Taroom could strengthen fuel security and give Australian exporters an edge

Queensland may be sitting on Australia's first major new oil province in more than 50 years.

If the Taroom Trough lives up to its promise, Australia could cut its exposure to global fuel shocks and give its exporters a competitive edge.

The Commonwealth should start working now on the infrastructure to refine that oil here and get the fuel to the people who depend on it.

Queensland says exploration between Chinchilla and Roma is yielding gas and about 300 barrels of light oil a day.

Companies have committed more than $1.2 billion to exploration and appraisal. Explorers see the potential for billions of barrels of oil, but the drilling still has to establish how much oil can be recovered commercially and whether wells can sustain production at scale.

"A conflict thousands of kilometres away had reached the farm gate."

In March, as war in the Middle East disrupted shipping through the Strait of Hormuz, a Queensland distributor that bought fuel on the spot market told the ABC it was getting just a tenth of what it usually used. Its customers included farmers, trucking operators and feedlots.

A conflict thousands of kilometres away had reached the farm gate. It hasn't got any better as fuel prices continue to fluctuate.

Australia's two remaining major refineries, at Lytton in Brisbane and Geelong in Victoria, produced about a fifth of the petrol, diesel and jet fuel we needed in 2025.

The federal budget committed $3.2 billion to establish a strategic reserve of around a billion litres, focused on diesel and jet fuel, and $10 million to study expanding domestic refining. A reserve buys time.

The ability to make more of our own fuel would give us options if a disruption outlasts it.

The competitive edge

With dependable diesel, a grain grower can keep a header running through a narrow harvest window and a mine can keep its haul trucks moving. A freight operator with a firm supply contract can quote jobs with more confidence. When overseas rivals are scrambling for fuel, Australian exporters who can fill orders on time and at the agreed price have an edge.

Local production could also save on ocean freight and import handling.

The commercial test is whether Taroom diesel can compete with imports at the farm gate or mine site once refining, storage and inland transport are included.

International benchmarks and the Australian dollar have a big influence on fuel prices. A competitive local supplier would give regional buyers another place to buy fuel and more leverage when negotiating contracts.

What governments should do now

The Crisafulli government has committed $11.9 million to a development plan for the Taroom Trough and $7.1 million to a wider program examining domestic fuel supply, refining and storage.

Canberra should use the federal refining study to find out how much diesel Lytton could make from Taroom crude and what upgrades it would need.

It should work with Queensland to plan the route from the wells to the refinery, including a pipeline corridor if production warrants one.

The plan should also put extra storage and loading capacity where it can best serve regional towns, farms and freight operators.

"Design work, route planning and consultation with Traditional Owners and landholders can proceed while exploration continues."

Design work, route planning and consultation with Traditional Owners and landholders can proceed while exploration continues.

Major construction should be tied to sustained flows in well tests, refinery trials and a credible assessment of costs and environmental impacts.

Commonwealth funding should come with a binding commitment to set aside an agreed share of fuel for essential users in a shortage.

A plan that survives a change of government

Canberra should put the refinery, transport and storage projects into the National Fuel Security Plan, fund the ones that stack up and give them a timetable that can survive a change of government.

When overseas supply is interrupted again, a Darling Downs grower should be able to buy competitively priced diesel from a supply chain that starts a few hours up the road.