Australia is a signatory to the International Energy Agency (IEA) International Energy Program (IEP) Treaty and participates in IEA oil market and energy emergency committees.
A key requirement under the Treaty is that member countries hold oil stocks equivalent to at least 90 days of their prior year’s daily net oil imports, and in the event of a major oil disruption, contribute to IEA collective actions by way of a stock release, demand restraint, fuel switching, or increased production or fuel sharing.
Australia has historically relied on commercial stock levels to meet the 90 day requirement. However, due to declining domestic production and increased demand for liquid fuels, these stocks are no longer sufficient to meet the 90-day requirement. Consequently, Australia has been structurally non-compliant with the 90-day stockholding obligation since March 2012.
Australia has a well-functioning domestic petroleum market that is closely integrated into international oil markets. This integration provides Australia with a flexible, responsive and efficient petroleum supply chain with crude oil sourced from more than a dozen countries, and refined products imported from more than 13 countries. Australia is also an exporter of oil, with a significant amount of crude oil and a small amount of petroleum product exported each year.
The Australian Government has agreed a plan to return to compliance with the IEA Treaty stockholding requirements.
In June 2016, the IEA Governing Board noted the Australian Government’s plan for returning to compliance with the stockholding obligation. The compliance plan comprises:
- the introduction of mandatory reporting of Australian Petroleum Statistics from January 2018
- the purchase of 400 kilo tonnes of oil tickets in 2018-19 and 2019-20 to enable Australia to contribute to an IEA collective action if needed. Tickets are used by some IEA members to supplement in-country stocks to meet their 90 day requirement and can be used to contribute towards collective action in the event of an oil supply disruption
- a return to full compliance with the IEA stockholding obligation by 2026. This will include diplomatic engagement to expand the international ticket market in the Asia-Pacific region, and ongoing investigation into the potential for emergency liquid fuels stockholdings to be established in Australia and overseas
- establishment of an Energy Security Office within the Department of the Environment and Energy
As noted above, the Australian Government’s compliance plan includes introducing mandatory reporting for petroleum statistics from 1 January 2018. This will improve the quality and accuracy of the petroleum statistics, replacing the voluntary monthly surveys of petroleum companies used to develop the Australian Petroleum Statistics.
The development of the mandatory reporting scheme is now underway.
Reports on oil stockholding
- National Energy Security Assessment (NESA) Identified Issues: Australia's International Energy Oil Obligation
- Australia's Emergency Liquid Fuel Stockholding Update 2013 - Australia's IEA Oil Obligation - Main report
- Australia's Emergency Liquid Fuel Stockholding Update 2013 - Oil Storage Options and Costs
- Stock on the Water Analysis, 2013
- Australia's Emergency Liquid Fuel Stockholding Update 2013 - Ticket Markets
- Ticket Market Pricing Update - Report, Apr 2014
- Additional Advice: Ticket Markets, Jun 2014