11th October 2019
The recent drone attacks on key oil installations in Saudi Arabia highlight the risk of disruption to world oil supplies. While the damaged Abqaiq refinery produces only 5% of global fuel supplies, around 90% of Australia’s imported fuel comes from the Middle East. An extended disruption in the Middle East would impact Australia’s fuel supplies
Multiple threats to Australia’s liquid fuel supply chain make businesses particularly vulnerable in a fuel emergency. Threats to our fuel supply include natural disasters, political instability, declining onshore refining capacity, as well as cyber and terrorist attacks. Ports receiving fuel are additionally subject to disruption from severe weather, accidents, equipment failures, industrial action and delays.
What happens if Australia runs out of fuel?
Disruptions to any stage of the fuel supply chain can have a significant flow-on effect to the business community. In 2015, aircraft at Melbourne Airport had to be rescheduled and refuelled at another airport due to the late arrival (by 3 days) of fuel ships1. In December 2012, when the Altona refinery was closed for scheduled maintenance and Victoria’s second refinery in Geelong was unexpectedly shut down due to electrical problems arising from a storm, many retail outlets in regional Victoria ran out of fuel quickly and were without diesel, and many Melbourne outlets were similarly affected2.
Under the Liquid Fuel Emergency Act 1984, the Australian Government has the authority to prepare for and manage a national liquid fuel emergency. Each state and territory also has arrangements in place to deal with liquid fuel emergencies within their respective jurisdictions.
Protecting business continuity
The reality is, in a fuel emergency, the management of available fuel will be out of the control of individual businesses, even those who consider themselves ‘essential users’. Will your organisation be able to carry on business as usual if your staff are unable to get to work or fly out for important meetings? Does your business have the technology to carry on the business with staff working remotely?
A business continuity plan that addresses a major fuel shortage is essential. “Fully assessing and understanding your company’s exposure to supply chain disruptions is the first step towards resilience and business continuity”, says Ben Patrick, Regional Manager at RiskLogic. “Thorough Business Impact Assessments (BIAs) will identify the dependencies within your supply chain. A detailed understanding of the associated critical business functions will form your business risk profile. In turn, appropriate strategies can be developed and tested using real-world scenarios. This is how you develop business resilience and capability in the face of a crisis.”
Businesses in Australia are predicted to be dependent on oil until at least mid-2030, with the ever present risk of a major disruption to liquid fuel supply. Sound business continuity planning and staying informed about government fuel priorities is essential. The Department of the Environment and Energy’s Liquid Fuel Security Report – due for release in 2019, will set out the Government’s priorities for fuel usage. This report will be essential for businesses to help them understand the potential implications on Australia’s supply chain if there is a fuel crisis.
To assess the effectiveness of your business continuity plan, or to develop a plan, contact RiskLogic to find out how.
1National Roads and Motorists’ Association, Committee Hansard, 2 February 2015, p. 70 (Chapter 4, Australia’s transport energy resilience and sustainability Senate report, 25 June 2015)
2Truck Industry Council, Submission 23, p. 2 (Chapter 4, Australia’s Transport Energy Resilience and Sustainability, Senate report, 25 June 2015)