A highly import-dependent and fiercely competitive Australian petroleum market

Document No.: A463/0494 Publication Date: April 1, 2024 A Highly Import-Dependent and Fiercely Competitive Australian Petroleum Market Petroleum consumption is highly import-dependent; refined fuel prices are relatively high; and service stations compete intensely. To address the increasingly serious issue of fuel supply security, the Australian government has implemented a series of measures. Wang Nengquan Although Australia was once the world’s largest exporter of coal and liquefied natural gas (LNG), it remains a net importer of petroleum, with petroleum consumption heavily reliant on imports. The domestic refined petroleum products market in Australia is highly competitive, and refined fuel prices are comparatively high. To safeguard national petroleum supply security, the Australian government has adopted a series of measures and policies. Drawing upon official data and reports from the Australian government and industry associations—as well as our on-the-ground observations during travel in Australia—this article outlines the status of Australia’s domestic petroleum market and petroleum-related policies. It also reflects our field investigation and firsthand experience of the Australian petroleum market during our travels. A Petroleum-Import-Dependent Country Though small in population, Australia is rich in natural resources—especially energy resources—and for an extended period was the world’s largest exporter of coal and LNG. However, its petroleum situation stands in stark contrast to its coal and natural gas sectors: petroleum consumption is overwhelmingly import-dependent. According to the UK-based Energy Institute’s World Energy Statistics Review 2023 edition, Australia’s total petroleum consumption in 2022 amounted to 47.3 million tonnes, while domestic petroleum production stood at only 17.5 million tonnes. Imports totaled 29.8 million tonnes—accounting for 63% of total petroleum consumption. Per data published by Australia’s Department of Climate Change, Energy, the Environment and Water in its January 2024 Australian Petroleum Statistics report (released March 15, 2024), crude oil production in January 2024 was 446 megalitres (ML), condensate production was 980 ML, and combined crude oil and condensate output reached 1,426 ML; Liquefied Petroleum Gas (LPG) production was 505 ML. Exports included 1,542.9 ML of crude oil and refinery feedstocks, 411.6 ML of LPG, and small volumes of automotive gasoline, aviation gasoline, and diesel. Imports comprised 334.3 ML of crude oil and refinery feedstocks, and a total of 4,515.3 ML of refined petroleum products—including 2,640.4 ML of diesel, 855.4 ML of automotive gasoline, and 720.7 ML of aviation fuel—yielding a total petroleum import volume of 4,849.6 ML. From these figures, Australia’s net petroleum imports in January 2024—calculated as total imports minus exports—amounted to 2,895.1 ML. Further breakdown reveals that virtually all domestically produced crude oil and condensate is exported, while imports consist predominantly of refined petroleum products. By country of origin, South Korea was Australia’s largest petroleum supplier in January 2024, providing 1,331.6 ML—or 27.46% of total petroleum imports. Malaysia ranked second (932 ML, or 19.22%), Singapore third (833.1 ML, or 17.18%), China fourth (457.1 ML, or 9.43%), and Brunei fifth (340.9 ML, or 7%).

Dehydrated Research Report – APA Group and Australia’s Oil & Gas Pipeline Transportation Industry

Pipeline transportation is expected to continue expanding over the next five years. Although the outbreak of COVID-19 introduced uncertainty into upstream and downstream sectors, the industry’s intermediary role is expected to help protect revenue generated by existing assets. Starting in fiscal year 2015/16, liquefied natural gas (LNG) export facilities in Queensland began operations, enabling—for the first time—the international trade of natural gas from Australia’s eastern seaboard. The LNG export market is expected to sustain ongoing demand for gas transportation and offset some constraints on traditional domestic market demand, such as those stemming from manufacturing sector contraction. However, post-COVID-19 economic restrictions may dampen global energy demand, potentially affecting industry performance over the next five years. Industry revenue is projected to grow at an annualized rate of 2.1% through 2025, reaching AUD 4.4 billion. The industry is expected to absorb pipeline assets from LNG projects. As oil and gas producers reduce capital expenditures in response to falling commodity prices following the COVID-19 outbreak, some producers may divest pipeline assets to improve their financial positions. Supported by rising industry demand, employment and the number of industry entities are expected to expand over this period. Profits are projected to increase modestly, as higher throughput offsets the costs of new pipeline investments and depreciation expenses. In May 2020, the National COVID-19 Coordination Commission (NCCC) re-examined the proposed AUD 6 billion East-West Gas Pipeline—a project designed to link Western Australia’s gas fields with the east coast. Previously, a government feasibility study had concluded the project was excessively costly. Nevertheless, the federal government designated the project as a support measure for the gas industry, integrating it into its broader strategy to stimulate Australia’s post-COVID-19 economic recovery—potentially boosting industry performance over the next five years. Globally, most natural gas trade occurs via pipelines, as seaborne trade is expensive due to the high cost of constructing import/export terminals. Approximately 60 countries participate in global LNG trade. Over the past five years, robust growth in global natural gas demand has enhanced the economic viability of overseas gas transport. Moreover, LNG exporters typically enter long-term supply agreements, giving industry participants confidence to invest in new projects. Australia has been a focal point for major new-project investment, owing to its political stability and proximity to key Asian markets—including China, Japan, and Thailand. Rising transportation demand has supported industry expansion over the past five years, including projects such as the expansion of the Dampier-to-Bunbury Natural Gas Pipeline in Western Australia. Industry participants tend to acquire pipelines developed over the long term by operators in the oil and gas exploration and production sector. As this trend continues, the industry expects throughput to increase over the next five years. During the construction phase, pipelines are typically owned by oil and gas exploration and production operators; however, as production ramps up, these companies may divest associated pipeline assets to free up capital. For example, in June 2015, BG Group sold pipeline assets linked to its Curtis LNG facility in Queensland to APA Group.

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