National Fuel Quality Standards Regulation Impact Statement 1 ...

# Euro 4 for petrol has yet to be formally defined. These estimated levels were provided
to Coffey Geosciences by the Australian Institute of Petroleum
Despite differences to the Commonwealth proposed fuel standards, Scenario 4 from the
Fuel Quality Review provides the best available estimate of the potential costs to the
refining industry of Commonwealth regulation of national fuel standards. Some costs,
particularly those associated with Euro 4 standards for olefins and aromatics (not
included in the Commonwealth proposal) are overstated.
The capital investment cost to refiners of achieving Euro 4 standards under Scenario 4 of
the fuel Quality Review is $1320 million (M) above what is already planned. At one
refinery, a substantial proportion of the investment required to achieve Euro 4 diesel and
petrol is already committed in existing programs. Excluding this refiner, capital
investment per refinery averages $185M.
Under Scenario 4 operating expenditure would increase by a total of $136M pa for the
production of Euro 4 fuels, an average of $17M pa per refinery.
Allowing a capital charge at 20% per annum, the average extra capital plus operating
costs for local refining of Euro 4 fuels would be:
* Euro 4 Diesel 1.5 c/L
* Euro 4 Petrol 1.1 c/L.
The potential overstatement of costs due to levels of stringency not involved in the
Commonwealth proposal include:
* $100M capital expenditure and 0.2c/l to achieve 1% benzene compared to 3%; and
* $170M capital expenditure and 0.9c/l operating costs at two refineries for achieving
14% olefins compared to 16%.
In addition, technological advances for refinery production processes may generate
savings in the cost of production that may drive down any increase in the price of fuel.
However, the actual impact on prices to consumers will be dependent on the companies’
handling of any cost savings.
5.5.3 IMPACT ON FUEL IMPORTERS AND DISTRIBUTORS
Importers
In order to ensure the availability of higher quality fuels for use in road transport
throughout Australia, it is necessary to establish clear, attainable standards that do not
discriminate between domestic fuel producers and importers. The national standards will,
therefore, provide a level of consistency for importers, enabling them to supply the same
fuel throughout the country.
The impact on independents and importers (Burmah, Liberty Oil, Gull Petroleum,
Woolworths Petrol Plus, etc) will vary depending on readily available supply in the