Australia fears oil shortage

Mar 06, 2002 01:00 AM

Australia would face an $ 8 bn deficit on oil imports if new discoveries were not made soon, the head of the biggest Australian-owned petroleum company has said. Woodside Petroleum managing director John Akehurst said that urgent action was needed to stop Australia's self-sufficiency in oil falling from 80 % to less than 40 % by 2010. He said a national energy supply strategy had to be developed which encouraged investment in exploration, research and supply.
"Australia is currently facing the start of a long-term decline in oil and gas liquids production," he told an Australian Bureau of Agricultural and Resource Economics in Canberra. "Although some good new discoveries have been made recently, these will not be sufficient for the country to continue to meet the majority of its oil requirements from local production. "Petroleum demand continues to grow, production from existing fields is declining and the international industry's interest in new oil exploration areas in Australia is at a low level."

This financial year Australia was expected to have a surplus on liquid hydrocarbons, which included petroleum, of $ 1.2 bn this financial year. Mr Akehurst said this would become a deficit of $ 7.6 bn by 2009-2010. Australia's proven supplies of oil amount to just over 10 years of present annual production.
Mr Akehurst said the Federal Government must consider changes to the petroleum resources rental tax to encourage what he termed frontier and deepwater oil exploration. The Government also should introduce internationally competitive depreciation write-off periods for all oil and gas industry assets.

He said for companies such as Woodside, finding new oil reserves is only going to become tougher and more expensive, especially with the existing tax structure.
"Oil explorers and producers like Woodside will have to live with declining oil prices and build these into our investment decision making," he said. "We will need to continue to invest heavily in new technology so as to better find and develop the smaller, higher cost, more remote and more technically complex fields remaining around Australia."
Mr Akehurst said apart from the impact on Australia's current account deficit, the fall-off in oil production would put the national economy at risk as the country relied on overseas petroleum.

Source: Herald Sun
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