Though much media is reporting this as a near-emergency Australia has had been far below recommended levels since 2012, as energy minster Josh Frydenberg admits, and varied groups have for years been pushing for a better solution. 

 

Liquid fuel accounts for 37% of energy use in Australia and for 98% of its transport needs. 

 

"The assessment is the prudent and proper thing to do to make sure we aren't complacent. It should not be construed as Australia having a fuel security problem," Frydenberg said this morning. 

 

"The comprehensive assessment will look at how fuel is supplied and used in Australia, including our resilience to withstand disruptions both overseas and in Australia." 

 

Liquids supply is more and more dependent on overseas sources, and multiple government reports have found the same thing, though the Resources and Energy Quarterly's March 2018 outlook noted that crude and condensate exports revenue was expected to rise from A$5.6 billion in the 2016-17 period to $9.3 billion by 2022-23. 

 

The report said that 70% of crude and condensate is produced from the Carnarvon Basin in the north of Western Australia, where condensate is a related product from the LNG megaprojects. 

 

The IEA's comprehensive report on Australian energy, released earlier this year, focussed largely on gas supply and the transition to renewables, but within those two large issues it found time to also note how small Australia's strategic fuel stockpiles were. 

 

The Canberra-based Australian Strategic Policy Institute has been looking at this issue since 2012 and a John Blackburn-authored report for insurance agency NRMA also worried over the issue in 2013.

 

"The very small consumption stockholdings of oil and liquid fuels in Australia, combined with what appears to be a narrow assessment of our fuel supply chain vulnerabilities, does not provide much confidence that the strategic risks to our fuel supply chain are well understood and mitigated by our nation's leaders, the business community or the population at large," Blackburn wrote some five years ago, noting the ‘she'll be right' attitude could be tripped up easily enough. 

 

Since then problems in the Middle East - where Australia sources much of its fuel from - and increasing  maritime issues in the South China Sea, home to the Asian shipping lanes where Malaysian crude and refined products from Korea transit through, have worsened. 

 

Last month Paul Barnes and Neil Greet at ASPI wrote that "The inadequacy of Australia's liquid fuel reserves is like a bothersome itch that won't go away". 

 

"It is not the new problem it seems, but the government is finally willing to publicly commit to doing something," they said.

 

Australia's reliance on maritime supply chains has only increased in recent years. 

 

Last year a parliamentary joint committee chaired by Andrew Hastie and with heavy hitter members like the Coalition's Eric Abetz and Labor front bencher Penny Wong recommended as its first point that government "review and develop measures to ensure that Australia has a continuous supply of fuel to meet its national security priorities" and whether the Department of Home Affairs should consider putting "critical fuel assets" under the Security of Critical Infrastructure Bill of 2017, the same way ports and some power assets are classed. 

 

Putting fuel infrastructure into the critical infrastructure list would change the way it is assessed and provide for better security. 

 

Barnes told Energy News this morning that the last National Energy Security Assessment was in 2011, at a time when world politics were very different.

 

However it may not be lackadaisical approach but rather "it may be they just wanted to get their terms of reference correct and get all their ducks lined up" that has created the wait. 

 

Barnes says there could be two approaches to this: a business as usual one, which only looks at the market "or they could go into the vulnerabilities and also infrastructure and choices of technology and suite of investments". 

 

"The market can only do certain things," he said, noting that it was the infrastructure systems that give rise to the physicality of the market.   

 

"From a perspective of policy advice… looking at refineries as crucial infrastructure is a sensible thing to do and looking at a range other secondary and tertiary networks would be a useful thing to include in thinking." 

 

Other solutions might be more dependent on original thinking. 

 

The analyst applauds Woodside Petroleum's moves to push LNG trucks in the Pilbara. 

 

At the Woodside annual general meeting two weeks ago CEO Peter Coleman noted the Pilbara imported huge amounts of diesel each year, and Woodside was working towards heavy haulage vehicles powered by LNG. 

 

Though explained in more environmental terms of lower emissions, such moves would also reduce Australian dependence on imports in favour of a commodity it produces plenty of, in LNG. 

 

"I think the diversity of choice that gives is idea [and] the sort of lateral thinking Australia needs to consider," Barnes said. 

 

As for the South China Sea, as his own report pointed out it is an "increasingly contested" area and the "The suspected deployment by China of communications jamming equipment onto Fiery Cross Reef in the Spratly Islands should cause assumptions that maritime supply chain continuity isn't an issue in the near term to be re-examined". 

 

However, he told Energy News the issue might not be an "extreme" case the shipping lanes were blocked and supply to Australia cut but rather than the increasing tense area might be shippers took a longer route to reach Australia "those delays might contribute to these concerns [around fuel supply].  It's the delay in which the supplies might arrive" that is the problem. 

 

Washington think tank the Centre for Strategic and International Studies put out a report last year with sponsor Indonesian oiler Pertamina stating the issues of the South China Sea were not limited to its varied claimants all squabbling with varied, but usually limited, success with China but rather than energy and shipping lanes could be affected. 

 

Australia's last two major White Papers, the Defence WP of 2016 and Foreign Policy WP of November both had a focus on freedom of navigation and a rules-based order. 

 

While the latter phrase was used so often in the DWP (56 times) it became comical the sentiment is, says Barnes "is based in reality": Australia must ensure free transit of goods through shipping lanes without interference. 

 

Frydenberg says that though Australia has not had a serious break in supplies since the 1970s there is no room to be complacent. 

 

"The assessment of liquid fuels will be completed by the end of 2018 and contribute to a broader consideration of energy security across liquid fuel, electricity and gas supplies in the National Energy Security Assessment by mid-2019."