Transport fuel imports do not increase risk for supply reliability and security
- A diversity of global supply sources and local import facilities provide a range of options for Australia.
- Australia is already dependent on imports to meet the growth in demand for transport fuels (eg. demand for diesel and jet fuel exceeds total local refinery production) and Australia is a price taker on world markets.
- Thus, fuel users in Australia are already exposed to a level of ‘international disruption risk’ (like most other countries) given our reliance of fuel imports to meet demand.
- Any risk to supply would exist for both crude oil and petroleum product imports – but increased shipments to Australia have increased supply flexibility and hence reliability.
Australia does not import all fuel from Singapore and reliance on Singapore is actually decreasing
- According to BREE, 43% of Australia’s imports of transport fuels was from Singapore in 2013–14.
- According to the ACCC, imports of petrol were 20% of sales in 2013-14 and “Singapore has become a somewhat less important source of (petrol) imports” (i.e. decline from 86% to 62%).
- The source of Australia's petroleum product imports has been dominated by Singapore (the Asia-Pacific trading centre), but this is changing as more product comes from North Asia (South Korea and Japan).
- Not all fuel from Singapore has been produced in Singapore refineries; a significant proportion has been produced from refineries across the broader Asian regional and stored in Singapore for ready export to the market.
- Australia has flexible supply chains and the industry will purchase fuel supply imports from the cheapest sources.
Not all fuel from Singapore is manufactured/refined in Singapore
- Petroleum products sourced from Singapore does not mean they were refined in Singapore from Middle Eastern Crude, since Singapore is a regional trade centre and a significant storage base for product produced across the Asian region.
- Fuel from Singapore refineries comprises around half of Singapore fuel exports with the remainder coming from other bulk storage and blending facilities there.
- Many Asian refineries source crude from their own fields and/or from their close neighbours.
- For example, Australia directly imports significant product (particularly diesel) from South Korea and Japan and both countries have diesel stored in Singapore for market trading opportunities.
- According to BREE, in 2013-14 Australia’s largest export markets for crude oil and refinery feedstock are Singapore, Thailand and Korea – accounting for 39% of Australia’s total exports.
A small proportion of imported crude for Australian refineries comes from the Middle East
- According to BREE, in 2013-14:
- Malaysia is the largest source for Australian crude oil and refinery feedstock imports, alone accounting for 23.7% of total crude imports in 2013–14
- Asia-Pacific (including NZ and PNG) accounts for 58% of crude and refinery feedstock imports and Africa accounts for 21%.
- Total imports of crude oil from the Middle East was 13%, with all imports sourced from UAE.
- While political instability in the Middle East has been a factor behind concerns about transport fuel security, past disruptions in this region (including during wars) had a relatively small impact on global oil flows and trade, as other countries saw an obvious commercial opportunity to supply.
- Australia had no issues sourcing crude oil during previous conflicts in the Middle East, and crude oil trade continued from this region during those times.
- Currently, the global oil market has an oversupply of crude oil and more supply would likely become available if global crude oil prices increased.