Australian leader offers fuel aid to state

Australia's government is ready to take emergency control over the nation's oil stocks to meet energy shortages in a mining boom state caused by an explosion at a natural gas plant, the prime minister said Wednesday.

Western Australia state, a major exporter of iron ore and natural gas, lost 30 percent of its natural gas supplies on June 3 when a plant owned by Apache Energy Ltd., which is a subsidiary of Houston-based Apache Corp., at remote Varanus Island was shut down by a pipeline explosion. No one was injured.

Gas generates 60 percent of the state's electricity.

Thousands of state workers are being laid off or asked to take vacation leave until gas supplies are resumed, while other business are turning to diesel-powered backup generators.

Prime Minister Kevin Rudd told Parliament on Wednesday that the state's gas supply might not be restored for months, describing the economic impact of the energy shortage as "huge."

Rudd said he told state Premier Alan Carpenter on Wednesday that the federal government was prepared to use an emergency law that would enable it to control production, transfer and stocks of Australia's oil.

Carpenter replied that "the invocation of that act is not required at this time," Rudd told Parliament.

Last week, the Defense Department halted an order for 1.6 million gallons of diesel for the navy so the supplier, a BP refinery in Western Australia, could sell it to local customers.

The Defense Department will also consider using fuel from its strategic stockpiles to help Western Australia meet its energy needs, Rudd said.

On Tuesday night, Carpenter made a TV and radio appeal to state residents to free up energy supplies for industry by switching off heaters during the current winter months, turning off lights and taking shorter showers.

Only 2 million of Australia's 21 million people live in Western Australia. But the state's exports of minerals and gas to feed Chinese and Indian industrial expansion are an increasingly important driver of Australian economic growth.

The state's Chamber of Commerce and Industry expects up to 15 percent of the state's companies could be forced to temporarily shut down. Several mining and industrial companies have already scaled back production.

The federal government has predicted that the crisis will reduce the nation's economic growth but has yet to specify an amount.