7.2.1.3 Petroleum

Petroleum product distribution infrastructure includes refineries, pipelines and fuel terminals. The Australian petroleum industry is entirely owned and operated by the private sector and functions as part of the global market. Australia currently has six operating refineries and terminals at 28 locations around the country.232

Declining domestic oil crude production and refining capacity in Australia, coupled with growth in domestic demand for petroleum products, has resulted in a significant rise in imports to meet the country's needs.233

The Audit estimated the existing capacity, utilisation and DEC of petroleum product terminal infrastructure in 2011:

■ Australian refineries produced around 37,400 megalitres (ML) of petroleum products;

■ the utilisation of petroleum product terminals in Australia was 79,199 ML;

■ of this total, 34,104 ML of throughput is attributable to terminals at refineries, some of which is conveyed by pipeline to other terminals;

■ the throughput of non-refinery terminals is the difference between these figures (45,095 ML);

■ total net consumption of petroleum was 52,095 ML; and

■ the DEC attributable to petroleum product terminals across Australia was $1.1 billion.

Table 23 presents the DEC of petroleum product terminal services by state and territory.

Table 23: DEC of petroleum product terminal services by state/territory, 2011 ($ million, 2011 prices)

Source: ACIL Allen Consulting (2014a)

Domestic demand for petroleum products has grown at an average annual rate of just over one per cent since 2000, and is expected to continue along this trajectory, largely driven by growth in population and economic activity.234 The transport sector uses more than 60 per cent of all petroleum consumed in Australia and has been the primary driver of demand growth.235 In addition, the expansion of the mining sector has contributed significantly to increased demand for diesel.

In the decade after 2003, the following demand trends emerged:

■ diesel use increased by 56 per cent, largely due to growth in the mining sector and increased uptake of cars fitted with new generation diesel technology engines;

■ jet fuel use increased by 80 per cent, due to growth in air travel;

■ petrol use declined, as vehicle fuel efficiency continued to improve along with hybrid technologies; and

■ there was a shift away from regular unleaded petrol (32 per cent decline) to higher octane petrol and ethanol blended petrol products.236

_________________________________________________________________________________

232. Australian Institute of Petroleum (2013b), p. 5

233. Bureau of Resources and Energy Economics (2014a), p. 16, p. 18

234. Bureau of Resources and Energy Economics (2014b), p. 37

235. Department of Industry and Science (2014b)

236. Australian Institute of Petroleum (2013b), p. 5