Rick Wilkinson
OGJ Correspondent
MELBOURNE, Feb. 22 -- Australia is facing a multimillion dollar petroleum liquids trade deficit within the next 10 years, according to a new study commissioned by the Australian Petroleum Production & Exploration Association.
The report, written by leading geoscientist Trevor Powell, shows that Australia's oil and condensate production has declined to meeting just 60% of Australian petroleum demand in 2008 from meeting nearly 100% of it in 2000. Without any significant discoveries, this percentage is expected to fall to 32% by 2017.
This translates to a decline in liquid petroleum and products trade balance from a surplus of $900 million (Aus.) in 2000 to a deficit of $13.7 billion today and a projected deficit of $28 billion in 2017.
'Compelling case'
APPEA Chief Executive Belinda Robinson says the report provides a compelling case for long-term investment by state and federal governments in precompetitive geoscientific information.
Robinson said in contrast with other more mature oil-producing regions, less than a quarter of Australia's 50 sedimentary basins have been explored. This presents governments with an opportunity to attract explorers into a lot of unexplored territory which could produce the country's next oil and gas province. The most promising areas are the high-risk 'frontier' basins, particularly those in deeper waters.
Robinson said Australia must persuade potential investors to risk capital in Australia rather than elsewhere in the world.
"This requires a two-pronged attack," she said. "We need to ensure the fiscal framework takes account of the high costs and high risks involved in exploring these areas and we must ensure the availability of baseline geological information."
Australia's Resources Minister Martin Ferguson acknowledges the magnitude of the problem that encompasses trade, energy security, and the country's economic future.
"We've got to find another Bass Strait-sized oil province because if we don't, by 2015 we will go from importing about 20% of our needs in the 1990s to importing 80% of all our oil and related product needs, effectively contributing to a $27 billion/year trade deficit," Ferguson said.
Even so, Australia's government said it will not increase funding for exploration incentives. It is, however, considering the introduction of a Canadian-style flow-through-share scheme whereby exploration costs would be tax deductible for investors.
