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Australia: Oil's not well: crisis looms

AUSTRALIA is facing a self-sufficiency crisis in liquid fuels, delegates to a conference in Darwin will be told today.

The opening session of the 10th South East Asia Australia Offshore Conference will hear that Australia's demand for oil is greater than supply and the gap is growing.

Chairing the session, the executive director of the Australian Petroleum Production and Exploration Association, Barry Jones, will argue there is a medium-level risk that without government support for exploration, the industry will not deliver more than 500 million barrels of liquids. Geoscience Australia believes this amount is needed to meet 50 per cent of domestic demand.

Mr Jones believes there is a much higher risk that, without strong government support, Australia will not meet 90 per cent of Geoscience Australia's high demand prediction.

Mr Jones said yesterday that 1200 million barrels of liquids, worth around $US30 billion, were required to maximise national self-sufficiency - but policy complacency meant it was unlikely to be achieved.

"Narrowing the gap requires a substantial and sustained national policy and research effort focusing on all aspects of demand and supply," Mr Jones said.

Australia would be primarily dependent on fossil fuels for the foreseeable future.

Mr Jones said that as 60 per cent of Australia's final energy consumption was in transport fuel, renewable energy was not a short-term option.

Large-scale use of cleaner cars was at least 10 to 15 years away, he said. And adding a substantial renewable energy component to the electricity grid required a big gas component to make the grid stable, he said.

"The sustainability future of Australia's coal industry is critically dependent on the gas industry as a service provider and a partner in building public confidence."

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