The Australian Government is boosting the nation’s long-term fuel security by taking advantage of dramatic falls in global oil prices and building the agreement with the United States to access their Strategic Petroleum Reserve (SPR).
Under the new measures, Australia will establish its first Government-owned oil reserves for domestic fuel security.
This will include a deal with the United States to store Australian Government owned crude oil in the US SPR.
Minister for Energy and Emissions Reduction Angus Taylor said the Government would also work with the private sector to consider options for improving domestic fuel security, and would work with refineries on temporary measures to ease the stockpiles of jet fuel by amending fuel standards under the Fuel Quality Standards Act.
“The Government is taking action to improve Australia’s fuel security and enhance our ability to withstand global shocks, such as the COVID-19 pandemic, when they reach our shores,” Minister Taylor said.
“Australians can be reassured there is plenty of fuel in the country and we are extremely well placed to keep supplies flowing through the COVID-19 pandemic.
“The new measures will take advantage of the current low prices for oil and Australia’s privileged position of access to the SPR, which is amongst the world’s most cost-effective long-term oil storage facilities. This work is a down payment on a stronger and more secure fuel supply for Australian households, motorists, industry and the national economy.
“Today’s announcement delivers immediate and medium-term measures that form a framework for a highly successful and domestically-centred approach to fuel security, which will underpin our economic prosperity for the next decade and beyond.”
Global oil prices have hit new lows due mainly to a significant drop in demand caused by the COVID-19 pandemic and a lack of cost-effective long-term storage options.
Australia has been negotiating access to the SPR since 2018, with Minister Taylor and US Energy Secretary Dan Brouillette signing the first arrangement of its kind to facilitate this deal in March of this year.
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Australia will spend $94 million to buy oil at the current low global prices. Australia has access to hold oil in the US SPR for an initial period of 10 years.
Minister Taylor said the Government would shortly launch a process to work with the private sector to identify the best options for further strengthening fuel security in Australia. Terms of reference to guide this process will be released in due course and will focus on investment options, supporting the refining sector and assessing the most effective stimulatory options.
To help refineries, the Government will work on a temporary change in fuel standards to provide refiners with more flexibility to adapt their operations to manage the changes in demand and oil prices as a result of COVID-19. Any change will be closely managed to ensure refiners have increased flexibility while motorists and the environment are protected.
“The temporary change provides Australian refineries with flexibility and can assist them to shore up their viability by helping them resolve some storage and supply issues,” Minister Taylor said.
At the end of February, Australia had 81 days’ worth of oil supplies, including 25 days of stocks in overseas ports and in transit to Australia.
The government says the oil held in the SPR will count towards Australia’s IEA 90 day stockpiling commitment.