Southern Pacific Petroleum has been unable to sell its product to local refiners because of the opposition from Greenpeace.

"The strategic case for helping Southern Pacific to overcome the Greenpeace boycott is overwhelming," Mr Hale said. "Global oil production is projected to peak around 2012 and begin declining after 140 years of steady increase.

"As a result it is expected that the world will have to obtain about 20% of its oil output in 2020 from new synthetic sources such as oil shale." Mr Hale added this figure could blow out to 50% if there are no new discoveries of oil.

With the latest research showing Australia's level of self-sufficiency declining from 90% to 40% by 2010, Mr Hale said the decline in oil output could raise the current account deficit and make Australia more vulnerable to supply shocks from political instability in the Middle East.

"The strategic need for Australia to develop Queensland's oil shale reserves is self-evident," Mr Hale said. "The Government should help Southern Pacific rescue its project by permitting the subsidy to apply to exports and encouraging domestic oil refiners to resist political intimidation."