Senate Foreign Affairs, Defence and Trade Legislation Committee, , 27:17 to 49:14
The Mindaroo Foundation highlights a loophole allowing refined Russian oil into Australia and advocates for legislative changes to ensure supply chain transparency.
Topics: Trade policy, Electricity grid
Speakers: Mark Corcoran, Hon Sarah Henderson, Rebecca Bryant, Unknown Speaker, Jacinta Nampijinpa Price
>> I would now like to welcome Mr. Mark Corrian and representatives from Mindaroo Foundation. I understand that information on parliamentary privilege and the protection of witnesses giving evidence to Senate committees has been provided to you. I'll give you a minute to make your way to the table. Thank you very much. So for the Hansard record, uh would you please state your full name and the capacity in which you appear today?
>> Uh my name is Mark Corrian. I'm appearing as a private individual.
>> Thanks Mr. Carrigan.
>> Uh my name is Rebecca Bryant. I'm director of global advocacy for the Mindu Foundation.
>> Um thanks Miss Bryant. I'd now like to invite each of you to make a brief opening statement and at the conclusion of that I will invite members of the committee to ask questions. Mr. Cowan, do you have a an opening statement?
Good morning, senators. Thank you for the for setting up this timely inquiry and thank you for giving me the opportunity to contribute. I'm a chemical engineer from Tasmania and began my sanctions journey in 2022 shortly after the full-scale invasion Ukrainian neighbors were dealing with the impact. And while helping out where I could, I came to realize that I was part of a deeper problem. An Australian motorist funing funding Russia's invasion through the petrol bowser. I wrote to my MP thinking the situation was so obviously dysfunctional it would be fixed in no time. How naive. On the surface, Australia's sanctions legislation is well constructed for exactly this situation. Placing economic pressure on a belligerent country, asserting dominance over a peaceful and weaker neighbor. Early civil court decisions demonstrated such strength. Once designated, Russian oil flow into Australia stopped, albeit from a minor baseline. Yet from that point, loopholes appeared, but were not dealt with by policy adjustment. The sanctions office provided Australia's oil industry with, in my view, inexplicable guidance that opened the valve to third party refined Russian oil products entering So-called shadow fleet tankers were belatedly sanctioned yet remained part of our supply chain via intermediate trade and manufacturing nodes. Australian refined products appeared to be entering our market without restraint through intermediaries. And otherwise sanctioned Russian entities like Ross Neft and Luke Oil continue to conduct business with the Australian market via intermediate terminals and refineries. Australian investment vehicles profit from Russian trade yet remain unhindered by either legislation or the regulator. Australian entities with significant or controlling holdings in oil infrastructure across far-flung ports in Singapore, Malaysia, India, UAE, South Africa, and Argentina continue to facilitate Russian trade and assist Russia's war effort. The status quo cannot continue. Australia's democratic allies in the EU, UK, and US are taking significant and rapid steps to stem the flow of Russian oil. While we watch on and hope no one notices our disengagement, we should immediately adopt a ban on third party refined Russian product. Greater compliance scrutiny should be applied by DEFAT, ASO, ABF, and AFP. We also require consideration of how to limit Australian capital being used to support Russia's war effort through complicit foreign terminal holdings. Thank you. I'm happy to answer any
>> Thanks very much, Mr. Cowan. Miss Bryant, do you have an opening
>> Chair and senators, thank you for the opportunity to appear today. The Mindaroo Foundation has stood with Ukraine since the beginning of Russia's full-scale invasion and continues to do so. We have supported humanitarian relief, recovery, and reconstruction and aligned our advocacy with Ukraine's stated priorities across government, civil society, and philanthropy. Australia has provided significant support to Ukraine, including humanitarian assistance, defense support, and sustained diplomatic backing. Sanctions are a central pillar of that broader response. They are the principal peaceful mechanism available to constrain Russia's capacity to sustain its war effort and to uphold international law. Australia has imposed a comprehensive framework of sanctions, including targeted financial measures, travel bans, export and import restrictions, and steps addressing maritime sanctions of Asians and Russian Russia's shadow fleet activity. We support the government's stated objectives that Australians Australia's sanctions prevent Australians from contributing directly or indirectly to Russia's war effort. Our focus today is on policy coherence. While Australia has taken substantial action, current fuel import settings may permit refined petroleum products made from Russian crude to enter Australia indirectly via third countries. Oil and gas revenues remain a significant source of income for the Russian state and sanctions are intended to constrain that capacity. Partners including the European Union and the United Kingdom have moved to restrict refined products made from Russian crude regardless of where they are processed. Greater alignment strengthens collective impact and the credibility of sanctions. Our intention in appearing today is to support the continued strengthening of Australia's sanctions framework. Closing this remaining gap would be a targeted and proportionate reform that reinforces Australia's commitment to Ukraine and to the rules-based international order. We welcome the opportunity to assist the committee in that work and I'm happy to answer any questions.
>> Uh thank you very much u Miss Bryant u Mr. Carrigan, the Department of Foreign Affairs and Trade has described our sanctions as our most innovative, wide-ranging, and multifaceted sanctions measures reflecting the scale and seriousness of Russia's breach of international law, including the UN charter. How would you respond to that
the uh the legislation itself um it it appears to be uh wellounded and uh for example when um there were several civil cases that uh that went through the courts that was Tiger's Realm and uh uh Quall and uh they gave surprisingly robust findings uh that um that strengthened Australia's position against uh uh Russia's activity. For instance, uh transporting overseas within Russia was uh found to be u uh contravention of our imports uh restrictions and so uh coal couldn't be moved around by an Australian company even though it was in Russia and never intended to come to Australia. So there are strong parts of our legislation, but what we're seeing since the full-scale invasion and um and then the uh Russia's development of their shadow fleet we're seeing that there are holes all over the place and leakage of Russia's main uh main income source that's oil uh going to Australia via uh places like India and Singapore particularly. and So yes, they may say that, but uh but it's the money that talks and if money is going back to Russia, well, we need to do something about that.
So you say in your submission the impact of closures of five Australian refineries between 2013 and 2022 uh has had a a significant impact on Australia's f fuel security. Could you expand on those concerns?
it uh it changed the um uh the dynamics of imports. Uh when at the start of that period I think I referred to a decade period um half of our imports of um of petroleum was uh as crude and half was as refined petroleum. once all those refineries were closed uh it became uh 90% approximately 90% um as refined product and a small amount of uh of crude material. Now we have as it turns out a lot less
>> just why is that material? Could you just explain?
>> Sorry.
>> Why is that material? Could you just
explain? um the identity of the of the material now that we're thinking about uh Russia and sanctions the identity of the source of that material is becoming more veiled and uh and so um if we have in restricting Russian crude coming into the country which before uh before the sanction was applied was was really not very much uh we haven't replied on relied on on Russian crude much at all historically. Um but at least we know where it's coming from. Now we don't know where it's coming from
>> because most of the crude is >> is now being it's been refined elsewhere.
>> Elsewhere. Yeah.
>> And and how I mean one of the huge complexities is how do you track it? How do you know when crude is being used by other >> Russian crude I should say he's being used by the countries.
>> A lot of my focus has been on Reliance Industries Jamnagar refinery in India in Gujarat uh mainly because it um was India was a significant importer of Russian crude and uh that particular refinery was our single largest refinery source of product coming to Australia. it accounted for 10% of our our total imports. Um, now I'm just an individual. I uh um but I can follow ships uh through uh use of uh commodity um clearing commodity um uh tracking. Um there's commercial entities that deal with that as their their um their business. Um you can see the ships the tracks uh on publicly available software if you know which ship to look for. Mhm. >> Uh so I was seeing uh ships that were otherwise sanctioned not necessarily in Australia but by Europe or the UK or the US going to uh Jamnar refinery being with Russian fuel, Russian crude being refined there and then we would take refined product coming to Australia to pretty well every importer in Australia. Yeah, I couldn't find one uh um uh retail outlet that wasn't sourcing this
>> But I guess how do you know that the Indian refinery was using Russian crude? Were they not also sourcing crude from other markets as well? >> They were. Uh >> so therefore the tracking of the Russian crude is complex, isn't it? Um, so when
it goes into a refinery, there was
>> it's all it's all mixed together, isn't
it? >> When I when I first started looking at it, it was in the 20%ish >> uh area of uh was Russian crude of their total imports. Um, last year it reached 55%. Uh, so
>> and why is that, Mr. Carrigan? Why is there being
>> they were getting it cheaper and so if they have the choice of importing some eural crude or uh um espo crude then it's cheaper >> and they would choose to buy it and they weren't being restrained by their government and their market which was included Australia but also EU uh wasn't saying no to that product.
>> So again, I'm a just to cut to the chase. So we need crude and refined products in this country. So what does Australia do? so you know given the complexity of establishing more onshore refining capacity uh do you have any observations about what practically Australia can do in terms of its fuel supply?
Uh it it highlighted to me that um there is a downside to uh getting rid of our own refineries because we have a lot more control over um over where that material is coming from where we would be buying a crude shipment from a particular oil field and we know exactly where that's coming from. It's becoming more veiled uh now that we we've got less refining capacity. We've only got two more refineries left. there's also um a a gray area of um
>> So just just to just again to cut to the chase on this, is there a way for Australia to source their crude to have the guarantees that they can source crude from countries other than Russia?
we could ban at least place a an an onus of responsibility on the importers to not bring in uh material that's been sourced from Russian crude. Now there are um if you look at the uh the trade clearing house plat um in their Singapore market, many of the traders in that market specifically say that the material that they're uh that they've got for sale, they're offering >> is free of Russian material. Uh we we have companies in Australia for example, Viva Energy buys their product usually through VTOL. VTOL is a massive um uh trader in the world and Viva has an obligation uh be um to buy from VTOL because VTOL used to own the company and then before they floated it they established a um a a sole uh supply arrangement and so Viva has to go to VTOL. What surprised me was that in that uh Singapore market, VTOL makes offers not offering the um uh the guarantee that the material is free from Russian uh
>> Not offering
>> they they their offers >> are saying are not saying that it's free from Russian material. other other traders are saying that it is free of Russian material. They're offering a
guarantee. >> Sorry to cut in. Um why why is VTO making the decision not to do that? Not to provide that guarantee on the on the world market where other others are in the position to do that. Is this driven by price? What's it what's it being driven by?
>> I have no idea. Um, V vetol has a history of of uh they traded with Iran for example uh 10 years ago u while other European traders were uh turning their back on Iran because of sanctions that were being imposed.
>> Just cognizant of any adverse reflections on anyone any company. I'd be very keen and happy to take this on notice if you could provide any evidence to support what you're saying about VTOL versus other world suppliers. So if if there's any way you can demonstrate what's actually happening, we'd be really grateful to
have a look at I I should add that uh the situation is changing very rapidly right now because of the EU ban and so they may when I sub put in my submission uh it was before the EU ban was implemented uh now the EU ban has was implemented on about 21st of January >> and so they may now be offering guarantees.
>> All right. Well, if you could come back, you know, through >> other questions on notice process and just clarify that. And I'm sure uh we we should probably invite Viva to make submissions in that respect as well. but I would appreciate if there's a way of clarifying what's happened since the 21st of January with with respect to the guarantees that VTOL is providing particularly to a great um and I have to say I have a particular affection for Viva Energy being very much based in the Jalong region. So, I'd be very grateful if if you could update your evidence uh by having a look at what's happened since the 21st of January. Uh look, I just wanted to we will go to other senators, but I just wanted to ask uh Miss Bryant uh how have the Russian sanctions evasion impacted operations on the ground as Mindaroo has observed them?
Senator, um our interest um in Ukraine is long-standing and unwavering. Um we have provided nearly 302 million Australian dollars in support of Ukraine's recovery and reconstruction since 2022. Um we work principally through partners um who are trusted um for example WFP and the Halo Trust. Um through those partners we support Ukrainians who are doing it tough after um four years of constant fighting. Um we I can't answer your question um in any measure of detail. What I can say um is that it's important from our perspective u that Australia's policy response um to Russia's aggression is consistent and that any evident gaps are closed. Um it is the case that um revenue from uh refined petroleum products is making its way back to Russia and fueling its war effort. Um this can't be quantified precisely um but it's true um that it is impacting Ukrainians on the ground um and uh ensuring that the war effort um is ongoing. So, um, that's not a very effective answer to your question, Senator, but it remains a concern to us that we do everything that we can as a country country to stand with Ukraine and ensure that this war comes to a speedy end.
>> Thanks, Miss Brian. I'm now going to go to other senators of questions. Senator Najiba Price, you have the call.
>> Thank you, Miss Bryant. Um I How much longer do you think um has the humanitarian crisis on the ground been drawn out because of um Russia's sanctions evasion?
>> It's impossible to for me to quantify, Senator. Um but it is uh the case that communities um throughout Ukraine are continuing um to suffer from ongoing aggression fueled by um revenue returning to the Russian state from avoidance of sanctions. Um so yeah I I mean again not a very effective answer to your question. Um but the fact that Russia has been able to sustain its effort for four years should be of a concern to all of us.
Okay.