The International Energy Agency (IEA) is advising Australia to build up its emergency oil supplies.
With Australia increasingly dependent on oil imports to maintain its reserves, it is falling short of the IEA's requirement to have a 90-day supply.
A recent loss of oil production in Libya has required the co-ordinated release of stockpiles last year, but Australia was unable to take part in this IEA collective action as its own reserves were too low and generally held by private companies, unlike other IEA members.
Australia's IEA compliance obligation is estimated at around 70 days throughout 2012, but a short-term increase in domestic production in 2013 could improveme volumes. The Australian resources minister can impose certain stockholding requirements on the industry as well as specific reporting obligations if there is an emergency. Currently, companies report on a monthly basis.
The gap between Australia's domestic output and its import demands has been gradually widening since 2000. According to the IEA, in 2010 Australia's oil demand averaged 960,000 barrels a day and this has grown by one percent per year on average since 2000 when crude production peaked.
Australia's net oil imports continue to exceed its exports and its refining capacity is shrinking in the face of competition from the giant Asian refineries. The government has forecast that crude and condensate production will rise 2.6% by mid-2013, but exports will increase by 2.5%. However, the September forecasts also indicate that Australia's imports fall by 2.2% percent year-on-year.