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Tuesday, 6 March 1984
Page: 474


Senator KILGARIFF(5.53) —It is worth noting the remarks of Senator Sir John Carrick, who was previously the Minister for Resources and Energy. He is a man of considerable experience and a man who in the previous Government, chaired international organisations relating to the matters before us. It was most interesting to hear his remarks. I think the Minister for Resources and Energy (Senator Walsh) is to be commended for introducing the Liquid Fuel Emergency Bill 1983. It is a most necessary piece of legislation. The Bill has been developed after discussions with various oil companies, the Australian Institute of Petroleum and Senator Chaney, the Leader of the Opposition. Therefore, this effort by the Government, which has consulted the various people I mentioned appears to have resulted in the introduction of a Bill that will go quite a long way towards improving the position. I note that when we talk about liquid fuel emergency legislation the explanatory memorandum to the Bill states that the Bill:

. . . provides the Commonwealth Government with the powers to enable it, in consultation with the State and Territory Governments to effectively coordinate the management of a national liquid fuel emergency.

The Bill, it continues:

. . . is based on the cooperative approach between Commonwealth, State and Territory Governments recommended by the National Petroleum Advisory Committee ( NPAC). All Governments have endorsed the NPAC report. The Bill will enable an effective response to a national liquid fuel emergency to be made. The powers in the Bill are complemented by powers in existing or prospective State and Territory legislation.

There is much that could be said regarding this matter of liquid fuel, its future in the world and the importance that it plays in our lives today. I could not help but think, when listening to Senator Sir John Carrick today and Senator Mason yesterday when they said that the world was fast running out of liquid fuel, that that is not quite accurate. I think that while we have to conserve our liquid fuels throughout the world-certainly in Australia-we have to do much more in exploration. Liquid fuels still have a very major part to play in the world. I do not think that they are fast running out.

I, too, have had the opportunity to spend some time in Arab countries. It was interesting to ascertain their reserves of oil for the future, having in mind the amount of fuel produced, processed and sold today. It was a subject that very few people in the Arab countries cared to discuss. It seemed to be, without any exaggeration, almost a taboo subject. It was easy for some people to give guesstimates of 50 years of fuel remaining. I am talking of the Middle East area . There are other people who are prepared to go much further because as Senator Sir John Carrick has said, there are many areas in the world-surprisingly so in the Middle East-which are still untapped and unexplored in regard to oil. One would think that there are such considerable reserves in the Middle East that if we continue to use fuel at the rate we are now one could imagine those oil reserves lasting far longer than 50 years.

Senator Sir John Carrick would think too, I am sure, of the empty quarter. The empty quarter is perhaps an area which has vast resources that are as yet untapped. That does not mean that while we are taking a much more generous, call it that, view of the situation, if we could that fuel should be wasted; far from it. It is easy to imagine too that perhaps when we have a national emergency it will not be brought about by the shortage of fuel in the ground, but as a result of some other situation. It is only in the last couple of weeks that we have seen the threat to supplies of oil through the Straits of Hormuz as a result of the conflict between Iraq and Iran. I had the opportunity to see the enormous tankers passing through those straits. It is an incredible scene to see several tankers pass by each hour of the day. However, this source could be cut off in an instant as a result of war. If that was so, Australia and many other countries could be seriously affected. At present Australia is still importing 30 per cent to 35 per cent of oil requirements.

I think that legislation for a national emergency situation is an excellent idea. The legislation ensures that with the co-operation of the States and the Territories we can bring about, at least on paper, a plan to conserve liquid fuel in an emergency. I believe that other things must be done. It would only be window dressing if this legislation was passed-as it quite obviously will- without other action being taken. We must look to advisers within the petroleum industry-for instance, the Australian Petroleum Exploration Association Ltd-to see what advice is given. I refer to a media statement issued on 3 February 1984 by the Australian Petroleum Exploration Association which discusses its development activities for 1984. This is quite alarming. It is all very well to pass legislation, but other things must be done to ensure the security of Australia in the future. The media statement reads in part:

Australian petroleum explorers' initial drilling programmes for 1984 rival those of the past two years-but the industry is seriously concerned that political events may impair what could be a record-breaking effort.

The Australian Petroleum Exploration Association announced details today of its annual survey of industry exploration and development activity.

Key features of the survey are:

Wildcat and appraisal well programmes show that explorers expect to drill some 240 wells, mainly onshore Seismic work remains severely depressed

A projected decline in offshore drilling activity and a large reduction in onshore rig rates will have the effect of reducing exploration expenditure to some $100 million below the $950 million estimated for 1983

Programmes are highly sensitive to changing circumstances, particularly the Federal Government's proposed resources rent tax. Commitments to contractors at this stage are only 113 exploration wells.

The Australian Petroleum Exploration Association continues to indicate its concern regarding the resource rent tax, and we have heard much from Senator Walsh about his feelings on the matter. The problem the Association sees is that if the resource rent tax is pursued too vigorously, or at all, it will affect investment, investment which is so necessary at this time. The statement goes on :

On 3 February the Government indicated that it had abandoned-at least for the time being-its attempt to impose RRT onshore. However it continues to seek to apply the new tax to petroleum production offshore.

The 100 companies which make up the Association have provided background briefing notes to people who are interested in the matter, that is, those who are opposed to such a tax. The Association continued:

Briefly, APEA believes the RRT is theoretically unsound, unworkable in practice , will further distort investment if applied to only the offshore sector of the industry. It is certain to deter exploration for the 200 million barrels of oil Australia needs to find each year to maintain its self-sufficiency at current levels.

In seeking to understand the potentially damaging effects of this additional tax on Australia's economic interests, you should know that the nation's commercially proven oil reserves are now 300 million barrels less than they were in 1979 despite recent discoveries.

I come back to the local situation. There are some matters we should take note of; indeed, where we should endeavour to improve the situation to safeguard the nation in the event that this emergency legislation is brought into force. While it is essential to ensure a maximum level of exploration, we also have to ensure maximum development of existing supplies. There are many areas in the Middle East which as yet are untapped. Surely this is also the situation in Australia. Senator Sir John Carrick has indicated the situation off the north-west coast of Australia at Jabiru. One would expect that there is much more oil in that area. However, that brings up a particular worry that I have. I have been following the negotiations and conferences that have been taking place between Indonesia and Australia on the maritime boundary. While these talks have been going on for some considerable time now, little progress has been made in an agreement between Indonesia and Australia regarding the maritime boundary. Of course, there is a lot of oil in the maritime boundary area, and it would certainly be in the interests of Australia to give more stimulus to these negotiations in an endeavour to reach some finality with our nearest neighbour.

Another matter that concerns me is that this legislation is merely window dressing if we do not ensure that the nation has considerable fuel reserves. What fuel reserves does Australia have? When a tanker cannot come into Darwin, or when there is industrial strife at a refinery for one or two weeks, immediately there is fuel rationing. This does not indicate that there are any huge reserves which can be used to back us up in a national emergency. These days one hears-I have not been able to ascertain whether or not it is correct- that the fuel reserves in our defence forces, in the Royal Australian Navy, are depleted and that our fuel reserves are dwindling because we are not keeping up the stocks which Australia is capable of holding. We are debating national emergency legislation, but it could well be that we are allowing our reserves to dwindle alarmingly. If this is the case we could well be in very severe trouble. Imagine the national emergency that could occur if our Navy were required to do something particular and there was insufficient oil. Perhaps we do not have the oil reserves to ensure that we could go through a period when no further fuel is forthcoming. I think we have to take note of that.

Overall, I support the legislation. I look forward to giving more stimulus to exploration, both off-shore and on-shore. When I was home at Alice Springs last weekend I spoke to people from the Magellan Petroleum Corporation Northern Territory. Honourable senators will recall that the Corporation is developing an oil field in the Mereenies, which is on the way to Ayers Rock in a direct line from Alice Springs. There is considerable activity there now and more exploration is taking place, which is very good. The wells there now are being developed and in a reasonable time oil will be brought in to Alice Springs from the Mereenies. Having oil on the spot will help people in inland Northern Territory. Quite obviously, if we are to take a genuine interest in this legislation and in protecting our future we must ensure that our development and exploration go along at a certain pace. But to do this, of course, we have to give stimulus to the people who will carry out this exploration. It is a huge risk area. I think that it would be of considerable benefit to the Government of Australia to give every encouragement to explorers these days.