Speaking of oil...This article indicates there is a "new" report from iea.org? The site has not been updated since late July.
afr.com.au
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SPECIAL REPORTS Financial Review
Adding fuel to the fire of Y2K
By Eric Wilson
Petroleum companies are busy assuring the public that Y2K will be a "non-problem" for them, but the Paris-based International Energy Commission disagrees, saying there could be disruptions in global oil markets.
The IEC (www.iea.org) report cites a number of critical millennium bug threats to fuel supplies, but says price fluctuations are difficult to predict due to decreased demand caused by possible Y2K failures in industry.
"The poor economic climate of some regions, such as Asia, may lead to corner cutting and fewer resources being devoted to Y2K remediation," the paper says.
"The complexities of the oil supply chain, and its resultant interdependencies may cause a ripple effect with the potential to harm even those companies and nations that consider themselves fully compliant."
The IEC is the premier oil industry security watchdog, established in 1974. The Commission has indicated a number of countries, including China and Russia, have a high risk of serious oil production problems.
And a special report by the US Senate identified a large proportion of its oil suppliers as being under threat, with Venezuela, Saudi Arabia and Nigeria up to 18 months behind in their work to beat the bug.
However, Mr Robert Hart, Shell's senior external affairs adviser who admitted he hadn't seen the IEC paper, dismissed its findings. Mr Hart has been a presenter at the infrastructure forums held around the country this week.
"There's an oversupply of sources at the moment," he said. "So Shell has choices about where to draw crude. There's very low risk to interruption to supply or health, safety and environmental concerns, because of the contingency plans we have taken".
Caltex corporate affairs manager, Mr Richard Beattie, is also confident the Australian oil industry is ready to roll into the next century. "There is absolutely no suggestion that Y2K is going to lead to fuel shortages in Australia," he said.
"The industry has put a major effort into preparing for the end of the year and contingency plans are being done very comprehensively by the industry and Caltex. Y2K is a non-problem. If problems do emerge they can be easily handled."
But the IEC working paper is critical of such nationally-based Y2K assessments, citing them as narrowly-focused, due to oil being a global commodity, with its price and distribution subject to fluctuations in the world market.
"UK and Australian examples of organisations addressing the Y2K problem are given," the working paper says, "however nothing is said about progress in regions such as South America or the Middle East. . . In fact, it is a typical shortcoming of most literature on the subject, due primarily to the relative lack of information on other regions."
Australian refineries in Sydney and Adelaide make extensive use of
Middle-East crude, which the IEC says could be under threat even if supplies are plentiful, due to Y2K slowdowns in Arab ports.
As of March this year, these ports had done little to address their millennium-bug problems, with a shortage of skilled technicians in the region. The commission also warned of clogged shipping lanes slowing compliant oil tankers down, with many other vessels stricken with Y2K induced radar, navigation, communications, ballast, cargo handling, steering and engine room problems.
But Caltex's Mr Beattie was emphatic this would not be a problem, pointing to the commodities market as a more realistic barometer of concern. "If there were any perception of a problem you would already see that in the paper [futures] trade," he said.
"Average time from purchasing to processing is 45 days. But there are no abnormal positions being taken, with people [thinking of] making money on a rising market."
However, the IEC working paper says the effect of possible fuel shortages on prices may be offset by depressed demand for fuel in malfunctioning manufacturing and commercial sectors. Keith Miller and Simon Stoddart, authors of the 51-page working paper, argue price movements are therefore very difficult to predict possibly explaining Mr Beattie's reference to the market's lack of interest in oil futures speculation.
However, they do state the enormity of Y2K issues facing the oil industry, which could quickly negate today's surplus production. For example, a single offshore platform can contain 10,000 embedded controllers microchips used to control pressure, temperature and flow all of which need checking and half of which are critical to its operation.
Some of the most important ones are underwater, in equipment embedded in the sea floor. And an offshore field can consist of dozens, even hundreds of platforms.
Oil from these platforms is transported by tanker or undersea pipes to shore-based terminals, then on to a refinery. All of these also make extensive use of embedded controllers, some of which will have a date problem.
"Companies are likely to operate myriad date-sensitive systems," the report says. "They are found throughout the industry and in all sectors, including drilling platforms, production platforms, pipelines and process plants. In the case of process plants and no doubt elsewhere, the devices containing embedded chips are interconnected, making the problem even more complex and increasing the possibility of Y2K failure."
Contrary to a report by research company the GartnerGroup to a US Senate hearing, which itself presented a sobering picture of the oil industry, the IEC paper states failure rates of embedded controllers can be high between 20 and 30 per cent in oil tankers.
Yet the working paper's authors admit taking their oil industry sources at face value on this, but deny they are being alarmists.
"Although no attempt has been made to verify sources, extremes including the belief that Y2K will bring about the end of civilisation as we know it, and those which refuse to acknowledge that a problem exists have been excluded from the study."
Even if the IEC is wrong, with crude oil supplies unaffected by the bug and all terminals, pipelines and refineries operating normally, there's a small chance of disruption to supply from power or water shortages.
"We're pretty well advanced as far as compliance is concerned," BP Australia's public affairs manager, Mr Neil McMaster, said.
"But I don't think you're going to get a straight answer on uninterrupted supply because we rely on third parties. We can't give you a cast iron guarantee."
So given the possibility of crude oil shortages plus shortfalls in the tankerage to move it a possibility the Australian representatives of Shell, Mobil and Caltex went out of their way to deny how well is Australia placed to cope?
For commercial reasons, the oil companies are keeping quiet about their contingency safety stocks, but it's understood on the day they'll have about two weeks supply of refined fuel, one week of crude feed stock and a few days in the ground at petrol stations.
A further month's worth of crude could be in transit, bound for Australia on the open sea, but there's no guarantee this would not be diverted to shortages elsewhere, where it could be sold at a premium.
So if there are fuel supply problems, given the holiday season, they may only show up locally in February 2000, as would most other Y2K induced shortages.
The most important fuel is diesel, used to take crops from the field, transport goods to market and drive the engines (such as standby power generation and water cartage) of thousands of Y2K contingency plans around the country.
Fortunately, Bass Strait has an abundance of offshore platforms producing light crude, which is pumped directly to refineries in Altona and Geelong, near Melbourne. So if Middle East crude is unavailable for Adelaide's refinery, the whole of Adelaide can be supplied out of Melbourne, to the detriment of the South Pacific region.
But the Melbourne refineries could not provide both Adelaide and Sydney with enough diesel at the same time, without substantially cutting into Melbourne's own supply.
But in an emergency, Sydney could draw supply from Brisbane, which imports light crude by tanker from Papua New Guinea and other places.
Perth can obtain crude for its refinery from fields in the North West Shelf, while the Northern Territory and Tasmania have no refining capacity.
Provided the Government is courageous enough to implement emergency export and price controls, Australia can weather a shortage.
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