Australia to Build Up 1B-Liter Fuel Reserve

The Australian government said Wednesday it will include a AUD-10 billion ($7.26 billion) Australian Fuel Security and Resilience package in the federal budget next week.

The package will include AUD 3.2 billion to establish a government-owned Australian Fuel Security Reserve of about 1 billion liters of diesel and aviation fuel, an official statement said.

Concurrently the Minimum Stockholding Obligation, imposed on refiners and fuel importers, will be raised by 10 days for every fuel type. This reform will be supported with AUD 34.7 million over 4 years.

"The changes will take place progressively over time, backed by support to invest in new and refurbished fuel storage to support the uplift in fuel stocks", the statement said.

Combined, the 2 stockpiling strategies would raise Australia's critical fuel reserves to 50 days, the statement said.

"Our Australia Fuel Security Reserve will focus on regional stockouts and supply constraints for essential users in the event of another supply crisis", it said.

"The government will consult on implementation of the fuel reserve to enable the ability to underwrite or purchase fuel, support storage, and trade stocks as needed to ensure our fuel security during severe or prolonged fuel supply disruption", the statement said.

The federal government said it will also work with state governments "to undertake feasibility studies into new or expanded refining capabilities, building on work with current refinery operators to retain our current refining capability in the decade beyond 2030".

MSO levels as of Saturday showed 43 days of gasoline, 33 days of diesel and 28 days of kerosene.

Meanwhile under the government's new Strategic Reserve powers, Australia has secured over 450 million liters of diesel and 100 million liters of jet fuel, according to a government statement last Friday.

"Under the Strategic Reserve powers, EFA [Export Finance Australia] is continuing to progress discussions with a number of other businesses who can secure, ship and distribute fertilizer into Australia where it is needed most", the statement said.

"More shipments are expected under these agreements in the coming days and weeks".

Besides building up reserves, the fuel security package announced Tuesday will also provide "loans, equity, guarantees, insurance and price support" for fuels and fertilizers, the government said.

Separately Australia signed an energy cooperation agreement with Japan.

"We recognize the complementarity of our trade and economic partnership and the interdependence of our energy security, we are committed to our two-way trade in energy resources and strengthening supply chain resilience, while also addressing unjustified import and export restrictions", said a joint statement Monday.

"We reaffirm our commitment to strengthen energy security; support the flow of essential energy goods, including liquefied natural gas, coal and liquid fuels between our two countries; and maintain stable and transparent engagement on the trade of energy products, while enhancing predictability and transparency regarding the investment environment.

"We also confirm our commitment to diversify energy sources, including through supporting the energy transition and investment and cooperation in energy efficiency".

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