The Australian government has announced that it will spend A$211 million (€129 million) to ensure long-term fuel security, including building new storage capacity and providing financial support to local refineries.
The largest portion of the funding, A$200 million, will be invested in a competitive grants programme to build 780 million L (4.9 million bbl) of onshore diesel storage. Australia’s Department of Industry, Science, Energy and Resources will also create a minimum stockholding obligation for key transport fuels including petrol and jet fuel, to act as a safety net. Stocks for diesel will be increased by 40%. The department will also enter into a detailed market design process for a refinery production payment, to make sure refineries can keep operating.
The energy department says that the package will keep prices low for customers and create more than 1,000 new jobs, with 950 jobs created in constructing the new storage and 75 ongoing jobs. It will also help to support the Australian economy as it recovers from the effects of the COVID-19 pandemic.
The Australian government will spend the next six months working with industry on the package’s legislative and regulatory design. It says that it will introduce additional measures to reduce the burden on industry and improve fuel market information, including through modernising the online fuel reporting system, allowing industry to report stock levels to the government more easily and quickly, and removing the application fess for fuel standard variation requests.
‘Almost all Australians are reliant on fuel and it is the lifeblood of so many sectors in our economy. Our farmers and miners rely heavily on diesel to do their jobs and provide services, while the transport sector sources 98% of its energy from liquid fuels,’ says Angus Taylor, Australia’s minister for energy and emissions reduction.
Prime minister Scott Morrison adds: ‘Like all sectors of the economy, the COVID-19 pandemic is having an impact on Australia’s fuel industry. The events of 2020 have reminded us that we cannot be complacent. We need a sovereign fuel supply to shield us from potential shocks in the future.’
The news will likely be welcomed by refinery operators, many of which are struggling in Australia. Viva Energy said in August that it plans to start designing an LNG terminal at its Geelong refinery site before the end of 2020, following ‘unsustainable’ refining losses, while Ampol said in August that it is reviewing operations at its Lytton Refinery in Queensland.