Mr Gerry Hueston, Chairman of the Australian Institute told the Australian Petroleum Production and Exploration Association (APPEA) conference today that "the Australian refining industry has met some formidable challenges over the last few years but is hopeful of a sustainable future in Australia".
The speech, "Australian Refining - Meeting the Challenges" emphasised that while petroleum refining is a global business there are significant regional differences between the industry in the US, Europe and Asia.
"Strong growth in Asia provides attractive market conditions but it could be threatened by a further wave of over-investment and surplus capacity into the next decade", Mr Hueston said.
"Against this international backdrop, the Australian refining industry continues to meet the challenges of a volatile regional environment and fierce import competition."
"Low Singapore refining margins and the general availability of cheap lower quality fuel from Asia culminated in a record loss for the Australian refining industry in 2001."
Mr Hueston highlighted the importance of the refining industry to the Australian community and the challenges posed by cleaner fuels standards.
"Australian refining makes an important contribution to Australia through competitive prices (lowest pre-tax price in the OECD) and reliable supply in an environmentally sensitive manner."
"Cleaner fuels will bring major community benefits but place a financial strain on the Australian refining industry."
Mr Hueston called on the Commonwealth Government to establish a positive investment climate for the Australian refining industry.
"Government can improve the effectiveness of the cleaner fuels policy by formalising the initiatives in the proposed energy statement and introducing regulations for the announced cleaner fuels incentives as soon as possible."
Mr Hueston also called on the Commonwealth Government to repeal the anachronistic Sites and Franchise Acts to assist in improving investor confidence in the industry.
A positive investment climate is critical to pursuing the Government's cleaner fuels agenda but is also integral to maintaining supply reliability for the Australian community.
Dr John Tilley
Executive Director, AIP
(02) 6247 3044