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Tuesday, 20 November 1973
Page: 3525


Mr CONNOR (Cunningham) (Minister for Minerals and Energy) - The honourable member for Farrer (Mr Fairbairn) raised the question of the iron ore development at Marandoo and asked just what the legal position is. It is a simple one. There has never at any stage in relation to the Marandoo project been any question of the transfer of shares. Two distinct groups of companies have met in a partnership arrangement, and that arrangement is outside the scope of the Companies (Foreign Takeovers) Act. That is the position. There was never any question of share transfers involved.

With regard to oil search - 'and much has been said on this score - the latest figures are particularly interesting. For the year ended 30 June 1973 these figures are only approximate - the expenditure off-shore for oil exploration was $79m. The figures for the previous year were precisely the same. The amount paid in subsidy was approximately the same - $2m - in each year. On-shore there was a drop from $24m for the year 1971-72 to $13m for the year 1972-73. That is part of a fairly general world-wide phenomenon, because it is generally recognised that the main sources of oil today are off-shore. They are more remote, they are more difficult of access, and the money is going in that direction.

Much has been said about the harsh deal handed out to Woodside-Burmah. Much has been said about the discouragement of overseas enterprise in searching for oil in Australia. This is the position: The Broken Hill Pty Co. Ltd, which has a half interest in the consortium for extracting the oil deposits in Bass Strait, is 83 per cent Australian owned. Therefore, because it has a 50-50 consortium arrangement with Esso the Australian equity in Bass Strait is 4H per cent. The other major source of hydrocarbon is the North West Shelf. The Australian equity in this case is 15 per cent. Crocodile tears are being shed, and by allegedly patriotic Australians. We are in a strong position thanks to the policy of the new national Government. We have ended the section 77 rackets. It has been a matter of distaste to me to have to sign approvals for petroleum search subsidy payments to be made to major oil companies which frankly do not need them. Nevertheless they are in respect of contracts which were entered into by the former Government and which we will honour until the expiry of the Act on 30 June next year. Other smaller explorers which might have had the benefit of subvention from that Act have been denied it.

As for the future - this was made very clear at the time by both the Treasurer (Mr Crean) and myself - the moneys that would normally have gone to the racketeers under section 77 will be recycled through the petroleum and minerals authority. It will be very interesting to see whether the members of the Opposition will line up enthusiastically to support that measure, because there our main effort will be directed towards helping the middle group of adventurers in the minerals field. In all cases - and there are quite a number of them - they are people who have discovered something worth while - so good, in fact, that hardboiled, hard-nosed overseas mining interests want to come in with them to acquire a minority holding. We will instead provide them with assist ance. It may take the form of a cash loan, acquisition of shares, the guarantee of a bank overdraft or a partnership. But whatever it is we will ensure that worthwhile mineral projects are kept within Australia and are developed by Australians and for the benefit of Australia.

The Leader of the Australian. Country Party (Mr Anthony) laid great stress on the need not to convert liquid petroleum gas into motor spirit. He said that it was a doubtful proposal. Let me refer him to recent comments made by the United States Director of Fuel Resources who particularly categorised the liquids available from natural gas and their conversion as being one of the more readily available forms of motor spirit. In my responsibilities I am playing for time because, on present projections, we have merely 8 years' supply of crude oil. More will be discovered. But, knowing where extra motor spirit can be obtained, naturally I want to get it. In the case of the Redcliffs project we can obtain it and at the same time leave quite a reasonable profit for the good and powerful consortium which has been formed. I believe that we can obtain as much as 12,000 barrels a day of motor spirit from it. Might I mention - this has been ignored conveniently by the Opposition - the little matter of about 24,000 barrels a day of liquid petroleum gas that is being exported from Australia. It is being done in pursuance of contracts. If the crunch ever came and by any chance Australia ever needed those extra hydro-carbons the boom would very quickly be dropped. But that would be only in an emergency - and a grave emergency. My objective is to obtain every extra barrel of motor spirit I can for Australia and for the needs of Australian industry, Australian transport and the private motorists.

Apart from the possible impact on the Australian motorists, in terms of pricing, there has been no general appreciation of the new world situation which we are now entering following the developing world energy crisis. In the last 50 years mankind has consumed more energy than in the whole of recorded prior history. In the emerging world, nations will be ranked by their energy reserve ratings and efficiency of utilisation rather than on population, gross national product or any of the traditional criteria. All the national energy systems have been a combination of fossil fuel resources - of coal, oil and gas. Electricity has been generated from them and distributed by a national grid system. Because of the convenience, liquid petroleum and natural gas have supplied a share of the world's energy market disproportionate to their relative position in overall energy reserves.

If one looks at the estimates of the recoverable reserves of energy in any of the major countries having these deposits, one will find that coal still bulks very large. As a matter of fact coal has been exploited only to the extent of 2 per cent of the world's total recoverable resources. This has been due to a number of factors. Oil has been more convenient; it has been cleaner; at a certain stage it was a little cheaper. But today the industrial nations of the world are facing a period of rising prices for both liquid petroleum and natural gas. The obvious symptoms were plain for all to see in the United States at least 12 months ago prior to the decision of the Organisation of Petroleum Exporting Countries to restrict crude oil supplies. The United States, with 6 per cent of the world's population, uses 35 per cent of the world's energy. The plight of the major industrial nations today is a direct result of the over dependence on an attractive liquid fuel, which provides 70 per cent of the freight carried on the world's oceans, it was President Wilson who said that the Allies in World War I 'floated to victory on a torrent of oil'. Control of oil supplies was the major strategic objective in World War II.

Oil is becoming scarcer, dearer and more difficult to find. The transference of oil search to the remoter depths of the ocean is the measure of man's frantic search for this limited resource. It is generally forgotten that oil, natural gas and coal are chemical cousins. They are all variable equations of hydrocarbons and they can be transmuted from one to the other. As I said last week, we depend for transmutation on the chemical engineers. The natural consequence of the growing scarcity of oil and its depletion is that prices will continue to rise. The technocrats believe that within 5 years the price of imported crude oil delivered to any major industrial nation will be more than that of oil and its derivatives derived from the economic conversion of coal and other carbonaceous materials into liquid and gaseous fuels.

In Australia we have every reason to be thankful. It would appear I am quoting the broad figures of the Joint Coal Board - that in New South Wales there is approximately 100,000 million tons of black coal. There is a similar amount in Queensland. It is not all recoverable. It is not all of the same quality. The recovery factor is generally reckoned to be 5C per cent. In Victoria there would appear to be an equal tonnage of brown coal. That is our greatest national asset, combined with the natural gas which we can derive from our off-shore fields. Our fuel and energy policy has been conditioned by our known limitations of indigenous crude. Although we hope by systematic organisation to augment our 8-year reserves, our energy planning has been built increasingly around our available reserves of coal. Natural gas, particularly from the northwest shelf, is a wet gas. In aggregate and by the restructuring of the liquids - that does not merely mean liquid petroleum gas; it means also the condensates - we can probably obtain a yield, spread over a considerable time, of motor spirit products equal to our present reserves of crude oil.

On several occasions I have informed the House that the Government will establish a national fuel and energy commission to devise and implement an integrated and co-ordinated national fuel and energy policy. The commission will prepare an annual energy budget based upon Australia's needs and available resources, having regard to variations in the location and availability of such resources. The commission will regulate the exploration, development, transportation, pricing and marketing and use of oil, natural gas, coal, fissionable materials and hydro-electricity. It will prevent the depletion of the fuel and energy resources needed to match Australia's requirements and, of course, will guard the ecology and environment from pollution.

Obvious constituent representatives of such an authority will be the Australian Atomic Energy Commission, the Snowy Mountains Hydro-electric Authority, the Pipeline Authority, the Joint Coal Board and the Gas and Fuel Corporation of Victoria. Added to these, of course, will be the petroleum and minerals authority that is to be established under the legislation to which I have just referred. One of the key utilities for the use of this commission will be the trans-continental pipeline for the distribution of natural gas by the inter-connection of Australia's resources in Bass Strait, Gidgealpa-Moomba, Palm Valley and the north west shelf. At a later stage - I stress that it will be considerably later - when depletion of our resources ultimately occurs the same concept of a pipeline will be available for the transmission of synthesised natural gas from black and brown coal or, in the even remoter future, hydrogen gas associated with the utilisation of solar energy.

One of the outstanding features of my recent visit to Japan was the ready agreement of Mr Nakasone, the Japanese Minister for International Trade and Industry, to join Japanese technologists with Australians in a feasibility study for the hydrogenation of coal into liquid motor spirit and other derivatives. He also agreed to a study being made of Australia's unique resources of solar energy, due to our record hours of sunshine and the relative aridity of portions of our continent. I also refer especially to the energy problems of Japan, our principal trading partner. On my recent visit to Japan I at all times conveyed to the various leaders of the Japanese Government and industry Australia's guarantee that we would make available to them energy resources of all kinds that are surplus to our national needs. The coal hydrogenation project is the first step in the implementation of these objectives.

In the utilisation of Australia's worldranking reserves of uranium we also know that there must be a special relationship between Australia and Japan in enrichment technology. We have the necessary uranium not only to supply our own and Japan's foreseeable needs but also to make provision for other major trading partners, such as West Germany and Italy. The control of Australia's energy resources will, in the terms of the Tokyo statement by the Prime Minister (Mr Whitlam), remain in Australian hands with the certainty of long term supply contracts to those of our trading partners to whom we can give from our abundance.

There is one other matter - it will be dealt with tonight in another place - to which I should make reference, that is, the inquisition - I will characterise it as that - into the construction of the pipeline. In the arrangements that we entered into with the Australian Gas Light Company it was quite clear that we would stand in its shoes; that we would take over - we have in fact done so - the liability for its contracts; and that we would acquire, and we have, the pipes imported from Japan. I might say that they are pipes of a very special character. They were constructed only after exhaustive computer studies and repre sent the acme of metallurgical excellence in their field. We have used the Australian Gas Light Company's consultants. We have used the intermediary of its designing, that is, the East Aust. Pipeline Corporation. We have worked closely in conjunction with it. I pay a tribute to both Mr Donald, the Executive Member of the Pipeline Authority, and Mr Butters for their co-operation. Tenders for the first sector of the pipeline have closed. They are now being examined. As for the allegations which have been made that there is no notion as to the cost of the pipeline, we have in all respects proceeded on the basis of the estimates - the very sound estimates - of the Australian Gas Light Company. I challenge anyone in this chamber or in the other place to fault them in any way. That is what we have done and that is what we intend to do.

It also should be said that there is an urgent need for the city of Sydney to get its supplies of natural gas. Frankly, had the Australian Government not come into the picture, there could have been considerable financial problems for the original company and its concept. A transmission agreement is in the process of being negotiated. That company will be treated fairly. The undertaking was given - signed by myself and Sir William Pettingell- that in no respect would the Australian Gas Light Company be disadvantaged as a result of the transference of the project. That undertaking will be strictly adhered to.

I also want to stress that even with the known recoverable reserves of natural gas at Gidgealpa, and having regard to the known needs or the dedicated needs of Adelaide for natural gas and of the proposed petro-chemical project at Redcliffs, as well as of Sydney itself, there is still a shortfall of, I would say, between 0.8 and 0.9 of a trillion cubic feet. It will be necessary for us therefore to proceed with all expedition not only to complete the construction of the pipeline but also to go beyond it to Palm Valley to provide the necessary backup from the very substantial reserves which have been proven there. In that way the future of industry and commerce as well as the domestic requirements will be assured in both Adelaide and Sydney. It is time that the sniping and the nit-picking ended because we are in business and we mean business. We have the authority under the Act. The Australian Gas Light Company will find, and has found, that we are good people to deal with. I move: That the question be now put.

Question put.







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