Treasurer Peter Costello has delivered a blunt warning that Australia is running out of oil as existing fields near the end of their productive lives.
In a speech to the Northern Territory Cattlemen's Association, Mr Costello said it was little known that Australian exports of fuel had been falling for years despite soaring prices.
"The reason why Australia's crude oil exports have fallen over recent years - while world demand and prices have increased to record levels and LNG exports are booming - is that some of our oilfields are approaching the end of their productive lives," he said.
Total production had fallen from about 650,000 barrels a day to less that 430,000 barrels a day since mid-2002. Some fields - for example the Bonaparte field off Western Australia - are now producing only about a quarter of 2002 levels.
World oil prices have been driven to record highs, largely by booming demand from China and India, but also by tensions in the Middle East and a series of supply disruptions.
In Australian-dollar terms, prices have leapt by about a third over the past four years.
The Government is hopeful that new projects will cut Australia's reliance on imported oil.
Mr Costello said the already completed first stage of the Bayu-Undan project, the Exeter/Mutineer oilfield and Enfield project were expected to produce around 200,000 barrels of oil a day - still less than the fall in production from existing fields since mid-2002.
According to the Australian Petroleum Production and Exploration Association, if current trends continue, Australia will be about 78 per cent dependent on oil imports in 10 years, compared with the present 30 per cent dependence.
The world oil price yesterday was hovering around the $US54 mark, after hitting a record $US58.28 earlier in the week, the highest since the contract was introduced in 1983. Some analysts now fear prices could rise as high as $US100 a barrel. International Monetary Fund senior economist Raghuram Rajan said it was possible they could go as high as $US105 a barrel.