Australia's fuel supply has proven to be highly reliable, with Australia not experiencing a major fuel disruption in the last 40 years. Liquid fuel is critical for economic and social activity and makes up around 50% of total energy consumption.
To continue our strong record of secure supplies and to take advantage of dramatic falls in global oil prices, the Australian Government is implementing a comprehensive fuel security package. The next steps of this plan focus on building-up Australia’s local industry for long term security. Key elements of the package are:
- Taking advantage of our unique position and purchasing Australian Government-owned crude oil at a historically low price
- Working with interested parties to increase Australia’s domestic fuel storage capacity
- Working with the refining sector to secure Australia’s future refining capability.
Purchasing Australian Government-owned stocks
By taking advantage of historically low oil prices caused by the impacts of COVID-19, the government is purchasing crude oil that will boost Australia’s fuel security. As there is a lack of storage space globally, Australia is using its privileged position to access cost effective and secure space in the United States’ Strategic Petroleum Reserve.
This work is a down payment on a stronger and more secure fuel supply for Australian households, motorists, industry and the national economy.
Testing the market for domestic storage opportunities
Normal commercial storage and stockholdings have provided a secure and reliable supply to meet Australia’s needs. However, the COVID-19 pandemic has highlighted that there is limited flexibility in the fuel storage market in Australia when the fuel supply and demand balance changes suddenly.
The Australian Government has announced initial steps to begin testing with interested parties opportunities to increase Australia’s domestic fuel storage capacity. An initial, non-binding Request for Information (RFI) process has been opened to gather preliminary information on these opportunities from new and existing market participants.
Submissions to this RFI will help to inform the government in assessing the next steps to potentially increase Australia’s fuel storage capacity.
The RFI process will be open until 10 July 2020. Submissions should address the issues raised in the RFI paper. For more information on the RFI or to make a submission, visit the Department of Industry, Science, Energy and Resources consultation hub.
Once the RFIs have been considered, next steps will be announced later in 2020.
Assessing the long-term capability of the refining sector
The Australian Government recognises the ongoing financial pressures on the domestic refining sector, which have been exacerbated by the COVID-19 pandemic. The government has announced several short-term measures to support refineries during this time, including through temporary changes to the fuel standards. These changes are assisting industry to ease storage pressures, and do not have environmental or safety impacts.
The government has also commissioned a strategic study to work with industry to assess the capability and viability of the Australian refining sector.
This analysis will look at the impact of oil market conditions, fuel security implications, and the interconnection of refineries on other industries and local communities. This work will assess the state of the industry and identify options to address emerging issues, with the objective of maintaining and enhancing the long-term fuel security of Australia.
Outcomes from this sector analysis will be announced before the end of 2020.
Enhancing Australia's fuel security - media release (15 June 2020) The Honourable Minister for Energy and Emissions Reduction, Angus Taylor
Australia to boost fuel security and establish national oil reserve - media release (22 April 2020) The Honourable Minister for Energy and Emissions Reduction, Angus Taylor