Strategic oil supplies

seaspear

Active Member
Should Australia follow the U.S in buying more oil for a strategic reserve
I note that Australia under a deal has access to the U.S strategic reserves but Australia could add to these as part of the deal
Also as the attached graph shows it could be a good time to do this
 

Milne Bay

Active Member
Oil companies make billions out of their cartel.
It should be a requirement that they are obliged to maintain reserves proportionate to their normal sales volumes so that a 90 day strategic reserve exists at all times.
MB
 

seaspear

Active Member
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  • #3
The U.s has a capacity of 790 million barrels
I dont believe its the responsibilty of any company to stockpile supplies on behalf of customers certainly governments must take a strategic interest in what should be stockpiled to avoid forseeable shortages ,I could mention medical supplies but thats another thread also its not as though Australia does not have the room for such facilities
 

tonnyc

Active Member
Oil companies make billions out of their cartel.
It should be a requirement that they are obliged to maintain reserves proportionate to their normal sales volumes so that a 90 day strategic reserve exists at all times.
MB
Oil companies will gladly accept such requirement since their oil wells automatically comply will such a requirement. Their oil wells are storage wells. The wells have stored the oil for billions of years after all.

Countries have to actually buy the oil when the price is low and release it when oil price is high if you want a strategic oil reserve. Making the companies store the oil does not actually accomplish this. They'll just point at their well and say, "we have this many billions of barrels down there."
 

ngatimozart

Super Moderator
Staff member
Verified Defense Pro
Should Australia follow the U.S in buying more oil for a strategic reserve
I note that Australia under a deal has access to the U.S strategic reserves but Australia could add to these as part of the deal
Also as the attached graph shows it could be a good time to do this
It's a political decision to determine how large a country's strategic oil & fuel reserve should be. The pollies see it as aa cost that can be avoided. Same pollies probably were the ones who also approved the disestablishment of Australian oil refining capabilities. Very short sighted and stupid
 

seaspear

Active Member
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  • #7
I believe under the International Energy Agreement which Australia is a signature Australia is required to hold 90 days worth that prior to leasing some facilities in the U.S only had fifty oddd
The Saudi production was damaged last year to a cruise missile attack and effected production and supply
I would suggest that any large scale conflict in this zone destroying much of the infrastructure and export of oil could cause a crisis similar to the seventies when oil supplies were cut off and even ninety days may not be enough
 

vonnoobie

Well-Known Member
I wasnt as worried about oil refining. Sure great to have but in the end with our limited local production wasnt really anything of true value. Refined or unrefined that oil refinery would become a stranded asset if sea trade is cut off which is another reason why the US deal wont do much for us in a major war. We need a minimum 100 million barrel strategic reserve Down Under and we need to invest in moving what assets of the ation we can away from the use of oil sooner rather then later. The more we move away from oil use or atleast reduced oil use (Hybrid vehicles etc) means the longer our reserves will last.
 

ngatimozart

Super Moderator
Staff member
Verified Defense Pro
I wasnt as worried about oil refining. Sure great to have but in the end with our limited local production wasnt really anything of true value. Refined or unrefined that oil refinery would become a stranded asset if sea trade is cut off which is another reason why the US deal wont do much for us in a major war. We need a minimum 100 million barrel strategic reserve Down Under and we need to invest in moving what assets of the ation we can away from the use of oil sooner rather then later. The more we move away from oil use or atleast reduced oil use (Hybrid vehicles etc) means the longer our reserves will last.
Nice in theory, but in practice??? Do you have the time, money, wherewithal, political will, public buy in etc., to convert your transport fleet to new forms of motive power? I think not on all counts at the present point in time.

I think that it was very much a strategic mistake losing your refining capabilities. You are now dependent upon foreign refineries for ALL of fuels, and if / when those refineries are required to place their own nation's interest first, you're up sh*t creek in a barbed wire canoe without a paddle.

We have a refinery in NZ and we extract our own oil. Unfortunately it's not the light sweet crude that is required for petrol, kerosenes, diesels etc. In our case some crude oil tankers will be sunk, but some will still get through. Secondly, we could extend the refinery and invest in highly expensive technology to enable us to refine our heavy crude into the fuels that we require, IF that technology is available.
 

OPSSG

Super Moderator
Staff member
There might be a good case case for building up storage centres on a large scale while its cheap
The World Is Running Out of Places to Store Its Oil and look at building refineries for future use
Not in a remote location like Australia - you have to show me the deal economics to store is such a location. Good try but you have not successfully made a case for your idea.

Storage of oil & LNG in and around the port of Singapore is encouraged but also helped by physical trade flows to enable FIFO movement of oil in the tanks.
 
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t68

Well-Known Member
Nice in theory, but in practice??? Do you have the time, money, wherewithal, political will, public buy in etc., to convert your transport fleet to new forms of motive power? I think not on all counts at the present point in time.

I think that it was very much a strategic mistake losing your refining capabilities. You are now dependent upon foreign refineries for ALL of fuels, and if / when those refineries are required to place their own nation's interest first, you're up sh*t creek in a barbed wire canoe without a paddle.

We have a refinery in NZ and we extract our own oil. Unfortunately it's not the light sweet crude that is required for petrol, kerosenes, diesels etc. In our case some crude oil tankers will be sunk, but some will still get through. Secondly, we could extend the refinery and invest in highly expensive technology to enable us to refine our heavy crude into the fuels that we require, IF that technology is available.

Well we actually still have four refineries left so not entirely dependant, but still cannot match consumption to output
 

seaspear

Active Member
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  • #13
Not in a remote location like Australia - you have to show me the deal economics to store is such a location. Good try but you have not successfully made a case for your idea.

Storage of oil & LNG in and around the port of Singapore is encouraged but also helped by physical trade flows to enable FIFO movement of oil in the tanks.

I would of thought as a member of the Interanational Energy Agecy that requires its members to hold ninety days of fuel it would not be beyond this countries means to increase its present storage facilities,I would also add that this article suggests that it is a concern for the operations of the A.D.F
 

OPSSG

Super Moderator
Staff member
....as a member of the Interanational Energy Agecy that requires its members to hold ninety days of fuel...
1. Have to admit that this is not an easy topic to discuss due to its potential scale. For clarity, the article by Major Keyurkumar Patel, states:
“...inadequate to provide a minimum requirement of 90-days’ stock, as recommended by the International Energy Agency...”​
The key word is recommended.

2. Further, to quote from the same article, it states that:
“...the reality is that imported petroleum is cheaper than refining crude oil in Australia (Andrews-Speed and Dan- nreuther, 2014). Australia currently imports most of its refined supplies from Singapore, which is relatively close to Australia and politically stable, providing a 14-day supply line that is unlikely to be easily disrupted. Even if the major supply line into Singapore from the Middle East were to be disrupted, Singapore has broadened its supply sources and increased its storage capacity, further enhancing the prospects of an adequate distribution of refined petroleum to meet the ADF’s fuel requirements (Wraith, 2013).”​

This adds to my prior point on working it out in deal economics, per deal. It will add to Australian energy costs and you would have to bear a political cost to implement.

3. If Australia is really serious, from an energy security perspective, the country will need 90 days’ of a whole range of different grades and types of chemicals, fuel, oil and lubricants at multiple ports of entry into Australia (near 2 to 4 population centres) — to build system resilience in a table of essentials. It is not just 1 grade of fuel to be stored.

4. Due to its scale as a regional logistics hub, it is mind boggling how the refined and ready to use fuel supply storage is tracked on a FIFO basis in Singapore and the system is more resilient than most people think. If you want energy security, you must be prepared for these additional costs, to be passed onto Australians (for use in cars, households and power plants) as these different grades of fuel supplies do ‘age’ and need to be circulated to consumers/end users in Australia before ‘expiry’. As a general rule, diesel fuel should not be stored for longer than six months. If long-term storage is necessary, avoid extreme temperatures by storing the tank underground and using proper ventilation caps. If diesel is stored for more than one year, it needs to be tested before use. The length of time diesel fuel can be stored depends on factors like tank location, contaminants, and the temperature at which it’s stored. Since these factors can vary from tank to tank. In this case, I am quite certain the deal economics do not support re-export from Australia, once a shipment is ‘landed’ in a port.

5. The chemicals and refinery industry is a total ecology, with Jurong Island (requiring multi-billion dollar infrastructure investments that can become obsolete) dedicated to value added production of these chemicals, fuel, oil and lubricants stocks — to ensure co-located consumption or value added processing of these different grades and stock piles maintained in Singapore. The rising competitor in Asia for speciality chemicals is actually Korea (and they make Singapore Inc question the wisdom of these investments). The Koreans are beating the Chinese at their own game in certain niches.

6. I suspect that you will need endless state subsidies to create the same ecology in Australia — the Koreans, have significant domestic consumption and are nearer to China (as the world’s largest importer of speciality chemicals) will eat your Australian lunch in the area of refineries and speciality chemicals. As a global manufacturing powerhouse, Korea has a broad range of industries, including automotive, electrics and electronics, construction, textile, and plastics, forming an extensive market for the chemicals industry. In particular, demand is surging for value- added and high-tech specialty chemicals in the automotive and electronics industries.

7. I wish you luck in finding relevant open source materials to build an argument that supports your idea of increasing Australian resilience to oil shocks by increasing in country storage. Thank you for tolerating my two cents worth. No offence is intended.
 
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