(EnergyAsia, March 8, 2017, Wednesday) — Australia has been importing petroleum products at a rate faster than its oil companies have been shutting down refining capacity this decade, an analysis of official data has shown.


Australia’s downstream oil performance

Table 1. Refinery Input

  2016* 2015 % change 2014 2010
Million litres 25,541.7 26,609.5 -4.01 32,782.1 37,574.7
000 b/d* 438.9 458.5 -4.27 564.9 647.5
Annual percentage growth 2010 to 2016: -6.28%    

* 366 days as 2016 is a leap year.

Table 2. Petroleum Sales

  2016* 2015 % change 2014 2010
Million litres 55,122.4 55,240.2 -0.21% 55,170.3 51,070.1
000 b/d* 947.3 951.9 -0.48% 950.7 880.1
Annual percentage growth 2010 to 2016: -1.23%    

* 366 days as 2016 is a leap year.

Table 3. Petroleum Sales: Share of Main Products

  2016 2015 2014 2010
Diesel 43.0% 42.8 41.8 38.3
Gasoline 32.8% 32.8 32.8 35.7
Jet fuel 15.4% 14.8 14.8 13.5
LPG 5.8% 6.4 7.0 8.0

Table 4. Petroleum Product Imports

  2016* 2015 % change 2014 2010
Million litres 32,344.0 31,759.7 1.84% 24,773.5 20,105.5
000 b/d* 555.8 547.3 1.55% 426.9 346.5
Annual percentage growth 2010 to 2016: 8.19%    

* 366 days as 2016 is a leap year.

Table 5. Product Imports-to-Sales Ratio

  2016* 2015 2014 2010
Import/Sales % 58.7 57.5 44.9 39.4

From just over 39% in 2010, the country’s dependence on imports to meet its domestic fuels demand surged to a record 58.7% last year, with the 60% mark likely to be breached sometime this year.

According to the Department of the Environment and Energy, Australia imported a record 555,840 b/d of petroleum products last year to help meet domestic demand of nearly 947,300 b/d. In 2010, imports accounted for just 346,465 b/d of 880,058 b/d of total product sales.

Between 2010 and 2016, Australia’s product imports grew at an annual rate of nearly 8.2% or nearly eight times its annual consumption growth of just over 1.2%. Over the same period, the country’s oil refining capacity fell by an annual rate of nearly 7.9% from 740,000 b/d to 452,000 b/d.

The rapid decline of Australia’s oil refining industry coincides with the massive expansion and upgrade of export-oriented plants in Asia and the Middle East.

Unlike in the past, the government and the public have not reacted with alarm that the country’s energy security is increasingly out of its hands.

In 2013, lawmakers were sufficiently alarmed to order an investigation into whether the country’s energy security would be threatened as oil companies progressively reduced their downstream manufacturing activities.

“The refineries have grown old, with no longer an ability to reach globally competitive economies of scale due to the low growth in local demand and an inability to compete in the major product export markets,” concluded a special report ordered by the House of Representatives.

Following that report, Caltex ceased operations at its 125,000 b/d Kurnell refinery in New South Wales state in 2014, converting the site to a fuels import, storage and distribution terminal. A year later, BP closed its 102,000 b/d refinery on Bulwer Island in Brisbane.

According to BP, Australia’s refining capacity is now at its lowest level in over 50 years. From 455,000 b/d in 1965, it rose to a record 822,000 b/d in 2002 before starting on its current decline.

Vitol’s purchase of Shell’s Geelong refinery in 2014 and a local company’s announcement last year to build a new refinery in Queensland state have sparked hopes that the industry may perhaps have seen its worst. According to media reports, Caspar Energy is planning to build an 80,000 b/d refinery in Gladstone to meet the region’s growing fuel demand arising mostly from the two liquefied natural gas plants.

Australia’s 4 oil refineries

  • BP’s 146,000 b/d Kwinana in Western Australia
  • Vitol’s Viva Energy: 120,000 b/d in Geelong, near Melbourne, Victoria.
  • ExxonMobil’s 80,000 b/d in Altona, near Melbourne, Victoria.
  • Caltex’s 106,000 b/d Lytton in Brisbane, Queensland.

Total: 452,000 b/d