Australia’s dependence on Middle East petroleum

3.3Australia’s dependence on Middle East petroleum

Middle Eastern crudes generally are heavier than and complement light crudes produced from Australian oil fields. This applies principally to the refineries in Victoria that draw on domestic supplies of crude oil from the producing fields in the Gippsland Basin. Shipping times from the Middle East are around 2 to 3 weeks. Australian refineries would be able to rely on crude oil on the water for about this period before closure of the Strait would begin having a physical impact on supplies.

Australia also imported 897 ML of products from the Middle East (5.4 per cent of total product imports), compared with 9,471 ML from Singapore and 2,013 ML from the Republic of Korea, out of a total of 18,771 ML (see Table ). Of course, a significant proportion of the products produced in the Republic of Korea and Singapore are refined from crude oil from the Middle East.

Table Australian imports of petroleum

A reduction in exports of crude oil from the Gulf would also have implications for Asian refineries that supply Australia with petroleum products. A list of countries and their current consumption of crude oil shipped through the Strait follows (Lloyds, 2011):

Japan -- takes 26 per cent of crude oil moving through the Strait (meets 85 per cent of this country's oil needs)

Republic of Korea -- 14 per cent (meets 72 per cent of this country’s crude oil needs)

United States -- 14 per cent (meets 18 per cent of this country’s crude oil needs)

India -- 12 per cent (meets 65 per cent of this country’s crude oil needs)

Egypt -- 8 per cent (most transhipped to other countries)

China -- 8 per cent (meets 34 per cent of this country’s crude oil needs)

Singapore – 6 per cent (meets 70 per cent of this country’s crude oil needs).

Importantly for Australian imports, oil refineries in Singapore and South Korea derive 70 per cent of their crude oil from shipments through the Strait. Oil refineries in India are also similarly dependent on shipments through the Strait, while oil refineries in China are only 34 per cent dependent on such crude oil. Around 50 per cent of Australia’s imports of petroleum products come from Singapore.

There is insufficient evidence to make an accurate calculation of the proportion of petroleum products imported into Australia that are dependent on crude oil shipped through the Strait of Hormuz. However, based on data from Table and dependence figures in Table , ACIL Tasman estimated that around 60 per cent of the products imported would come from oil refineries in Asia and elsewhere that depend to varying degrees on crude oil imported from the Middle East.

Table Imports of petroleum products 2010-11

Data source: BREE – Australian Commodity Statistics.

Shipping times for crude oil is around 3 to 4 weeks from the Middle East, 4 to 5 weeks from West Africa and 2 to 3 weeks from Asia respectively (Australian Institute of Petroleum, 2008). Average shipping times would be around 17 days.

Shipping times for product from Asia is from around 10 to 14 days to the major east and west coast import terminals. As the major proportion of imported product is sourced from Asia, the average shipping time for product might be around 12 days.

Taking these shipping times as a guide, an estimate of the volumes of crude oil and product on the water at any one time is provided in Table . The table shows that the estimated volume of crude oil on the water is around 1,480 ML. Total stocks of crude oil in Australia and on the water were 4292 ML as at January 2012 (Australian Petroleum Statistics, 2012). This means that stocks of crude oil on the water represent around 34.5 per cent of the total of crude oil in storage in Australia and in ships destined for Australia.

Using a similar calculation for petroleum products, the estimated 617 ML of petroleum product on the water bound for Australia represents around 15 per cent of the total of 4136 ML of petroleum product in storage in Australia and in ships destined for Australia.

This estimate should only be regarded as a general guide the volume of crude and product that might be in the pipeline as the data is not detailed enough to draw precise conclusions.

Table Volume of crude oil and product on the water

Data source: Australian Petroleum Statistics.