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Australia's Oil Producers Look Overseas as Domestic Supply Declines, IEEFA Says

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The start of production at Santos's 80,000-barrel-per-day Pikka oil project in Alaska highlights how Australia's biggest oil and gas companies are increasingly turning overseas as domestic oil supplies decline, Institute for Energy Economics and Financial Analysis analyst Kevin Morrison said in a Friday note.

The shift comes as concerns over Australia's fuel security have grown, with the conflict in Iran putting greater focus on reliable fuel supplies.

Australia imported about 95% of the fuel it consumed last financial year, when daily consumption averaged about 1.08 million barrels, according to government data. Domestic oil production has fallen to about 46,600 barrels per day, its lowest level since the late 1960s.

Australia had 213.4 million barrels of proven and probable oil reserves at the end of 2024, down 6.8% from a year earlier, Morrison said, citing Geoscience Australia data. The reserves amount to slightly more than six months of current consumption.

The country also has far larger reserves of condensate, a lighter petroleum product. But Australia's two refineries cannot process it, so most of the condensate is exported, mainly to Singapore. Including condensate in oil reserve figures can therefore overstate the country's usable crude oil supply.

Limited prospects for major new oil discoveries have encouraged Santos and rival Woodside Energy to expand overseas.

Santos is developing Pikka despite having discovered the Dorado oil and gas field off Western Australia in 2018. Dorado has 162 million barrels of oil and condensate resources, compared with 400 million barrels of proven and probable oil reserves at Pikka, plus another 600 million barrels of potentially recoverable resources.

Woodside has similarly expanded its international portfolio, acquiring Gulf of Mexico assets through its 2022 merger with BHP's petroleum business. Its Sangomar field offshore Senegal, which began production in 2024, produced more than twice as much oil as its Australian operations in the first half of 2026.

Woodside is also developing the 110,000-barrel-per-day Trion field offshore Mexico, due to start production in 2028.

Although Australian oil exploration spending reached a 10-year high in early 2026, early results suggest several frontier areas may offer greater gas than oil potential.

Analysts say increased drilling alone is unlikely to significantly improve Australia's fuel security. Reducing oil demand, particularly by shifting transport to electric vehicles, could have a greater impact on the country's reliance on imports.

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