Australian liquid fuel supply
Key messages
- The Australian refining industry is a price taker in the Asia–Pacific region.
- Australian refineries are generally smaller than regional competitors and must be highly efficient to compete.
- The Asia–Pacific region has moved to a negative regional supply balance due primarily to supply not keeping pace with rapidly increasing demand.
- Demand growth and the move to cleaner fuels have put upward pressure on prices.
- The Australian downstream petroleum industry has a good record over recent decades of ensuring reliable supply to consumers. Regulatory measures are unlikely to enhance security of supply.
Petroleum refining in Australia
In 2006–07, domestic refineries supplied around 78 per cent of petroleum products required by major industries and the fuel distribution network of around 6000 service stations. The reliability of the fuel supply system is high given the unique logistical and geographical challenges in Australia.
The Australian oil refining industry produces a full range of petroleum products comprising:
- petrol (46%)
- diesel (29%)
- jet fuel (14%)
- fuel oil (2%)
- LPG (4%)
- lube oils, bitumen and other products (5%).
The industry also produces a substantial volume of chemical feedstock.
In 2006–07 Australia consumed 49 750 ML (megalitres) of petroleum products. Australian refineries produced 38 800 ML, of which around four per cent was exported (excluding LPG). Imports accounted for 26 per cent (or 12 900 ML) of total consumption. A proportion of this imported volume was supplied to northern and north western areas of Australia where domestic refineries generally are unable to competitively supply market needs. Import terminals are located throughout Australia. The bulk of imported petrol was from Singapore.
While Australia has substantial crude oil production, around 58 per cent of this oil was exported in 2006–07. Crude oils required to meet the product demand mix in Australia were imported by domestic refineries mainly from Asia (83%) and the Middle East (17%).
Australian refineries
Australia has seven major operating refineries that were generally constructed in the 1950s and 1960s, although they have been extensively modified since then, particularly during 2005 and 2006. These refineries are relatively small with the largest having a capacity of 8000 ML pa (megalitres per year), compared with the four largest Asian refineries which produce between 30 000 ML pa and 70 000 ML pa.
| Refinery | Capacity: (ML pa) |
| Bulwer Island (BP—Brisbane) | 5110 |
| Lytton (Caltex—Brisbane) | 6270 |
| Clyde (Shell—Sydney) | 4930 |
| Kurnell (Caltex—Sydney) | 7540 |
| Altona (Mobil—Melbourne) | 4530 |
| Geelong (Shell—Geelong) | 6380 |
| Kwinana (BP—Kwinana, WA) | 7960 |
| Total | 42 720 |
The demand for petroleum products in Australia was around 49 750 ML in 2006–07 (or around 136 ML per day — a 5.5% increase since 2004–05).
The Port Stanvac refinery (capacity: 4520 ML pa) was mothballed by Mobil in July 2003. As one of the smallest refineries in the Asia–Pacific region, it could not compete against larger regional refineries.
Australian refineries must price their output to be competitive with imports (i.e. import parity) from the Asia–Pacific region. There is no tariff protection and all seaboard capitals have product import facilities. Profitability of the Australian refining industry is therefore largely determined by product prices in Asia, and its viability depends on our competitiveness against imports from Asian refiners. In future, the growing demand in Australia will continue to be largely met by imports, further strengthening the price relationship with Asian product prices.
