Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 28 November 1973
Page: 3996

Mr FAIRBAIRN (Farrer) - The Minister for Minerals and Energy (Mr Connor), whose ability to get any figures correct is extremely suspect, made the statement on Monday that there are in Australia no more than 8 years known recoverable reserves of crude oil. Anyone with the least knowledge of oil research and production would know this statement to be absolute nonsense. One does not merely add up our total reserves and divide that figure by our current and anticipated demand. What happens, of course, is that an oil well is brought into full production in its early years and over a period of about IS years or more this production gradually declines until the particular field is exhausted. It does not suddenly cut out.

Australia has some 1SS0 million barrels of known reserves of oil. Local production satisfies about 66 per cent of our requirements. The remaining 33 per cent of our requirements are for heavier crude oils and are supplied from overseas sources. Production in Bass Strait will be kept up for some years through the third platform on Kingfish and the deeper levels in Marlin. Later Snapper and Tuna oil fields will offset the reducing flow from the earlier established fields. The reserves of oil discovered in the north-west shelf of our continent are unfortunately not large at this stage and because of the economics involved in bringing fields into production in that area have not been declared commercial. However, the area is extremely prospective. The Cooper Basin also has prospects and, of course, some known oil. Already we know of the existence of some 60 million barrels at Mereenie in the Northern Territory.

Thus, while Australia's reserves of coal, natural gas and uranium are sufficient for our reasonable requirements for some considerable time to come, the urgent need is to step up dramatically the search for oil. There is only one way that that can be done and that is by the expenditure of vast sums of money. All existing commercial reserves will have been developed fully and will be in production by the end of the 1970s. Production will continue into the 1990s, but on a declining scale. Significant new discoveries are needed. In fact, if in 20 years Australia is to produce 70 per cent of its oil requirements it will need a fivefold increase in oil discovery and even greater discoveries to be self-sufficient.

So far average returns from petroleum exploration in Australia have been disappointing. In fact, from a cumulative expenditure of about $ 1,000m, used to drill some HOO wildcat expoloration wells, only 5 really significant oil fields have been developed. If one works out the cost per barrel of discovering oil so far one estimates that an annual rate of expenditure of approximately $200m will be required to maintain the present standard of self-sufficiency. Where is this money to come from? At present only about half this amount is being spent each year but even that is likely to drop drastically as a result of the policies of this Government.

As I have pointed out to the House on a previous occasion, exploration in Australia is already dropping rapidly and disastrously. Now only one rig is operating on-shore over the whole 3 million square miles of the Australian continent. Twenty rigs are idle. Who would blame the operators for this? If they do find a commercial field the Minister has announced that he will take the oil from them. It is no wonder that the London 'Economist', in a recent article on Australian oil entitled 'Find It and Hope', said:

The apparent contradiction in the Government's policies will effectively stop exploration by nonAustralian companies.

The article went on to say:

Without the promise of future profits from development, oil exploration is not worth the huge expense. This seems to be only dimly recognised by the Government's advisers. Since the removal of tax concessions for local residents to invest in oil exploration there has been a distinct lack of interest in providing Australian risk capital for the business. The off-shore drilling program is at its lowest level for over a decade.

What the article might also have said is that another off-shore rig has left Australian waters, probably permanently. It might have said that 3 major international oil companies have ceased to search in Australia over the past 12 months, and that Australian companies are working in South East Asia in preference to Australia. The article might also have said that the search for oil in Australia is rapidly coming to a standstill.

The Minister appears to welcome this situation. It has become apparent that he would sooner have no oil discovered in Australia than have it discovered by one of those wicked companies owned by a majority of shareholders resident overseas. Why he has this vindictive spirit against these companies I am completely unable to understand. No company - Australian or overseas - can export 1 gallon of petroleum from Australia without his permission, and it must pay more than half its profits to the Government, as well as many other taxes. We have the simple choice. Australian investors simply cannot provide all the necessary capital to explore adequately. The Government certainly cannot, and it should not use taxpayers' funds for risk capital anyway. There have been rumours of the Government's putting up $50m, but this would be only a drop in the bucket, and the Government lacks the new technologies and the exploration and management skills to carry this out.

So the only other choice available to us if we want the $200m necessary to retain selfsufficiency spent here annually, as the honourable member for Adelaide (Mr Hurford) said last week, is to allow a resumption of foreign investment under specified guidelines and local equity provisions. As he said so clearly:

We must not throw out the baby with the bath water. Exploration is needed.

After all, what is so evil about foreign investment? Lee Kuan Yew welcomes it in Singapore. He welcomes all he can get. Yet there is no country more nationalistic than Singapore. Foreign investment is encouraged by both Federal and State governments in the United States of America, usually with no limits. The United States Department of Commerce even administers an 'Invest in the United States of America Program'. Foreign investment is welcomed generally in Canada. I do not have time to go through the list which has been given to me by the Parliamentary Library, but if honourable members are interested, I have here to show them a very long and full list of the principles and policies of various other countries under which they allow investment from overseas.

Capital liberalisation started in Japan in 1967 and the final stage took effect on 1 May 1973. Now 100 per cent foreign ownership in Japanese firms is permitted, with certain exceptions and provisions. Again time does not permit me to go into this matter fully but if honourable members are interested they could obtain a copy of the research work undertaken by the Parliamentary Library which shows the conditions under which foreign investment is allowed in other countries and is welcomed. For example, the New

Zealand Government welcomes foreign investment. Joint ventures are favoured, although there are no legal limitations on 100 per cent foreign ownership in New Zealand. The South African Government recognises that a steady inflow of foreign investment is necessary to maintain South Africa's economic development. Foreign investors are encouraged to take local partners. France is one of the few countries which prohibits foreign investment in certain fields, but even there many foreign firms have been encouraged to invest in the French provinces.

Every day one sees headlines in the newspapers such as a few I have here which appeared in the last day or two. The Bulletin', under the headline 'Strangled', had this to say:

Oil Drilling and Exploration has a chilling tale of how exploration work is declining in Australia under the auspices of Rex Connor.

In their annual report, directors say that while the company obtained the majority of oil drilling contracts available in the past year, the overall on-shore rig utilisation in Australia was the lowest for more than 12 years.

Another newspaper had the heading: 'Government copying United States Errors on Gas - Broker'. The article said:

The Federal Government's 'foolish' attitudes on natural gas policies probably will prove a temporary phenomenon . . . sharebrokers say.

It went on to say that we are repeating the errors that have been made in the United States, where there has been a tendency not to look for gas because of the inadequate rewards for it. A further article, under the headline: 'Attack by Abrolhos on Government oil, gas policies', reads as follows:

A strongly worded attack on the Federal Government's attitude to natural resources was made yesterday in the Chairman's address of Abrolhos Oil NL.

The Chairman . . . said that at a time when the discovery of oil and natural gas was so vital to the future of Australia, the directors were gravely concerned and puzzled at the Government's lack of ground rules and its removal of incentives.

So one can go on. A further article has the heading: 'Search declines to its lowest point'. It says:

The search for minerals in Australia is at its lowest point for years.

Every day one can pick up a newspaper and read these things.

Of course, at the same time as talking about energy crises, the Government should be doing everything it can sensibly to reduce our dependence on oil. For example, we could substitute gas, coal and electricity for oil in stationary burners. The Minister has suggested the use of Australian liquid petroleum gas in making local motor spirit. Whilst this may be technically feasible, it is a good deal more expensive and at present virtually prohibitive. In addition to that, of course, one would have to draw enormous amounts of gas, much of which could not be used, just to convert a certain amount into motor spirit. Coal liquefaction and oil from shale is again more expensive than looking for oil, but it could play a part in the future. The situation is that Australia's energy resources will take a lot of money and effort before they are reasonably explored. 'Unless some of that money and effort comes from both Australian and overseas investors we will fall far short of the effort necessary to maintain reasonable selfsufficiency.

I have put forward these suggestions to the Government in a genuine attempt to persuade it to review its disastrous policies, as even some of its own members would undoubtedly desire. But I am afraid that these pleas will fall on deaf ears. As one person with many years experience in the fuel section of the Bureau of Mineral 'Resources said recently:

When the Minister recently said 'our search for crude oil is continuing, especially off-shore' this would be read as indicating that the Australian Government is actively and directly involved in the search for oil, when in fact it is actively involved in reducing the exploration effort.

It is unfortunately a fact of life which we must acknowledge that Australia's exploration for petroleum will continue to languish until there is a change of Government.

Suggest corrections