Australia commits $7 B to boost fuel stockpiles, create government reserve
- Government to increase fuel stocks to 50 days
- Plans permanent onshore reserve of 1 B liters
- Package to cost A$10 B
Australia will spend A$10 B ($7.22 B) to boost its national fuel stockpiles and establish a permanent government-owned fuel reserve, Prime Minister Anthony Albanese said on Wednesday.
The expanded stockpiles and reserve of around 1 B liters (264 MMgal) will ensure Australia holds at least 50 days of fuel onshore to shield the country from future supply shocks, Albanese said.
Australia imports about 80% of its fuel and has experienced localized shortages since the start of the conflict in the Middle East. Its current reserves, mandated at around 30 days' supply, rely on stocks maintained by private companies.
"The federal budget next week will include an Australian fuel security and resilience package," Albanese told a press conference. "This is aimed at making sure Australians can have more confidence in protecting our energy sovereignty not just during this crisis but going forward as well, protecting our nation's energy interests."
The A$10-B package includes A$3.2 B in funding for the fuel reserve to increase long-term diesel and aviation fuel supply and storage.
"Our fuel security reserve will focus on regional stockouts and supply constraints for essential users in the event of another supply crisis," Albanese said.
The minimum stockholding obligation requiring importers and refiners to hold roughly 30 days of fuel will also be lifted by 10 days, costing A$34.7 MM.
Additionally, A$7.5 B will go towards funding supplies and storage of fuel and fertilizer through providing loans, equity, guarantees, insurance and price support.
Energy Minister Chris Bowen said Australia was one of the few countries in the International Energy Agency which did not have a government-owned fuel reserve.
"We will now have a government-owned fuel reserve of around a billion liters to add to those minimum stocks that the private sector must hold," he said. "This is a big change in our approach as a country and a good one."
The National Roads and Motorists Association welcomed the move.
"It now means the Australian government will have a direct stake in storage capacity. Given this issue is critical to our nation’s security, this makes sense," said spokesman Peter Khoury.
But Tony Wood, a senior fellow at the Grattan Institute's energy program, questioned how the reserve would be implemented and deployed in practice, and said it would be better to only increase private companies' reserves.
"The government should not be a participant in the market," he said.
($1 = 1.3856 Australian dollars)
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