Offshoring Australian oil refineries undermines Australia’s fuel energy resilience

Foreign multinationals and imported foreign CEOs have an ongoing record of disloyalty towards Australia, towards Australian workers and towards Australian communities.  Recent offenders exposed in our national news media are:  QANTAS, Telstra, BHP Billiton, Alcoa, Exxon-Mobil, Ford Motor Company, General Motors, Royal Dutch Shell, Toyota, Unilever, Xstrata and this week it’s BP.

Yesterday, multinational oil giant BP announced its decision to close its Bulwer Island refinery in Brisbane for global profit reasons, which will result in the loss of more than 350 Australian jobs, and the loss of yet another domestic oil refinery.

BP Bulwer Island RefineryBP has decided that by closing its Brisbane Refinery, it can ship Australian petroleum production offshore to Asia for refining in places like Singapore which produces massively more petroleum cheaper: 650,000 barrels a day instead of 100,000 barrels a day.

And all the Liberals’ Queensland Premier Campbell Newman can say is that he’s disappointed, but stops short of offering government assistance to assist in any retraining of the 350 or so workers fated to be sacked.  Like Abbott at Ford and Toyota: “My thoughts are with the 300 or so employees and their families.’’

BP's Andy Holmes at BulwerThe face of multinational disloyalty:  sorry but.

To the Australian Workers’ Union Queensland secretary Ben Swan representing just 160 of the 380 workers at the refinery, he was not informed by BP so the news of its impending closure came as a “shock”.

Such has become the reality of work insecurity experienced by thousands of Australians working for multinationals – one day you think you have a steady job, the next day you have no future.  Not only are the workers impacted, so too are their families and dependant communities, often set up with no other revenue source.

Offshoring is part of globalisation.  It is all about globally doing more cheaper, and finding cheap countries to deliver a lower cost base for greater shareholder return.  Multinationals only look after their corporate selves, beyond nations they operate in.   Profitability ignores any loyalty to employees or the host nation.  To multinationals, nations are valued as parasitic hosts – expendable.

Today, the 350 or so loyal workers at BP’s Bulwer Island Refinery must feel expendable.  The Bulwer Island refinery was built in 1965 by Amoco at the mouth of the Brisbane River and bought by BP in 1984.

BP’s sellout for global profit is anti-Australian but do Labor, Liberal, Greens or Clive Palmer give a toss?   Abbott and his Liberals are just about to sign off on more Free Trade agreements with more foreign interests, next week China, South Korea and Japan.  Such agreements were set up by Rudd and Gillard Labor with the Greens.  Their all in on selling out Australian industry.

It’s always going to be the two-bit waged Slave Third World and state-subsidised emerging world that employs cheap foreign labor that will scale the top of the food chain in BP’s multinational world.   Decent-waged Western nations like Australia under the multinational globalisation model are set for the waste bin of the global economy.

What does Australia as a nation critically need?  Energy and fuel, like any nation.

Australia’s national fuel security requires:

  • Fuel Security – adequate reserves and reliability for national defence, road and rail transport (passenger and freight), coastal shipping, aviation and LPG for domestic industry, and other petroleum products (bitumen, plastics, kerosene, etc)
  • Leverage of our territorial oil-based resources
  • Maintaining fuel quality standards
  • Industrial competitive advantages by access to cheap national fuels
  • Maintaining the nation’s network of 6300 petrol stations
  • Diversifing into low-cost biofuel alternatives
  • Building Australia’s aggregate national wealth

But offshoring Australian oil refineries only undermines Australia’s fuel energy resilience.

In 2003, Australia had eight productive oil refineries.  Now we have just four domestic refineries left – Lytton in Brisbane, Altona and Geelong both west of Melbourne and Kwinana near Fremantle.

These four refineries now provide around a third of Australia’s domestic oil-based fuel needs, making Australia more reliant upon imports and so more exposed to international risks.  Increased distribution costs from fewer refineries will also drive higher domestic fuel costs, and so driving up costs of living and costs of industry across Australia.

All four remaining oil refineries in Australia are foreign owed and controlled by multinationals which could make similar announcements as BP using the same multinational commercial justifications – efficiencies of scale from supersized refineries, and so greater profitability.

The global oil refining trend is toward much larger regionally based low-cost nations such as in Singapore.  So there is every likelihood that the foreign-owned remaining four oil refineries will follow the closure trend.


Australia's Oil Refineries

Australia’s domestic oil refining therefore is at risk and its future highly uncertain.

Australia’s strict regulatory environment and high labour costs will have both played a factor in the closure of domestic refineries, but it is these factors that makes Australia a first world nation.   Globalisation is about dumbing down to the cheapest and largest producer.

The multinational business model may rely on the global business environment, global economies scale, global markets, a globally comparatively low-cost base. Such modelling only plays into the hands of the global OPEC nations, particularly those of the United States, Middle East and European controlled refineries.

But the commercial interests of multinationals are a different realm to Australia’s national interest, in fact in many ways they present competing interests.  Certainly multinational loyalties to Australia and Australians is akin to a disposable razor; ask any Australian miner.

Australia’s national security demands Australian government control and protection of reliable low-cost energy supply, especially petroleum and diesel fuel and its distribution to Australian industry, business, transport and citizens.

All the Liberals seem capable of is to cost cut and encourage free trade under some Laissez-Faire free market Libertarian idealism.   Free market with its free trade agreements just pander to the big multinationals with their economies of scale.  Free Trade undermines Australian wages and makes Australia more foreign dependent.   We are experiencing this in manufacturing, aviation, steel production, oil refining, and indeed across the service sector jobs are now routinely off-shored to low-wage nations.

The NRMA is right when it says Australia needs a national plan to improve and safeguard our fuel security.  Australia needs to maintain its domestic refining capabilities for reasons of and self-sufficiency, controlling a critical cost to our domestic economy, to ensure economic resilience in the event of international strife.

But what the short-sighted Liberal and Labor parties lack is the necessary vision and strategic planning to achieve long-term nation scale endeavours.  If multinationals cannot be entrusted with Australia’s fuel security, then our national government needs to step up to its responsibility and acquire our nation’s oil refining resources and wealth, partner with domestic industry and nationalise Australia’s oil industry.

Australia retains considerable oil resources of condensate and liquefied petroleum gas (LPG) associated with giant offshore gas fields in the Browse, Carnarvon and Bonaparte basins.  There is no reason why Australia should not be a fuel resilient nation.  It is our competitive advantage.

Australia’s fuel security and costs of production can be best achieved by nationalising Australia’s domestic oil industry from exploration to the petrol pump.

The Australian Government should draft a Domestic Fuel Security policy and acquire the oil refineries around Australian under a government-owned enterprise with 100% joint Australian Government-Australian Citizen ownership.    It needs to consider controlling all oil exploration and drilling in Australia’s territorial waters, controlling the complete supply chain to the fuel pump including setting national fuel pricing to ensure low-cost fuels to domestic industry, transport and to ordinary Australians.

We’ll be watching out for the Liberal Party’s Energy Policy Green Paper and its Energy White Paper with Australia’s national interest clearly in mind.