The report by RMIT University in Melbourne says China’s growing naval and air power in the region would block vital shipping routes to Australia during any conflict.
“Any conflict would have a dramatic impact on Australia’s refined fuel reserves,” co-author Professor Matthew Warren, of RMIT University, told 9News.com.au.
“We calculate a major conflict would threaten routes supplying 90 per cent of refined fuel imports, coming from South Korea, Singapore, Japan, Malaysia, Taiwan, Brunei and Vietnam.”
And much of the crude oil used by these countries used to produce refined fuels, including petrol, diesel, jet fuel, marine fuel and kerosene, passes through the South China Sea.
Any prolonged war in the region would also force tankers to take alternative routes.
The longer routes would mean higher freight costs and tanker shortages impacting the Australian economy. And while Australia has strategic reserves of refined fuel they are held in the US.
Professor Warren said a lack of Australian-flagged merchant ships and the closure of oil refineries also put the country at risk of a fuel crisis.
“There is no Australia merchant fleet so we are very dependent on foreign flagged vessels. And in recent years, oil refineries have closed so today we have only two left.”
Professor Warren said the study, commissioned by the Department of Defence, should be a wake-up call for the federal government.
The report highlights a 2019 workshop of engineering experts which predicted Australia would run out of liquid fuels within two months of a major import disruption.
“The focus should be on developing Australia’s energy resilience – even though we export crude oil, we import about 90 per cent of refined fuels.”
The RMIT study urges Australian authorities to reduce the country’s vulnerability by diversifying sources of refined fuel imports, increasing local refining capacity, reducing dependence on fossil fuels, increasing strategic reserves and preparing the population for potential shortages.