The Australian standards for petrol differ from the standard of petrol used in the Singapore benchmark price (based on the Platts reported price).
This is shown in table 6.2. It provides information from the Caltex submission which compares the gasoline specifications for the Platts benchmark price with the Australian specifications for Sydney and Brisbane.4 It can be seen that the Australian gasoline specification has higher limits than the Platts
benchmark price in a number of items, such as lead, benzene, MTBE and sulfur levels.
Table 6.2 Comparison of Platts Singapore benchmark gasoline specification with the Caltex Australia gasoline specification for Sydney and Brisbane
Property (Sydney/Brisbane) Platts FOB Singapore gasoline
specifications
Caltex Australia gasoline specifications
Research Octane Number (RON) Min 92, Min 95, Min 97 Min ULP 91
Motor Octane Number (MON) None specified Min ULP 81
Lead content, gpb/l Max 0.013 Max 0.005
Density at 15°C, kg/l Report Report
Reid Vapour Pressure (PSI) Max 10.0 Summer Max 9 NSW, 9.7 Qld
Distillation °C
Initial Boiling Point Report Report
10% evaporated Max 74 Max 60-65
50% evaporated Max 127 Max 110-115
90% evaporated Max 190 Max 180-183
Final Boiling point Max 225 Max 210
Residue, % vol Max 2.0 Max 2
Loss, % Vol Max 2.0
Odour Marketable Marketable
Existent gum, mg/100ml Max 4.0 Max 5
Benzene content, % vol Max 5.0 Max 1.0
Sulfur, %wt Max 0.10 Max 0.015
Doctor test Negative Negative
Or Mercaptan sulphur, ppm Max 15 Max 15
Mercaptan sulphur, %wt Max 0.0015 Max 0.0015
Copper corrosion (3 hours at 50°C) Max 1.0 Max 1
Ag Strip Max 2
Induction period, minutes Min 240 Min 360
MTBE content, % vol Max 10.0 Max 1
Aromatics, % vol Report Max 42 over 6 month period
Colour undyed Undyed, light yellow ULP Purple
Alcohol No additions of any alcohol No additions of any alcohol
Driveability index NA ULP report
Source: Caltex submission.
6.1.2 state fuel standards
Some states had taken an individual approach to fuel standards and introduced their own fuel standards ahead of the Australian Government. These were: Western Australia (in January 2000), Queensland (in July 2000) and South Australia (in March 2001). Each state introduced differing standards, which restricted their ability to import fuel, both from overseas and from other states.
Since January 2006 the Australian Government standards have been generally similar to those in the states. The exception is Western Australia, which has even tighter limits than the national standards on the amount of MTBE permitted in petrol (only 0.1 per cent by volume). An implication of the tighter Western Australian standards is that a premium is added to the terminal gate price in Western Australia to reflect that fuel standards are higher there than elsewhere in Australia.
Most fuel parameters are regulated nationally under the Fuel Quality Standards Act 2000. However, there are some parameters—such as volatility, which is measured as Reid vapour pressure (RVP)—which continue to be regulated by the states and territories. All states except Tasmania have a RVP limit which typically is set by a regulation under the relevant state environment protection act. The 2005 Report of
the biofuels taskforce to the Prime Minister noted that the Australian Government was in dialogue with
the states on how to regulate fuel parameters, including RVP, that are not regulated nationally under the Fuel Quality Standards Act 2000.5 The ACCC understands that work is continuing in this regard.
6.1.3 implications of australian fuel standards
The divergence between Australian and international fuel standards has had a number of effects on both prices and competition. These include increases in prices to reflect the higher quality of Australian fuel and, for independent importers, greater difficulties obtaining overseas refined petrol that meets the Australian specifications.
These effects are considered in greater detail in chapter 13.
6.2
Oilcode
The Oilcode came into effect on 1 March 2007 as a prescribed mandatory industry code of conduct under s. 51AD of the Trade Practices Act 1974. The Oilcode regulates the conduct of suppliers, distributors and retailers in the downstream petroleum retail industry. The ACCC is responsible for promoting compliance with the Oilcode and conducting enforcement action for breaches of the Oilcode where it is necessary.
The purpose of the Oilcode is to:
improve transparency in wholesale pricing and provide better access to declared petroleum products •
at a published terminal gate price (TGP)
assist industry participants to make informed decisions when entering, renewing or transferring a fuel •
reselling agreement through the disclosure of specific information
improve the operating environment for all industry participants by providing access to a cost-effective •
and timely dispute resolution scheme as an alternative to litigation.
6.2.1 terminal gate pricing
The Oilcode provides a nationally consistent approach to terminal gate pricing arrangements between wholesale suppliers and their customers.
A wholesale supplier under the Oilcode is a person who sells declared petroleum products such as unleaded petrol and diesel from a wholesale facility such as an oil refinery, a shipping facility, a facility connected by a product transfer pipeline to an oil refinery or shipping facility, or a facility connected by a pipeline to a shipping facility. A customer is simply a person engaged in the business of buying declared petroleum products from a wholesale supplier.
There are a number of requirements for terminal gate pricing under the Oilcode. Broadly, these include a requirement on wholesale suppliers to:
make their TGP publicly available each day on a website •
provide transaction documentation at the time of delivery and within 30 days of delivery if necessary •
make their declared petroleum products available at the TGP except in a limited number of •
circumstances where it would be not unreasonable to refuse supply
ensure that their customers are complying with applicable health and safety responsibilities. •
6.2.2 Fuel reselling businesses
The Oilcode establishes minimum standards for parties involved in a fuel reselling business. This aims to help parties to make informed decisions when entering, renewing, extending, transferring and operating under a fuel reselling agreement.
Under the Oilcode, a fuel reselling agreement is between suppliers and retailers where the: supplier grants the retailer the right to conduct a fuel reselling business
•
supplier is able to exert substantial control over that business •
fuel reselling business will be associated with a trademark, commercial symbol or advertising that is •
owned, used, licensed or specified by the supplier
retailer is required to pay, or agree to pay, a fee before starting the fuel reselling business •
supplier reasonably believes that the amount of fuel that will be sold under the agreement will not •
be less than 30 000 litres per month.
If a commission agency meets these criteria, except the requirement to pay or agree to pay a fee, it would still be specifically identified as a fuel reselling agreement.
In relation to fuel reselling agreements, the Oilcode requires a supplier to:
ensure the agreement has a minimum duration of five years except in certain circumstances (for •
example, where the upfront initial investment is less than $20 000)
create and provide a disclosure document to a prospective retailer at least 14 days before the •
agreement is entered into
make allowances for a specified cooling-off period at least seven days after entering into the •
agreement of paying any money under the agreement provide leasing documentation to the retailer
•
not prohibit a retailer from associating with other retailers for a lawful purpose •
disclose materially relevant facts such as the finalisation of certain court proceedings and bankruptcy •
as the supplier becomes aware of them
follow certain procedures where a renegotiation, variation or transfer of the fuel reselling agreement •
is sought
follow certain procedures where it is sought to terminate the agreement because of a breach by the •
retailer or other special circumstances outlined in the Oilcode
follow certain procedures before the expiry of the agreement or the parties agree to terminate it early. •
6.2.3 dispute resolution
The Oilcode provides for a dispute resolution scheme, the objective of which is to provide the industry with an effective and inexpensive way of resolving disputes. The scheme includes the appointment of the Dispute Resolution Adviser (DRA).
The scheme covers disputes:
where a wholesale supplier fails to supply a declared petroleum product to a customer •
arising between parties to a fuel reselling agreement •
arising from any provision of the Oilcode covering TGP or fuel reselling agreements. •
The Oilcode provides separate procedures for dealing with disputes about supply of products at a TGP and disputes unrelated to a failure to supply. This is because the Oilcode takes into consideration the potential for commercial damage that may flow as a consequence of a failure to supply declared petroleum products. Consequently the Oilcode provides for disputes about supply to be promptly dealt with by the DRA.