released in April this 2019.
That report clearly identifies the risk of maintaining a continuing posture of “manageable risk” to global fuel supplies and that the Government needs to act.
And with this threat to our national fuel stockholdings comes opportunity… the opportunity to position for and engage within a space that will require the delivery and maintenance of fuel-based infrastructure, transportation and security solutions across Australia and to connect with overseas markets and partners.
Critically, these solutions will encompass significant scope and scale, and require long-term maintenance programs – in themselves attractive the key commercial entities and stakeholders in the transportation and logistics sectors.
Australia’s apathy towards the issue of fuel security is being challenged by the strategic security environment that directly impacts and challenges extant thinking on fuel security arrangements and guarantees of supply.
Vaxa is tuned to Australia’s Liquid Fuel Security problems, is linked to key applicable government and industry stakeholders and is positioned to identify and realise commercial opportunities that will establish the necessary fuel storage infrastructure and transportation needs in Australia.