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Petroleum - Royal Commission - 1st Report - Shortages of petroleum products

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1974-Parliamentary Paper No. 229




Presented by Command 16 October 1974

Ordered to be printed 31 October 1974



Printed in Australia by The Courier-Mail Printing Service, Campbell Street, Bowen HiJJs, Brisbane.


Your Excellency,

G.P.O. Box 4377 Sydney, N.S.W. 2001 15 October 1974

In accordance with Letters Patent dated 12 September 1973, I have the honour to present to you the first Report of the Commis sion of Inquiry into production, m arketing and pricing of petroleum, diesel and other fuels.

His Excellency the Honourable Sir John Kerr, K.C.M .G., Q.C., K.St.J. Governor-General of Australia Government House Yarralumla

Canberra, A.C.T. 2600

Yours sincerely, W.H. COLLINS Commissioner


During 1974 shortages of petroleum products have occurred of varying extent in both country and metropolitan areas throughout Australia. While isolat ed instances of comparatively minor or spot shortages have occurred in Tasmania and South Australia , the four major areas of shortage have been:

1. Northern New South Wales and Southern Queensland; 2. Queensland Coast and North Queensland; 3. Central Western New South Wales; 4. Northern and Central Australia.

The mo st severe effects have been felt in Northern New South W ales and Southern Queensland, both areas normally substantially dependent on the outturn of the Am pol and the Amoco refineries at Brisbane.

Supply and demand are still finely balanced in Victoria and Western A ustralia . Some complaints have been received from areas in western and north western Vic " toria , but it appears that normal demand is now being met in these two states .

The pattern of distribution of petroleum products to many country areas involves sea carriage from refinery centres such as Sydney and Brisbane to outports such as Trial Bay, Bundaberg, Rockhampton, Townsville, Cairns and then by rail or road tankers to depots in principal country towns, and from the depots to retail or customer storage on farms, at factories, at council depots, service stations and other retail


At each stage, the refinery, the outport, the depot and the service stations, stocks are held which act as reserves against demand. The distribut ion system at each of its stages therefore holds its own reserves.

If reserves fail merely at one stage the problem can readily be met. But if reserves fail at every stage the result is a profound depletion of the whole system creating a crisis. Resupply involves major redeployment of resources of transportation and products.

It is in the face of such a profound depletion that the present crisis has occurred. During the months of June to August, the country continued to run almost normally on reserves of fuel stocks both at seaboard terminals and inland. These were in turn being slightly augmented as opportunity and very limit ed production allowed. By the end of August stocks in areas of some States were nearly exhausted.

The capacity of both rail and road transportation equipment available is geared to the handling of adequate stocks of product normally available at seaboard in " stallations and to a steady and even flow of product through the system. The trans " portation capacity employed is, neverthele ss, capable of handling reasonable peaks due to such recurring factors as seasonal influence s.

In the period following a major depletion of stocks at installation s, depots and agencies, transportation capacity can be expected to be under stress and there is a physical limit to the rate at which such replenishment stocks can be moved out to


inland areas. Thus, even after initial replenishment stocks are received at installa " tions, it takes some considerable time to rebuild stocks in the country up to normal trading levels, while at the same time meeting the full normal demands.

This problem is aggravated by the natural tendency of customers particularly in the country and particularly when facing a peak demand period such as harvesting to 'over buy' in a precautionary way, aggravating local stock shortages.

As individual companies have differing supply sources, differing distribution patterns and varying modes of transport to various inland areas, such unsatisfactory supply situations are not uniformly felt in all regional centres in any State.


The Royal Commission on Petroleum became aware from press statements that there was an apparent current critical shortage of petroleum products in certain areas.

No party, agency or government had brought the matter directly to the attention of the Commission. However, the Commission itself took the view that it was likely that if there were shortages, the matter fell within those parts of the Commission's Terms of Reference which require it to make inquiry into and report upon all aspects of the production by refining and the marketing of all types of petroleum, diesel and other fuels for internal combustion engines derived from any form of liquid or gaseous hydrocarbons.

In addition, the Commission was of the view that the situation as reported required an immediate inquiry and report if such was to serve a useful purpose. Accordingly on Tuesday, 8 October 1974 an announcement was made publicly by the Cbmmission calling for immediate submissions in writing from all major petroleum marketers and refiners dealing initially with the following matters:

1. Are there shortages of petroleum products in country areas in Australia?

2. If so:

(a) where are such shortages presently being felt?

(b) what is the extent and nature of such shortages and what petroleum products are affected thereby? (c) what are the reasons for such shortages? and,

(d) what steps are being taken to remedy the shortages?

The Commission asked that the major petroleum marketers and refiners should furnish these submissions by 5.00 p.m. on Thursday, 10 October 1974. In addition, the Commission called for any submissions or other comments that any other in " terested person, agency or Government might wish to make and asked that these should be furnished as soon as possible.

There was a substantial response from many quarters . Those who responded included:


The Ron. J. Bjelke-Petersen, Premier of Queensland Senator A.G. Lawrie, Queensland Senator E.R. Maunsell, Queensland Senator D.B. Scott, New South Wales The Right Honourable J.D. Anthony, Leader of the Australian Country Party The Ron. I. Sinclair, Deputy Leader of the Australian Country Party

Mr A.E. Adermann (Member for Fisher) Mr J. Corbett (Member for Maranoa) Mr P.S. Fisher (Member for Mallee) The Ron. R.J.D. Hunt (Member for Gwydir) The Ron. R.C. Katter (Member for Kennedy) The Ron. R.S. King (Member for Wimmera)

MrS. Lusher (Member for Hume) Mr D.T. McVeigh (Member for Darling Downs) Mr P.C. Millar (Member for Wide Bay) Mr F.L. O'Keefe (Member for Patterson) Lt-Col J.W. Sullivan (Member for Riverina) The Ron. I.L. Robinson (Member for Cowper)

Mr D. Day, M.L.A. (Member for Casino) Mayors or Town Clerks of: Armidale, Guyra, Inverell, Lismore, Tamworth and Uralla Councillors of the Shires of: Barraba and Walcha Mr D.L. Bone, Oil Distributor, Nambour Mr Burton, Manager, Amagraze Seafood, Brisbane Mr R. Doyle, Ron. Sec. Northern Silo Advisory Council

Mr Kauter, Operations Manager, Namoi Cotton Co-operative Ltd Mr Ramsay, Oil & Gas Division, B.H.P. Mrs J.J. Russell (Kootingall) Mr I.G. Sykes, XL Petroleum Service Station Association of N.S.W. Ltd

Mr Warner, Mobil Agent, Trangie Mr J. Kidd, Organiser, A.M.W.U., Newcastle General Secretary, Queensland Cane Growers' Council President, Memorial Club, Walcha Administrator, Queensland Grain Growers' Association, Toowoomba President, Inland Division, National Party of Australia

At the same time, all the major refiners and marketers operating in the areas affected furnished material in the form of submissions answering the questions raised by the Commission. The Commission appreciates the completeness and thoroughness with which much of the material was prepared and submitted to it

in the very limited time available to the parties concerned.


By Friday morning, II October I974, the Commission had read all submissions and in order to consider and assess the supply crisis and possible solutions thereto, a special sitting of the Commission was convened on Saturday, I2 October 1974, at 10.30 a.m. At this there were present at the Commission's request legal and tech " nical representatives from all major refiners and marketers. There were also present from the Australian Government, Mr Tim Moore, Industrial Relations Branch, Department of Labor and Immigration, Sydney, and Mr S.P. Smith, Assistant Secretary, Department of Transport, Canberra; and from the Government of New South Wales, Mr J. Savage, Deputy Director, Department of Decentralisation and Development, Mr D. Bodham-Wettham, Executive Officer Energy Advisory Com " mittee, Department of Mines, Mr H. Silverton, Projects Manager, Department of Transport and Mr K. Lennon, Freight Trains Operations Superintendent, Depart " ment of Transport. After a formal hearing in open court at which reference was made to the submissions and communications received, the Commission adjourned into a closed conference.


The Commission finds that the causes of the shortages of refined petroleum products fall under three headings:

1. During the first few months of I974 there was prolonged and very severe bad weather along the whole coast of Australia which placed a major restriction on the program movement of both crude and product tankers. For example the weather was at times so severe as to force delays to vessels discharging and loading at the A.O.R. Refinery at Kurnell. This weather led to a reduction in crude oil supply to east coast refineries and to a reduction in shipment of petroleum products along the east and southern coast of Australia. British Petroleum states, as an example, that as a result of this weather its stock of motor gasoline and distillate in New South Wales seaboard terminals had dropped from 27 760 tons of motor gasoline and 10 480 tons of distillate on I Apriii974 to 20 200 tons and 5 500 tons respectively on I June I974.

2. During 1974 there have been considerable industrial disputes which, at a time when inventories were already depleted as a result of severe weather, had an accumulating adverse effect. In June 1974, the Institute of Marine and Power Engin " eers, in a dispute over paid study leave, refused to sail all tanker ships for a period of about seventeen days. During that time little or no indigenous crude supplies from the Gippsland fields could be produced or delivered to refiners in South Australia, Queensland or New South Wales and industrial product movements were largely at a standstill.

The following table demonstrates the loss of actual production of crude oil from Gippsland in thousand barrels per day from various causes over the seven months of February-August I974.



Month Production in barrels per day Reason for non-attainment of

(1974) Forecast Actual Loss Forecast

February 385 000 355 200 29 800 General ship slippage and reduced

runs at Altona.

March 385 000 359 600 25 400 Changes to Amanda Miller

program caused shut-in .

April 385 000 349 700 35 300 Unscheduled shutdown Geelong

refinery; delays to Howard Smith, P.J. Adams due to bad weather in Sydney and Brisbane.

May 385 000 337 600 47 400 Industrial disputes at Caltex

Sydney and Shell Geelong refineries. Merchant Services Guild strike. Extension by 3 days to Amanda Miller's dry docking schedule.

June 385 000 335 600 49400 Unscheduled shutdown of BP's

Westernport refinery . Bad weather in Sydney caused excessive delays to Howard Smith and Amanda Miller. Marine Engineers on strike.

July 390 000 245 600 144 400 Marine Engineers, A WU and

AMWU workers on strike .

August 390 000 220 300 169 700 A WU and AMWU workers strike .

Following soon afterwards towards the end of July industrial disputes broke out between various industry companies and some unions represente d within the in " dustry over pay, leave, shift allowances and other matters. Some refineries were forced to shut down altogether and other refineries were able to continue only limited

production for varying periods of time. Tank ships were unable to load or discharge cargo. Refinery start-up and the resumption of normal work did not occur until late August. In September 1974, Shell was involved at its Clyde refinery in a local dispute involving 35-hour week rosters as a result of which intakes to main processing

units were reduced to 65 per cent of normal for five days of the month.

The stoppages affected indigenous crude production, the operation of refineries, the ability to load and discharge tankers at terminals and the distribution out from terminals.

The submission of Ampol, a critically placed Brisbane refiner, illustrates the cumulative effect of these industrial disputes .

The P.J. Adams was prevented by the action of the Institute of Marine and Power Engineers from moving at Westernport from 28 June to 8 July and Brisbane from 13 July to 15 July. The Prima Maersk was delayed at Westernport from 15 June to 17 June. The consequences of these stoppages was a loss of crude input into Ampol's Brisbane refinery of 589 300 barrels.

A ban was placed on ships by the Amalgamated Metal Trade Unions and the Aus " tralian Workers Union which tied up the Prima Maersk at Brisbane from I July to 26 July-a loss of 25 days ship usage and a loss of crude oil input of 1 116 700 barrels. Thus, these two industrial stoppages prevented 1 706 000 barrels of crude from being

processed in Ampol's Brisbane refinery. They caused a loss of 31 refinery production days in the period at a planned crude rate of 54 000 barrels per day.


Ampol's product carrying ship W.M . Leonard was also stopped from operating by these industrial disputes for 29 days during the same period. The average time per voyage for. the W.M. Leonard to deliver products to Queensland outports is 8 days. Thus, it was prevented from doing 3t voyages and as it carried approximately 21 000 tons per voyage, the Queensland outports were denied 73 500 tons of refined products.

3. During the period that the industry was facing severe problems with industrial disputation, it was also suffering from machinery breakdowns of varying seve1ity and maintenance shutdowns within refineries. British Petroleum reports , for example, that at"Westernport loss of production resulted from both industrial disputes and unit breakdown and the overlapping the these two factors. A total of some 220 000 tons of crude throughput was lost. Shell reports that its Geelong refinery was shut down on 28 June 1974, on account of power failure. Most units were on stream within 24 hours, but a large distilling unit and its downstream units were not on the line until 3 July. There was a reduction of crude intake in June below program for 16 000 tons, the whole of which was due to the power failure.

Since 12 September 1974, Shell's catalytic cracking unit at Clyde has been shut down for overhaul. It is due to return on stream about 20 October 1974. It was originally scheduled for shutdown in April 1974, that being the time at which, ac " cording to Government regulations, overhaul had to be carried out. The New South Wales Department of Labour and Industry has authority to grant extensions of time and because of the tight fuel situation existing in New South Wales during the middle of 1974, extensions were sought and obtained from the Department to the maximum extent. The Department would not, however, grant any further extension beyond 12 September 1974. It is ordinarily possible to accommodate such a period of shut " down for overhaul without any disruption in the supply of products from the refinery. However, the industrial disputes referred to led in this case to a tight supply of gasoline components and particularly middle distillate. Notably, the disputes ex " perienced by Shell in August and September prevented a build-up, which would ordinarily have been arranged, in stocks of gasoline components to cover the shut " down. Accordingly, the availability of motor gasoline and middle distillates has been greatly reduced.

At the present time one of the two crude distillation units at the British Petroleum refinery at Kwinana in Western Australia is shut down for statutory overhaul.


(a) Northern New South Wales and Southern Que ensland

These areas, which may be regarded as one, are critically dependent upon the outturn from the Amoco and Ampol refineries at Brisbane and upon supply from Newcastle.

Typical of the most affected centres is Tamworth. Mr McKellar, the Mayor of Tamworth, speaking of the position of Tamworth City Council, reports that the Council has had to ration supplies of both super and standard motor spirit since 24 July. This has resulted in twelve Council vehicles being stood down throughout


the whole of August. No diesel fuel has been available from early September to 10 October. All mowing of parks and ovals has been halted and construction work much curtailed. An accompanying survey of stocks held in depots for 2 October to 11 October shows stocks to be very low or completely out.

Reports of critical shortages have been received from Casino, Moree, Walgett, Narrabri, Gunnedah, Coonabarabran, Quirindi, Inverell, Armidale, Barrada, Tam " worth, Lismore, and in South Queensland from Nambour, Charleville and Toowoomba.

In the face of resupply, past experience of distributors tends to confirm very severe problems in meeting extraordinary demand levels after shortages, with an abrupt onset of repletion once the system is restarted and precautionary buying is no longer in evidnece.

This large and uncertain demand picture is even further exaggerated where demand is seasonal. For instance where crop harvesting is a feature of consumption, bulk buying of fuel tends to take place 5-6 weeks ahead of consumption. If the demand is not immediately met understandable consumer concern and impatience immediately arises. If in addition the harvest is abnormally large, such as the anticipated wheat harvest, substantial problems of supply emerge. Ordinarily the reserves at outports

are sufficient to meet extra demand of this dimension but as the outports are also depleted this extra demand soon leads to a crisis. High or even exceptional seasonal demand has aggravated the situation of extreme shortage. In these circumstances a large number of justifiable complaints from New South Wales and Southern Queens "

land has been generated. This exceptional seasonal demand has been referred to by the Premier of Queensland who estimates that the fuel requirements for this season will be 20 per cent higher than last year's. Steps are, however, being taken to mitigate the problem.

Major actions taken so far include:

I. By mid-September marketing experts employed by the major distributors had anticipated that heavy seasonal peak demands for agricultural fuels would aggravate the already prolonged depression of supply. It was anticipated that short " falls would occur progressively down the eastern seaboard and similarly but not coincidentally inland as well. Harvesting patterns in broad terms move from north

to south with the northern dem~nd being seasonally the earlier. Therefore the oil marketers moved to redeploy their distribution resources initially by moving products north from Victoria into New South Wales and thus releasing railway rolling stock and road tankers for deployment further north again.

By following seasonal shifts through the State the distributors have been able to concentrate resources not to meet the shortages entirely but to mitigate substantially the repercussions of shortage. This process still continues .

2. The Amoco Refinery at Brisbane is now operating at maximum crude oil throughput and in addition the company has successfully completed a purchase of 24 000 long tons of automotive distillate outside Australia which is expected to arrive at Queensland outports in late October.


3. Ampol, the other Queensland refiner, is currently producing at optimum rate of 54000 barrels per day. The company has also entered into a processing arrange " ment with a Melbourne refiner which will permit the importation of 23 400 tons of gasoline and distillate and 11 000 tons of Gippsland topped crude into Brisbane and Townsville on 12 and 16 October respectively to supplement refinery production. In addition, Am pol is endeavouring to import refined products from overseas sources.

4. A rail tank car fleet based on Sydney and Newcastle has been redeployed to handle the longer haulage distribution into Northern and Western New South Wales, and some companies are road hauling product directly from Melbourne to Northern New South Wales.

5. Caltex is bringing an overseas cargo of 16 500 tons of gasoline into Newcastle from Korea. The expected date of arrival is 4 November 1974.

6. Additional cartage contractor capacity has been engaged to operate out of Brisbane into Northern New South Wales. Particular concentration has been made on the Namoi Valley to meet the specific needs of the cotton industry .

7. The areas supplied by South-west Rocks have been extended in an endeavour to speed up the recovery of the Northern Rivers area. During August and September, Shell delivered considerably more product into Tamworth than would be regarded as its normal monthly requirement. In August 1973 Shell delivered 114 000 gallons of motor spirit into Tamworth, in August 1974 146 000 gallons. In September 1973 Shell delivered 146 000 gallons of motor spirit into Tamworth, in September 1974 193 000 gallons of motor spirit.

8. In both Sydney and Brisbane, Shell has increased the utilisation of its own tanker fleet over weekends and as a result of the waiver by the Transport Workers Union in New South Wales of its award overtime limits, Shell has delivered approxim " ately 85 000 gallons of product into the Tamworth and Gunnedah area over the weekend of 5-6 October. Further, by extending the weekend use of contract carriers an additional 130 000 gallons was delivered into Southern and Central New South Wales ex-Melbourne during the same period.

The Commission concludes from its examination of the supply position that the prospects in northern New South Wales and southern Queensland are for gradual improvement in supplies during October provided the Shell refinery is restored to full production this week particularly of distillates and provided production and transportation schedules are not affected by industrial disputes.

(b) Que ensland Coast and North Qu eensland

Upon the Queensland coast, as distinct from Southern Queensland, shortages though inconvenient have not been as severe.

The maintenance of minimum inventories however is critically dependent on uninterrupted shipping schedules and probably the use of additional coastal shipping, and coastal shipping capacity is scarce. The Commis sion notes that it has received a submission from Counsel for the Australian Government in the following terms:


Current supply problems are known to the Minister for Transport who on 10 October informed the Secretary of the Department that in any situation where a licensed product tanker is not available he would approve an application for use of an un " licensed product tanker to carry petroleum products on the Australian coast as long as the current supply problems persist.

Further, it is noted that since July 1974, nine single-voyage permits under Section 286 of the Navigation Act have been issued for unlicensed foreign flag tankers to carry coastal cargoes of crude oil and refined petroleum products to Queensland. These voyages include one critical voyage to Queensland ports by the vessel Hanetia due to commence from Geelong on 9 October.

Additionally, Shell and B.P. have undertaken the supply of Mt Isa from Darwin and Ampol is supplying Mt Isa from Port Alma near Rockhampton by road tankers. These manoeuvres have the effect of releasing for seaboard and inland use a large volume of rail traffic which otherwise would be tied to supplying M t Isa.

There is, however, at Cairns in particular a problem in the supply of tobacco " curing oil. Most curing oil comes from the Ampol refinery at Brisbane. During July an amount of 2 500 tons which equals the refinery's holding capacity of the product was to have been shipped north. This was prevented by industrial disputation and

as a result, the pre-seasonal build-up of stocks did not take place. This loss cannot be recovered.

Supplies are adequate for October but uncertain for November and December as the area can only be replenished by lots no bigger than 2 500 tons and only then as shipping permits.

An Industry Product Movements Committee is to review the supply of tobacco " curing oil on 23 October and the Commission proposes to remain informed as to the supply position.

Distillate has been in short supply but serious stock-outs are not expected. There may continue to be spot shortages at seaboard terminals between shipments and regular shipping movements are essential if shortages are to be avoided.

(c) Central Western New South Wales

Within this Central Western area which is ordinarily supplied from Sydney are the cities and towns of Orange, Mudgee, Parkes, Blayney, Cowra and Forbes which have all been reported as short of petroleum products, sometimes acutely so. The area is currently facing a wheat harvest.

Although all Sydney refineries are producing to available capacity the chronic systematic depletion that has already been referred to is still absorbing very large quantities of product and the Central West is therefore undersupplied.

However, the area has begun to be supplied directly from Melbourne and addit " ional cartage contractor capacity has been engaged to operate between Melbourne and Southern and Central New South Wales depots. The Commission concludes that the prospects for Western New South Wales

are for steady improvement in supplies during October, although occasional shortages may still occur particularly of distillates.


(d) Northern and Central Australia

The Northern part of the Territory is supplied either from Perth or by product imported from Singapore. These areas have a satisfactory supply. However, southern parts of the Northern Territory normally supplied from South Australia are now in the grip of stock shortages brought about by the very severe flooding which cut transport services.

Earlier this year unprecedented floods in Northern and Central Australia cut off the normal main distribution route (rail) for motor gasoline /diesel oil from Port Pirie to Alice Springs. This rail service was cut completely from about 27 February to 17 March 1974. (Supplies of Jet A-1 and some gasolines are brought into Alice Springs by road train from Darwin.)

The road south from Darwin servicing Tennant Creek and Alice Springs was cut completely at Newcastle Waters during the whole of March and part loadings of tankers only were possible during first half April. The section between Tennant Creek and Alice Springs was extremely hazardous throughout April resulting in slow turnaround of transport. This section is still hazardous despite only little rain and the road is rough and badly damaged in many localities.

As a consequence of the foregoing the general stock position in Alice Springs " Tennant Creek was rendered most precarious in March-April. However, absolute minimum supplies of distillate to keep the Alice Springs Power House operating were brought in under extreme difficulty from the south by road via Kulgera. Some emer " gency supplies were also brought in to Tennant Creek from Mt Isa after the re-opening of the Townsville-Mt Isa railway line which had been closed for some time due to Queensland floods.

More recently, the rail service from Port Pirie was again cut from 30 September to 5 October and yet again from 8 October. It will probably remain cut until12 Octo " ber. Re-opening will be dependent on the flow of the Finke River and whether there are any further rains in the area.

The Commission notes that it has recently conducted two working conferences with Magellan Petroleum Australia Limited and Oilmin N.L. These dealt with amongst other things the prospect of using what may otherwise be the uneconomic dis " coveries of oil from East Mereenie No. 4 in the Amadeus Basin by building a small refinery in the Alice Springs area. Such a development, if on further examination it proves economically viable, could in the long term solve many supply difficulties to Central Australia.

In the short term the Commisssion is satisfied that the outlook is, subject to weather conditions and other reservations made in this report , reasonably good and that further improvement in supply can be expected.


In addition to steps so far detailed to deal with localised shortages, a number of other steps have been taken to improve the overall supply position.


1. B.P. Australia Ltd have scheduled direct imports to Australia of some 105 000 tons of finished motor spirit or motor spirit component over the remainder of this year. The majority of this is in addition to the company's normal import pattern and is directed towards replacement of stocks depleted earlier in the year.

There is a lead time of several months associated with the scheduling of imports from overseas and therefore there is a corresponding time lag before the benefit resulting from additional imports is felt in terms of physical stock increases.

2. B.P. Australia Ltd have also arranged the 'shipping of imports of Kuwait crude with gas oil to offset losses from reduced Australian crude production '.

3. B.P. Australia Ltd have negotiated a processing deal with Ampol under which they are providing capacity at Westernport to provide about 36 000 tons of clean products and cracker feed to augment Queensland supply. They have also been instrumental in making available the requisite shipping for the movement of the clean products from Westernport to Queensland.

4. Shell has been operating its Geelong refinery at absolute maximum capacity. Fortunately, the Commission is pleased to report, during September 1974 the pro " duction of Gippsland crude was 399 459 barrels per day the highest rate ever recorded.

5. Shell has several Single Voyage Permits from the Minister for Transport and is therefore able to shift the following very substantial volumes:

ARCA-loaded Geelong 9 September 1974 Cargo: 8 441 tons premium motor spirit 822 , regular , ,

1 514 , L.A. naphtha

3 188 , jet A1

4 028 , gas oil

Discharged: Townsville-Mackay 17-19 September 1974.

SACHEM-loaded Geelong 11 September 1974 Cargo: 12 574 tons premium motor spirit 3 191 , regular , ,

3 451 , gas oil

Discharged: Adelaide 16 September 1974

SILVER SEAHAWK-1oaded Geelong 23 September 1974 Cargo: 1 839 tons detergent alkyl ate 790 , luboil basics Discharged: Sydney 26 September 1974 HANETIA-Ioading Geelong commencing 9 October 1974, due to be completed

11 October 1974. Cargo approx.



4 800 tons tops 6 500 , luboil basics 3 700 , L.A. naphtha

800 , gas oil

1 600 , premium motor spirit

17 400


-loading Sydney about 14 October 1974 Cargo approx. 1 700 tons jet A1 -loading Brisbane about 17 October 1974, and subject to issue of a permit, 23 October 1974. Cargo approx. 300 tons avgas 100


6 400 , premium motor spirit 1 700 , regular , ,

500 , power kerosene 15 000 , gas oil

Discharge ports Sydney, Brisbane, Gladstone, Bundaberg, Mack ay, Townsville.

In addition Shell has been able substantially to increase its movements into country areas but the magnitude of the demand has been such that it has still not achieved normal stock levels in Southern Queensland and Northern and Central New South Wales.

6. Shell has arranged additional imports of overseas crude.

There were various periods during July-August when Clyde refinery was still operating (albeit sometimes subject to production bans), but could not be supplied with indigenous crude, either because ships were immobilised, or through inability to load at Westernport. During those periods Shell made every endeavour to maximise the intake of overseas crude, additional cargoes being ordered from overseas for this purpose; in particular overseas crude originally destined for Gee long Refinery (i.e. Basrah crude for the Lub. Oil Plant) was discharged at Sydney because Geelong was able to compensate, to some extent, by taking in additional Gippsland crude through WAG line. That change of crude diet has led to marked distortions from normal in the pattern of refinery product yields, and in particular the replacement of Gippsland crude with Middle East crude at Clyde Refinery has seriously reduced middle distillate production. This factor, in conjunction with the high middle " distillate demand during the winter season, is largely responsible for low stock " levels of distillate fuels in Shell's country depots in New South Wales at the present time.

7. During the period from July until the present time, Shell has cancelled sub " stantial volumes of product exports to such traditional destinations as New Zealand and the Pacific Islands. In terms of product availability within Australia this action has the same effect as importing refined products from overseas.

8. Ampol is endeavouring to import refined products from overseas.

9. Mobil renegotiated an export commitment which made additional product available for use in Australia.

10. The Public Transport Commission of New South Wales has informed this Commission that first priority has been granted for the time being to petroleum product traffic.

11. The Commission also notes that present problems due to limited Australian flag coastal shipping are likely to improve in the near future. In particular the pro-


ducts tanker Express scheduled for handover to its owners on 16 October; the crude oil tanker Robert Miller is expected to be completed towards the end of 1974; the products tanker John Hunter is due to completion in February 1975. The crude oil carrier Arthur Phillip has just been delivered and is about to be placed in service.


The Commission, having made inquiries , reports in summation its findings as follows:

1. That there have been and in part still remain severe shortages of some refined petroleum products in some parts of Australia, notably Northern New South Wales and Southern Queensland, Queensland Coast and Far North, Central Australia, Central Western New South Wales.

2. That these severe shortages are not due to want of standing refining capacity.

3. That the causes of the determined shortages are: (a) adverse weather conditions in the first half of 1974 which led by mid-year to some depletion of stocks held especially at outports. (b) extensive industrial disputation which affected production of crude,

refining and land and sea transportation often in a cumulative fashion, especially in June, July and August 1974. (c) refinery breakdowns and closures for essential maintenance which aggravated shortages. (d) insufficiency of Australian flag coastal shipping to meet substantial

increased demand, which has hampered replenishment of stocks.

4. That the measures taken and reported herein are adequate in these circum " stances to replenish normal stocks of refined petroleum product taking account of both the means available and the extent of the problem and within.

5. That the Commission expects that these shortages will be met but that the process will unavoidably be uneven and that some areas may continue to have some shortages of some products after the general problems of resupply have been met. The Commission notes and approves that presently operating programs for resupply take specific note of the harvest and other seasonal needs of primary

producers and considers that the special urgency of this problem justifies priority if necessary in resupply.

6. That these expectations of a successful replenishment of stocks are critically dependent upon continued production of crude and uninterrupted refining process. Even more critical is the role of coastal shipping in redistributing petroleum products to outports. With the whole system of supply stretched to its limits, the repercussive effects of even minor delays arising from industrial disputation could have grave consequences, and significantly alter the patterns of resupply referred to in this report.