The Australian government is negotiating with the US administration to access oil from its Strategic Petroleum Reserve. Energy Minister Angus Taylor is reported as saying it was a way to address dwindling local supply.
Australia has sufficient crude oil and gasoline to last 28 days, a figure well below the 90-day supply agreement set by the International Energy Agency. The reserve figure for diesel fuel is 22 days’ supply.
Taylor said the Australian government has undertaken the new initiative since the recent reelection of the government of Prime Minister Scott Morrison in May to ensure the delivery of increased security for Australians.
Taylor added that access through a contractual arrangement would substantially boost the country’s stocks and flexibility of supply.
Taylor also wants the IEA Treaty to be rewritten to take into account oil in transit to Australia. If this were in place it would mean that as of May, Australia was compliant with 92 days of stock.
The minister said the government wants to secure access to the US SPR distributed across four locations along the Gulf Coast. He said the point of this is to minimize costs. What Australia doesn’t want is to establish a physical reserve at very high cost in Australia and pass that cost to Australians at the fuel pump.
It would take 20-40 days for oil to be sent to Australia from the US and it would need refining when it arrived.
Negotiations with the US began “some time back,” Taylor said.
There is opposition to the plan. The Australian Trucking Association said any emergency stock must be in Australia.
Australia’s Opposition Leader Anthony Albanese said the way to shore up Australia’s fuel security is to actually have fuel security in Australia. He said the need is for a strategy here, not one that asks the US for help if we run out of fuel.
Australia currently relies on Asia for most of its fuel imports and much of the Asian fuel is sourced from Middle East crude where there are growing tensions.
Australian Defence Minister Linda Reynolds said Australia was reliant on tanker traffic through the Straits of Hormuz for a percentage of its oil supply. Hence the government is doing everything it can to be prudent to ensure continuity of supply. This could include Australia sending a warship to help protect oil tankers in this region.
The SPR’s current inventory stands at 644.8 million bbl as of Aug. 2, according to US Office of Fossil Energy data. The four storage caverns have a total capacity of 727 million bbl.