David Feeney, 08 April 2016

Australia may be the world’s ninth largest energy producer but we depend on imports of crude oil and refined petroleum to power our economy.

Australia’s crude oil reserves are small and depleting faster than they are being replenished by discovery. About 91 per cent of our crude oil and refined petroleum is imported, mostly from the Middle East via Singapore and Southeast Asia. Of 28 nations belonging to the International Energy Agency, Australia is the only one failing to meet its 90-day net oil stockholding obligation.

In 2000 Australia had seven refineries. Today that number has fallen to four. By 2030 it is projected to be nil.

In the event of a crisis that interrupted fuel imports, Australia would exhaust its fuel stock within 22 days. By 2030, it will be less than 20 days.

The 2016 defence white paper contemplates the kind of crisis that could inflict this kind of disruption on Australia, including further conflict in the Middle East and conflict in the South China Sea.

For decades defence planning has held dear the need to defend the air-sea gap to the north of Australia. In such a contingency, importing oil and petroleum supplies would be affected, and Australian Defence Force operations in the north of Australia would rely on the shipment of processed fuels into northern ports, as Australia lacks the rail and road links to transport the required volume of fuel by land. The shipping lanes to ports in Darwin, Townsville and Cairns, to name a few, would run through the area of operations and would be at risk.

The Australian economy has an expanding reliance on an imported, “just-in-time” liquid fuel supply. And so does our ADF.

As we contemplate the white paper at the Australian Strategic Policy Institute conference Defence White Paper: From the Page to Reality this week, it should be noted that Australia’s fuel security has been left in a perilous state.

The white paper has outlined the acquisition of new Joint Strike Fighters, aircraft, frigates, patrol boats and new armoured vehicles: they need fuel.

New capabilities will increase fuel consumption and many strategically important sites also rely on fuel to generate power to operate the facilities.

While the white paper may set the scene for Australia to have a highly capable ADF, without fuel security it could quickly be rendered useless. For too long, fuel consumption has been ignored as new military capabilities were brought into service.

Fuel is not managed as a capability and there is no overall strategic approach.

Defence does not have a comprehensive strategic view of fuel storage infrastructure, inventory or consumption patterns. Australia’s fuel security and Defence fuel facilities are in a parlous state. At least 50 Defence fuel sites have failed to meet environmental and occupational health and safety standards and regulations. Governance and oversight requirements are not being met because fuel is being procured by several Defence entities, fuel is recorded only as part of Defence inventory, and there is no oversight of all fuel procurement.

Defence sites contain a mix of aged and poorly maintained fuel tanks. Navy fuel installations are in a particularly poor state. Already, Defence is struggling to meet its demand for certain fuel types needed by the ADF, such as F-44 and F-76, in locations such as Sydney, Darwin and Townsville.

For example, Defence is the only user of F-44 in Australia and relies on a single source of supply: the BP refinery in Brisbane. BP produces only F-44 in batches of at least five million litres. This poses several questions: how can the fuel be distributed so supply meets demand, before the fuel “is no longer in specification”, meaning it can no longer be safely used in aircraft? How can the ADF plan for a surge in operations in the event of a crisis, with no fuel reserves? Perhaps Australia can learn from countries exploring alternative fuels such as Sweden and the US.

Australia’s vulnerability to any interrupted fuel supply is of course wider than defence. Without fuel, our access to health services, our food production and distribution systems, and our transportation systems would all cease to function. But what is the point in investing billions in our armed forces if they would run out of fuel within weeks in the event of war?

David Feeney is assistant opposition spokesman for defence.

Extracted in full from The Australian.

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