Australia needs to soon find new offshore oil, lest it becomes fully dependent on oil imports for transport fuel 10 years from now, the Australian Petroleum Production & Exploration Association (APPEA) warned on Friday.
APPEA Director South Australia, Matthew Doman, said that exploration in the Great Australian Bight was vital for the country’s energy security.
The industry body’s statement comes just a few days after BP (NYSE:BP) said it was quitting a US$600-million drilling operation in the Great Australian Bight. According to the company’s Australian managing director for exploration and production, Claire Fitzpatrick, the project was not in line with BP’s “strategic goals.” Another reason for the withdrawal could be the strong public opposition to drilling for oil in the pristine Bight, along with several regulatory delays, including two rejections from Australia’s National Offshore Petroleum Safety and Environmental Management Authority.
Today’s warning by APPEA builds on the Australian Energy Update 2016 by the Office of the Chief Economist published earlier this month, which said that the country has increased its reliance on oil imports, with imports now accounting for 85 percent of refinery input.
In addition, 45 percent of refined products consumption is being met by imports.
Related: The Saudi Aramco IPO May Be Bigger Than First Thought
Oil was still the single biggest primary energy source for Australia, at 38 percent in 2014–2015, followed by coal and natural gas.
Domestic crude oil, condensate and naturally occurring LPG output dropped by 6 percent in 2014-2015, as new supply was unable to offset declining production at aging fields. In addition, locally-produced crude grades are considered less suitable for use by refineries compared to those coming from imports, the energy update showed.
“The report highlights a worrying trend that could be rectified by successful exploration in the Great Australian Bight,” APPEA’s Doman said.
The industry body’s official expressed disappointment with BP’s decision, but said that Chevron (NYSE:CVX), Murphy Oil (NYSE:MUR), Santos and other companies would continue to pursue their exploration plans.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…