The world's energy map is undergoing a historic shift. The biggest change centres on the US, which will increasingly curtail crude oil imports as its oil output surges on the back of the shale revolution. But another, if less noticed, major shift is occurring in Australia.
The island continent could soon overtake Indonesia as the biggest importer of refined products in the Asia-Pacific region, as old and high-cost refineries close and demand continues to rise strongly.
The rising reliance on oil imports is likely to be a boon for independent trading houses, such as Vitol, Glencore and Trafigura, and export-orientated refineries in Asia, including the Reliance-owned Jamnagar refinery in India, the world's largest petrochemical complex.
"Australia is the biggest regional opportunity in years for the industry," says a Singapore-based oil trader.
The shift comes as Royal Dutch Shell and Caltex announce the closure of two ageing refineries near Sydney, reducing at one stroke by almost a third the country's refining capacity. As a result, the Australian government this week said "domestic refiners will produce just over half the fuel consumed" in the country. "The remainder will be imported."
Australia consumes about 1m barrels a day of oil-refined products - on a par with a medium-sized European country such as the Netherlands. If the country imports half of its fuel requirements, as Canberra is now forecasting, it could easily surpass Indonesia's fuel purchases of about 400,000 b/d - the largest in Asia and one of the biggest worldwide.
In 2000 when there were eight refineries in Australia, only 5 per cent of fuel was imported - equivalent to less than 100,000 b/d. Fuel imports rose to nearly a quarter of total demand by 2010, or 320,000 b/d, as consumption increased and one refinery closed. Soozhana Choi, chief oil strategist at Deutsche Bank in Singapore, says further consumption growth and the impact of closing the Shell and Caltex refineries, which will reduce the total number of plants to five, would push Australia's imports of petrol, diesel, jet fuel and fuel oil to 640,000 b/d by 2015.
"Gasoil and gasoline import needs in particular increase sharply going forward due to the refinery closures, which presents an outlet for refineries in the region with surplus," Ms Choi says.
The Australian government is relaxed about growing imports, noting that other developed countries in Europe also rely on imports. Martin Ferguson, minister of resources and energy, says the closures "will not jeopardise Australia's energy security".
But for the independent oil traders the anticipated increase in imports is a rare opportunity for more business in a developed country with little risk. The traders are already scouting the Australian coast looking for potential sites to build import terminals.
Yet not everyone is convinced of the size of the new business opportunity. "It is a bit overblown," says a Singapore-based oil trader, adding that Indonesia is likely to remain the top import market in the region as consumption continues to increase rapidly in parallel with economic development and population growth.
Others also worry that the mining boom in Australia is almost over, and with it the large increase in diesel demand - and imports - witnessed over the past decade. But that ignores the fact that any drop-off in demand from the resource sector or agriculture will be more than offset by rising consumer consumption - through the increasing popularity of diesel vehicles.
Regardless of the size of the new business, traders say the Australian opportunity will be hard-won.
Shell is closing its 80,000 b/d Clyde refinery near Sydney but is converting the plant, built nearly a century ago, into an import terminal to maintain a foothold in the Australian market.
Caltex is replicating the move. It has announced plans for the 2014 closure of its 57-year-old 125,000 b/d Kurnell refinery, on the outskirts of Sydney, but similarly plans to transform it into an import terminal, so it does not cede any business to independent oil traders. Julian Segal, Caltex chief executive, says the company has signed a long-term deal with US multinational Chevron to source refined products. "There is a reliable supply in the region - in Singapore, in Korea, in India," he says.
