Nesa identified Issues: Strait of Hormuz


Australia’s dependence on Middle East petroleum



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3.3Australia’s dependence on Middle East petroleum


According to the Bureau of Resources and Energy Economics (BREE), in 2010-11, Australia imported 156 megalitres (ML) of crude oil from Saudi Arabia and 4,683 ML from the UAE (out of a total 31,766 ML from around the world or 15.2 per cent of Australia’s crude oil imports as shown in Table ).

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






2006-07
ML

2007-08
ML

2008-09
ML

2009-10
ML

2010-11
ML

Crude oil and other refinery feedstock
















Indonesia

3,391

3,289

3,666

4,178

4,805

Malaysia

3,730

4,103

4,461

5,319

5,930

New Zealand

635

1,974

2,313

2,569

2,565

Other Middle East

118

43

40

43

0

Papua New Guinea

2,059

2,190

1,349

1,580

1,612

Qatar

106

0

0

0

42

Saudi Arabia

1,151

573

775

478

156

Singapore

841

713

555

605

497

United Arab Emirates

2,971

3,660

2,918

3,846

4,683

Viet Nam

6,677

6,318

5,277

3,904

2,554

Other

3,665

3,360

2,947

4,762

8,923

Total__25,345__26,223__24,302__27,284'>Total

25,345

26,223

24,302

27,284

31,766

Refined products
















Indonesia

17

11

45

95

259

Korea, Rep. of

821

785

1,704

1,960

2,013

Malaysia

8

316

184

249

263

Middle East

642

1,044

1,050

1,070

897

New Zealand

96

40

215

4

9

Singapore

7,681

10,215

10,217

10,249

9,471

United States

378

421

473

301

400

Other

4,375

5,149

5,808

6,039

5,459

Total

14,018

17,982

19,697

19,967

18,771

Data source: BREE – Australian Commodity Statistics.

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






Imports of petroleum products

Dependence on Middle East Crude

Imports dependent on Middle East Crude




ML

ML

ML

Indonesia

259




0

Korea, Rep. of

2013

72%

1449

Malaysia

263




0

Middle East

897

100%

897

New Zealand

9




0

Singapore

9471

70%

6629

United States

400

18%

72

Other

5459

50%

2729

Total

18771

63%

11777

Note: Dependence percentages are based on ACIL Tasman estimates for Indonesia, Malaysia and other.

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






Total imports

20010-11


Average sailing time to Australia

Stocks on the water

End of months stocks as at January 2012

Total stocks on land and on water

Proportion of stocks on water to total stocks on land and water




ML

Days

ML

ML

ML




Crude oil

31,766

17

1,480

2,812

4,292

34%

Product

18,771

12

617

3,519

4,136

15%

Note: Calculations provide only an approximate indication of petroleum on the water.

Data source: Australian Petroleum Statistics.




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