* China's ban on product exports to exacerbate shortage

* Some farmers restricted from planting due to diesel

rationing

* Smaller miners start to change operations to conserve

diesel

By Melanie Burton and Helen Clark

MELBOURNE/PERTH, March 19 (Reuters) - Tight domestic

diesel supplies due to limited stockpiles and far-flung

distribution networks are rattling Australia's farming and

mining sectors, the main users of the transport fuel, as the

Iran war disrupts global oil supplies.

With the war squeezing fuel availability, China banned

exports of diesel, gasoline and jet fuel last week, heightening

fears of fuel shortages. Australia, Bangladesh and the

Philippines are especially reliant on Chinese fuel supply.

Australia holds stockpiles far below global standards and

last year imported 84% of its petroleum product needs,

government statistics show.

"Australian farmers and miners are competing in a global

marketplace for refined product. We are entirely dependent on

those imports," said CLSA analyst Baden Moore.

Given Australia's vast distances, diesel is critical for

regional businesses and communities, but shortages are beginning

to bite. Diesel stocks are down to 30 days, Energy Minister

Chris Bowen said on Tuesday.

"There has been an unprecedented rush on fuel - especially

by bulk customers wanting to secure diesel before the full price

impact hits," said Malcolm Roberts, CEO of the Australian

Institute of Petroleum. AIP's members include Mobil, BP

and Australia's two refiners, Viva Energy ( VVEGF ) and Ampol ( CTXAF )

.

"The buying surge has left customers without sufficient,

secure contracted supply searching for fuel," he said.

Prime Minister Anthony Albanese on Thursday urged

Australians to avoid panic buying of petrol and diesel and

appointed a national coordinator to tackle shortages.

FARM PLANTING COULD BE CONSTRAINED

In southeast Australia, solid rains have set up a strong

planting season that could be hampered if farmers lack tractor

fuel, while some smaller miners are already rationing diesel and

larger producers are closely monitoring supply.

The country's oil refiners and importers started allocating

fuel volumes about two weeks ago, controlling how much

distributors and retailers could deliver to regional areas, said

Brent Squires, a general manager at diesel and grains

distributor Riordan.

"It's a period of high demand as farmers need to start

planting crops following recent good rains through central

Victoria and southern New South Wales. If farmers can't plant

their crops now, there will be no crops to harvest in the

summer," he said.

BP said it and other major importers were making sure

contracted customers were securing 100% of their contracted

volumes. AIP said the suppliers had ceased spot sales.

"This has caused scarcity in the spot market due to

unprecedented demand," a BP spokesperson said.

Viva Energy ( VVEGF ) declined to comment, ExxonMobil ( XOM ) declined

to comment beyond AIP statements, and Ampol ( CTXAF ), the country's

biggest fuel supplier, did not respond to requests for comment.

Meanwhile, Blue Cap Mining (BCM), a small gold producer, has

stood down some employees due to fuel shortages, its parent

company Matsa Resources ( MTRSF ) told the country's bourse.

"Matsa and BCM are working through the fuel shortage issue

which is impacting the mining industry," it said.

More miners are likely to follow in Blue Cap's footsteps if

current conditions persist over the next week, said Warren

Pearce, CEO of the Association of Mining and Exploration

Companies.

"At the moment there appears to be a portion of the

industry, at the smaller end, that are missing out or only

receiving rationed fuel supplies," he said.

For now, Australia's biggest miners are watching and

waiting. The country is the world's biggest supplier of seaborne

iron ore and is the top coal exporter.

BHP is closely scrutinising diesel markets, but has

not made any changes to its operations, CEO Mike Henry said on

Wednesday, adding that higher diesel costs would drive up

commodity prices.

Aviation fuel is also a concern, given Australia imports 32%

from China and 15% from South Korea which has also restricted

exports, CLSA's Moore said.

However, Australia's transport minister, Catherine King,

said on Monday airlines Qantas and Virgin were well

placed to withstand war-related fuel disruption and there were

no short-term supply issues.