Following the development of the Bass Strait oilfields in the early 1970s followed by the oilfields off Western Australia, Australia was largely self-sufficient in oil production up to about 2000, as shown in Figure 4.
Those happy days are long past and Australia’s oil production is now in long term decline to exhaustion. Our production of oil and condensate is forecast to decline from 147 million barrels in 2014 to 83 million barrels in 2030. In 2014, Australia imported 169 million barrels of oil and 132 million barrels of refined products. This equates to 465,000 barrels per day of oil and 361,000 barrels per day of refined products for a total of 826,000 barrels per day.
The increasing proportion of the world’s oil supply coming from the Middle East increases the importance of the Straits of Hormuz chokepoint to Australian supply. The next major chokepoint is the Straits of Malacca, as shown in Figure 5. This is on the edge of a potential conflict zone in the South China Sea and East China Sea. In the event of a conflict, we are unlikely to get any refined product supply from the Asian region.
Figure 4: Australian Oil Production and Consumption 1965 – 2030
Figure 5: Australian Oil and Refined Product Supply Chokepoints
Figure 6: Crude Oil and Refined Product Imports
As well as being a national security problem and a potential cause of catastrophic economic disruption, Australia’s crude oil and refined products imports are an enormous drag on the economy. Last year, $41 billion left the country to pay for those imported fuels. At average weekly earnings, this equates to over half a million jobs which could be created if those funds stayed in the country.