10 October 2005



 · February 2004 Report rings alarm bells – but is the Government behaving like a ‘dipstick’ and ignoring it?


A secret Government Report into the State’s fuel supplies – delivered to the Minister for Energy in February 2004 “should alarm every South Australian that’s concerned about the security and pricing of fuel supplies in the State” according to No Pokies MLC Nick Xenophon.

The Report, by the Liquid Fuel (Diesel And Petrol) Stocks Task Force entitled ‘A Report into Fuel Storage And Supply in South Australia’ was commissioned by the Minister for Energy in December 2003 following the Task Force being established on 8th December 2003 – in light of the closure of Pt Stanvac earlier that year and a critical diesel supply shortage for harvest 2003.

It is believed the 45 page Report was also presented to Cabinet early last year. 

The Report, obtained by Mr Xenophon from the ‘back of a truck’ (which had obviously stalled because it ran out of fuel) refers to the closure of the Mobil Pt Stanvac refining and fuel storage facilities as having “significantly reduced the overall fuel storage capacity in the State” to just the Birkenhead facility.  The Report goes on to state:

This concentration of fuel storage and delivery at Birkenhead raises additional risks for state fuel supplies due to the fact that the previous duplication of storage and delivery mechanisms provided insurance against one of the major assets becoming inoperable.  This single point of reliance of storage and delivery at Birkenhead introduces additional risks that require management.

Given the fundamental importance of a secure fuel supply to the state to support all manner of activities that industry, commerce and the general public conduct utilising fuel, it is fundamental that the state has the ability to receive bulk delivery of fuel.  Against this context retention of the Pt Stanvac fuel delivery and storage facilities for this purpose must be considered a strategic issue for the state.

It also raises the practice of major oil companies having a “minimum stock policy” for fuel which translates to just 3 – 5 days reserves for Caltex and Mobil/Shell, and 5 days for BP.  The Report highlights that:

These minimum stock policies assume a ship per week delivery schedule.  While these minimum stock policies appear acceptable on the surface, as South Australia now relies solely on marine deliveries of fuel, any delays in marine deliveries can and have caused stock outs to occur for any one or two of the fuel majors at the terminal level, but rarely at the retail level….Stock outs for individual fuel companies have always occurred in the past but are now more probable post the closure of Pt Stanvac, which operated as an intermediate balancing storage for Birkenhead.

Mr Xenophon said the Report also focuses on the little publicised diesel fuel fiasco that farmers faced in the late 2003 harvest season where there were reports of headers stalling in paddocks because of a shortage of diesel fuel.  The Report warns shortages could ‘again occur’.

Even more disturbingly the Report raises the issue of fuel supplies for emergency services vehicles. 

Emergency service operators need to consider strategies to manage situations when fuel may not be available, for whatever reason. 

The Report makes 11 key recommendations for strategic planning to occur to prevent further future fuel shortages, with Recommendations 3 and 4 relating to the State Disaster Organisation and Emergency Services.

The Report falls short of recommending mandated minimum fuel stores – on the basis that there will be voluntary ‘cooperation’ from oil companies on the reporting of stocks.

Mr Xenophon who revealed last week how close the State had come to a fuel crisis with the delay of the berthing of the oil tanker Bow Puma said this Report ”highlights just how vulnerable SA is with fuel supplies”.

“If a ship gets stuck in the Port River we’re only about 3 days away from all using pushbikes”.

Mr Xenophon renewed his calls for the Government to “get tough” with Mobil over the Pt Stanvac fuel storage facility.

“There is no question now that the deal the State Government did with Mobil to mothball the facility in 2003 for 3 years, with an option of at least 3 more years after that, was great for Mobil, but a dud for South Australians.  The Government needs to rip up that flawed deal immediately.  There are operators that are willing to use the 500 million litre storage facility at Pt Stanvac on fair commercial terms, but can’t because of the sweetheart deal between the Government and Mobil.  And what’s worse no independent operators will invest in an alternative fuel storage facility while Pt Stanvac is mothballed”.

Mr Xenophon foreshadowed he would be pushing for an urgent Parliamentary Inquiry into the State’s fuel stocks – both in terms of security of supply and pricing – when Parliament resumes next week. “South Australians deserve to know the full extent of the problem and the potential solutions – neither of which the Government seems to be forthcoming on”.


Written and authorised by Nick Xenophon, 653 Lower North East Road, Paradise, SA 5075