Speaker 1: I'm Daniel James and you're listening to seven AM. The
Speaker 1: fighting may have temporarily eased in the Middle East, but
Speaker 1: the fallout are still moving through the global economy. Shipping
Speaker 1: through the Strait of Horror Moves remains disrupted, fuel markets
Speaker 1: are unsettled, and Australia is exposed. Now. Anthony Alberizi is
Speaker 1: in Singapore trying to secure a supply as the opposition
Speaker 1: presses the government over how prepared the country it really is.
Speaker 1: Today Energy and Climate Change Senior Fellow at the Gratton
Speaker 1: Institute Tony Wood on the state of the Strait and
Speaker 1: the ongoing risks for Australia and the politics taking shape
Speaker 1: around another global shock. It's Saturday, April eleven.
Speaker 2: Okay, Ellie, I have to pause because I'm just hearing
Speaker 2: a may hear that the President has agreed to start
Speaker 2: bombing for two weeks.
Speaker 3: Control Room, do you have any more information.
Speaker 1: Around the forumst so confirming the reopening of the critical
Speaker 1: streets of four Moves during this season five period, Tony.
Speaker 1: This ceasefire has raised hopes that the Strait of Homus
Speaker 1: could reopen, but there are still reports that ships need
Speaker 1: permission from Aram's navy to pass, and that shippings at
Speaker 1: a knee stand still. So, firstly, is homus actually opening
Speaker 1: in any sort of meaningful.
Speaker 4: Sense half open, half close, like I think, it's obviously
Speaker 4: just reflecting a lot of the tension that's still both
Speaker 4: sides of the conflict negotiating their position. Chris Barron said
Speaker 4: it accurately. It's not a bit too carried away that
Speaker 4: it's all going to reopen, but it is heading in
Speaker 4: a better direction.
Speaker 1: Obviously.
Speaker 2: We hope a cease fire takes hope and becomes the
Speaker 2: permanent arrangement, obviously, and the sooner that happens, the better
Speaker 2: it'll be for field prices around the world. If you're
Speaker 2: asking me to say, with a great deal of certainty
Speaker 2: to predict avens in the Middle East coming days, in
Speaker 2: which I'm not going to do that because it's a
Speaker 2: fast moving situation.
Speaker 4: But boy, this could easily tip either way. I still
Speaker 4: think about what's going on. So what that means is
Speaker 4: that the things that the government's been doing almost have
Speaker 4: to continue on the basis that nothing has changed.
Speaker 1: Shit, if it's not really open, what would companies need
Speaker 1: to see before traffic starts moving properly again?
Speaker 4: I think there's two things. What is the actual shipping
Speaker 4: If the strait is open and there's no other impediment,
Speaker 4: then that was simply could start pretty quickly. When there's
Speaker 4: a whole lot of ships basically sitting their way to go,
Speaker 4: there's a debate going on about whether or not they
Speaker 4: run like apparently as evidence, they've already tried to change
Speaker 4: some sort of toying fee to use Australia. That would
Speaker 4: be something everyone's going to react adversally toned any fuel
Speaker 4: that's already on the way. This is an issue that
Speaker 4: government had our government in Australia had already been concerned about.
Speaker 4: But if people were buying fuel at one hundred and
Speaker 4: ten hundred and twenty dollars a barrel, but with the
Speaker 4: time the ship to Australia the price has dropped from
Speaker 4: eighty dollars a barrel, you can see there's a bit
Speaker 4: of a commercial exposure there and the government had looked
Speaker 4: to even underwrite that risk. And then the other one
Speaker 4: of their courses, has there been any significant physical damage
Speaker 4: to the resources, to the facilities in the Persian Gulf,
Speaker 4: because there certainly has been to the L and G
Speaker 4: reduction from the gas field in their Katari field, and
Speaker 4: so that's a big problem because that's going to take
Speaker 4: people have said more than three to five years to
Speaker 4: get some of the effects. Now it's not the whole thing,
Speaker 4: but that would be a problem. So it's a been
Speaker 4: out of clear whether they our physical strange on that.
Speaker 4: And then you've got the fact that it takes a
Speaker 4: long time to fill up a global supply chain, so
Speaker 4: it's not going to have it over night. But you know,
Speaker 4: the prices react very quickly, and we've seen that already,
Speaker 4: up and down, up and down, and I think we'd
Speaker 4: see some improvement in price pretty quickly if it became
Speaker 4: clear that the stroke was going to effectively stay open.
Speaker 1: Just to give us a sense of how important Australia
Speaker 1: is tony. When it is open, what does it mean
Speaker 1: in market terms? And when it does properly reopen sometime
Speaker 1: in the hopefully not too distant future, when will we
Speaker 1: start to see sort of any real impact here in
Speaker 1: Australia in terms of our fuel security.
Speaker 4: Well a couple of week. Firstly, about twenty percent of
Speaker 4: the Wills oil crude or comes through the straight now
Speaker 4: only a modest proportion that is Iranian oil Iran, together
Speaker 4: with Saudi Arabia and Venezuela have the big resources globally
Speaker 4: of oil. Most of what Iran has exported has been
Speaker 4: able to China in recent times. But what has been
Speaker 4: prevented by the australiaanmus problem isn't Iranian oil. It's oil
Speaker 4: coming from Kuwait, Saudi and those sort of places. And
Speaker 4: just the oil, by the way, it's also things like fertilizer.
Speaker 4: So that's been the big problem. Now if that opens up,
Speaker 4: then you would start to see that flowing. Now, what
Speaker 4: Australia has been doing, we've depended upon companies like Singapore
Speaker 4: and Malaysia to a smaller extern Japan for our finished
Speaker 4: products and also for our crude or that goes through
Speaker 4: our two refineries. We already diversified that a fair bit
Speaker 4: over the last twenty years as we shut down our refineries. Obviously,
Speaker 4: this is giving us a reason to even think about
Speaker 4: for more so and maybe the relationships with some of
Speaker 4: those countries can we see as strong long term energy partners,
Speaker 4: will mean we'll get more from them. But also recognize
Speaker 4: that companies like Singapore and Malaysia themselves they depended upon
Speaker 4: getting the crude which they refine in products from places
Speaker 4: like the Middle East, and so I think this complex
Speaker 4: global supply chain of liquid fuel products is going to
Speaker 4: change a lot, and what people we depend upon of
Speaker 4: those we don't depend upon, is going to change a lot.
Speaker 4: And at the same time, we are and will be
Speaker 4: and should be looking forward to. Okay, now what do
Speaker 4: we have to think of? You thinking about almost at
Speaker 4: the same time to ensure that we don't become complacent
Speaker 4: if things return to something like normal.
Speaker 3: Our Prime Minister has to fly halfway around the world
Speaker 3: to beg for liquid fuels, which is what he's had
Speaker 3: to do in this last minute flight to Singapore today.
Speaker 3: We should instead have been drilling for the last few decades.
Speaker 3: We probably would have found a new source of liquid
Speaker 3: fuels to replace the bats straight just a generation of
Speaker 3: is all.
Speaker 1: Of this tony? As the opposition is suggesting a case
Speaker 1: for more domestic refining, bigger reserves, and different trading partnerships.
Speaker 1: Were all three, but.
Speaker 4: Going through the trading partnerships makes a lot of sense.
Speaker 4: I think the idea that we're going to rapidly find
Speaker 4: more oil and build more refineries is far more challenging.
Speaker 4: Its the history that's a very big ask and would
Speaker 4: acquire huge amounts of government effort because we already know
Speaker 4: the reason we don't have refineries because they are un economic.
Speaker 4: So building new refineries for a market it's relatively small,
Speaker 4: like Australia with physically spread around a very large country
Speaker 4: with a small population is a really big hard thing
Speaker 4: to do. There's been some suggestions recently that there's a
Speaker 4: potential new oil and gas resource in Queensland. Premier has
Speaker 4: been talking it up. I think it's very very early
Speaker 4: days just where that's real or not and is it
Speaker 4: a the size that would justify the enthusiasm that we're seeing. So,
Speaker 4: you know, it seems to me that looking for a
Speaker 4: more oil be our process in ourselves is going to
Speaker 4: be a really long term hard challenge. There are better
Speaker 4: things we could be doing. One of them forces to
Speaker 4: really continue to push our acceleration of electric vehicles to risks.
Speaker 4: What is because it reduces our dependence upon the sort
Speaker 4: of problems we've been talking about. And secondly, it also
Speaker 4: is consistent with producing our impact on climate change, and
Speaker 4: it means that we can do both. That would seem
Speaker 4: to be a double benefit for going down that route.
Speaker 4: At the same time, probably looking to increase the level
Speaker 4: of stories we have on shore. And also probably this
Speaker 4: is a little bit less clear what the government's be
Speaker 4: talking about to produce biodiesel rather than fossil diesel.
Speaker 1: Coming up, What Albinize's flash trip to Singapore help Australia's
Speaker 1: fuel problems.
Speaker 5: This is a relationship of trust and of mutual interests
Speaker 5: as well. We know that it is in both of
Speaker 5: our country's interests to engage with each other to make
Speaker 5: sure that we are both reliable suppliers and our word
Speaker 5: means something.
Speaker 1: Tony Anthony Abenezi has flowing to Singapore to meet with
Speaker 1: his counterpart Prome Minister Lawrence Wong. You've touched upon it,
Speaker 1: but why is Singapore so important to Australia's fuel needs?
Speaker 4: Well, we get three finished products we're important we use.
Speaker 4: One is petrol, one is diesel. What is aviation field?
Speaker 4: Now you know people who have been carrying up that
Speaker 4: bowsers know that there's a couple of variations on that,
Speaker 4: but fundamental that's what we're talking about now. We buy
Speaker 4: about half of our petrol or Singapore big refineeries they've
Speaker 4: got there very important for us. The other side of
Speaker 4: why Singapore is interesting is because Australia in this part
Speaker 4: of the world is a globally important supplier of LERG
Speaker 4: and now even more so with what's happened to the Kata,
Speaker 4: And so Singapore has some very important challenges because they
Speaker 4: produce most of it ninety percent of electricity from gas,
Speaker 4: so they need us if we need them. You can
Speaker 4: see the opportunity for reciprocal roadment. Now, Governments do not
Speaker 4: do commercial deals. Governments do not threaten each other with
Speaker 4: unless you do this, I'm going to do that. What
Speaker 4: they do is so let's work together and see if
Speaker 4: we can find some solutions here. They're going to be
Speaker 4: better for both of us, clearly in both countries have
Speaker 4: got a very strong common interest and that's what I
Speaker 4: think Prime Minister of Australia is trying to shore up
Speaker 4: with the Prime Minister of Singapore, for example, not doing
Speaker 4: commercial deals, but making it very clear that the government
Speaker 4: is not going to intervene in ways to adversity affect
Speaker 4: Singapore and looking for assurances the Singapore government won't do
Speaker 4: the same thing. Remembering that Singapore produces more fuel than
Speaker 4: they need. How they allocate that will be important for us.
Speaker 1: So in purely political terms, what can Alberdas realistically achieved
Speaker 1: during his visit Tony.
Speaker 4: I think the highest priority would be too thing. Firstly,
Speaker 4: we know s reciprocally what we're planning to do if
Speaker 4: things don't improve, And what I mean by that is
Speaker 4: that Singapore will not if they do decide they've got
Speaker 4: some real problems meeting all their customers requirements for the
Speaker 4: products they produce, that we won't be adversey affected by that.
Speaker 4: I mean there's no guarantees here, But equally, will they
Speaker 4: be looking for the same thing. We won't do anything
Speaker 4: on the L and G side that would affect them.
Speaker 4: Now that's the political decision. At the same time, obviously
Speaker 4: there will be a lot of interest in the way
Speaker 4: that will work out commercially long the term. What I
Speaker 4: think this does is absolutely supports a better long term
Speaker 4: relationship with Singapore, because if we are going to be
Speaker 4: dependent upon imported fuels for some time yet, and I
Speaker 4: think it's quite likely, then deepening those relationships with countries
Speaker 4: like Singapore and Malaysia and so forth makes a lot
Speaker 4: of sense. And secondly, as we think about building our
Speaker 4: own onshore storage, that will also be important so I
Speaker 4: think there's two levels of arrangements that the Prime Minister's
Speaker 4: visit could bring to a future.
Speaker 1: Beyond the Singapore trip. The government has announced a series
Speaker 1: of measures underwriting extra shipments, cutting exercise further with states,
Speaker 1: releasing twenty percent of the minimum stockholding obligation, changing fuel
Speaker 1: standards and backing some the refineries that we do have.
Speaker 1: So how would you rate the government's response to this
Speaker 1: so far?
Speaker 4: Look, I only the government in terms of responding to
Speaker 4: is they leaded to situation has been developing where we
Speaker 4: refer it has been pretty good. Actually, they were trying
Speaker 4: to run a fine line between being too optimistic and
Speaker 4: two prisonistic. And so you know this idea that as
Speaker 4: soon as the government says Doug, panic, what does everybody
Speaker 4: do panic? Of course that's what happens, right, So the
Speaker 4: government was trying to assure people that and so far
Speaker 4: it's been true. Overall Australia has not run out of fuel.
Speaker 4: What we have that is putting more for it. And secondly,
Speaker 4: because of our large country, we're on the end of
Speaker 4: the many of our many people in regional Australia are
Speaker 4: in the longer supply chains. When you start to see
Speaker 4: panic buying in those supply chains, then quickly you can
Speaker 4: get local problems. So I think broadly speaking, what my
Speaker 4: governments does been appropriate. But I think most Australians will say, Okay,
Speaker 4: we understand this wasn't caused by Australia. We're comfortable what
Speaker 4: my government's doing. We all know we're going to if
Speaker 4: it gets worse, we're going to have to do our part.
Speaker 4: Let's get on with that.
Speaker 1: A question you may or may not be able to answer, Tony,
Speaker 1: but it's something that's I've always sort of fascinated me
Speaker 1: since this thing broke out, is that during normal times,
Speaker 1: do we have any sort of idea of how many
Speaker 1: surveys would actually run out of petrol on a normal day.
Speaker 1: You'd like to big zero, wouldn't it look?
Speaker 4: I think it does happen from time to time. And
Speaker 4: I've driven up the stud Highway from Adelaide to dar
Speaker 4: on a couple of times, and it's not that unusual
Speaker 4: to to come to one that is out of one
Speaker 4: particular feel like diesel or petrol or something like that,
Speaker 4: or a particular home lettered petrol or something. So it's
Speaker 4: not off the planet at all. But I can recall
Speaker 4: when we did have more refiners in this country, it
Speaker 4: seemed to me that we had had more disruptions to
Speaker 4: supply because those in those days a very strong unionized workforce,
Speaker 4: and we have industrial disputation more than we have physical disputation,
Speaker 4: and so, you know, I think this is actually overall,
Speaker 4: our fuel supply has been pretty good, but I think
Speaker 4: it's important that we'd be thinking about what level of
Speaker 4: insurance do we want to have against this thing happening
Speaker 4: in the future. And we've had pretty small spot relatively
Speaker 4: small stocks of fuel. I'm sure we may have to
Speaker 4: revisit that the need for that has changed a lot,
Speaker 4: because we're still produce crudeal or we used to also
Speaker 4: profine it ourselves. We didn't need to have the same
Speaker 4: amount of onshore storage as we probably do today.
Speaker 1: And finally, Tony, a very simple question, really, what's the
Speaker 1: best case scenario here and what's the worst case scenario?
Speaker 1: And how long can we be feeling the impacts of this.
Speaker 4: I think the best case would be if both sides
Speaker 4: don't remember there are three sides to this bloody thing.
Speaker 4: With Israel, I think its own very particular view, not
Speaker 4: necessarily on with the United states. They've got to find
Speaker 4: a way to back out of this withdraw, break it
Speaker 4: all down, get some serious negotiations going on. Very tricky,
Speaker 4: very sensitive. It only requires someone to say the wrong
Speaker 4: thing on the wrong media interview. It all goes to.
Speaker 1: Hell, right, But be careful what you say, Taming bob On.
Speaker 4: You've got it now. The worst case, obviously, is that
Speaker 4: doesn't happen. The most dramatically wordate worst case would be
Speaker 4: something like what Donald Trumkt was threatening actually happened. If
Speaker 4: we did fundamentally wipe out the physical infrastructure in a
Speaker 4: way that Trump was talking about, recovery would take a
Speaker 4: lot longer. The consequence will be a lot worse. That
Speaker 4: would be so bad that I don't think anyone a
Speaker 4: lot will be done to avoid that happening.
Speaker 1: Well, Tony, we thank you for your insights and we
Speaker 1: thank you for your time. Thanks for joining us.
Speaker 4: Thanks.
Speaker 1: Jan seven Am is a daily show from Solstice Media.
Speaker 1: It's made by Adigus Bastow, Ariel Richards, Chris Dgate, Crystal Keller,
Speaker 1: Nicole Johnston, Travis Evans, Zoltanfecho and me Daniel James. Our
Speaker 1: theme music is by Ned Beckley and Josh Hogan of
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Speaker 1: Please have yourself a great weekend