Page 11 - AsianOil Week 06 2021

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Commenting on Canberra’s efforts to sup- What next
port the local downstream, ExxonMobil Aus- Australia is more exposed to regional energy
tralia chairman Nathan Fay said: “We extend market volatility than ever before. The
our thanks to the federal government for the country has failed to invest in a strategic
significant support offered to Altona and other petroleum reserve (SPR), leaving it to rely
refineries. Our decision to convert our facility on commercial oil storages as well as ship-
to a terminal is not a reflection of those efforts.” ments of crude and oil products already in
It is, however, hard to see ExxonMobil’s decision transit to the country.
to close one of the country’s few remaining refiner- The country currently holds 28 days’ worth
ies, despite government promises of downstream of crude and gasoline demand in domestic
incentives, as anything else, given that Morrison’s storages, equivalent to around 57-60 days of
relief package was meant to improve the sector’s net imports. This is far short of the 90 days it is
long-term economic viability. obligated to maintain as part of its International
Energy Association (IEA) membership, and
Plant closures levels could deteriorate further following the
Three refineries – Clyde, Kurnell and Bulwer – Altona closure.
have already shut up shop over the last decade as Dr Hunter Laidlaw, from the Australian Par-
a result of rising regional competition. liamentary Library, wrote in December 2020 that
Morrison claimed that the downstream “having fewer refineries reduces Australia’s abil-
needed support in the face of growing compe- ity to refine fuels if shipping and supply chains
tition from growing export-focused capacity are ever severely disrupted for any reason in the
scattered throughout the region. future.”
“Fuel security underpins our entire econ- Security concerns took centre stage fol-
omy,” Morrison said at the time. The prime min- lowing ExxonMobil’s announcement, with
ister added: “We need a sovereign fuel supply to federal opposition leader Anthony Albanese
shield us from potential shocks in the future.” slamming the government’s fuel security pol-
Yet despite the energy security emphasis, the icy as having “failed to address Australia’s fuel
government’s offerings could not convince Exx- security needs”.
onMobil of the economic advantages of remain- While the Morrison administration can chalk
ing in the downstream. This conclusion will up the lack of a strategic petroleum reserve (SPR)
trouble Canberra given that both of the country’s to the combined failure of successive Liberal and
last two refineries – Ampol’s Lytton refinery in Labor governments, there is very little wriggle
Queensland and Viva Energy’s Geelong plant – room when judging his attempt to rescue the
are more than 50 years old with small capacities. country’s downstream in the name of energy
Ampol is already undertaking a strategic review security.
of Lytton after the facility racked up heavy losses Could he have done more? Probably, but
last year, with the company warning that it could then Australian governments have traditionally
shutter the facility permanently. shown only a half-hearted desire to tackle gaps in
The outlook for small-scale refineries is only the country’s oil security. It has been far easier to
likely to deteriorate as well, given China and champion an already vibrant natural gas indus-
India’s ongoing refinery expansion programmes. try instead.™

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