Australia commits $7b to boost fuel stockpiles, create government reserve

Australia will spend A$10 billion ($7.22 billion) to boost its national fuel stockpiles and establish a permanent government-owned fuel reserve, Prime Minister Anthony Albanese said on Wednesday.

The reserve of around 1 billion litres (264 million gallons) will ensure Australia holds at least 50 days of fuel onshore to shield the country from future supply shocks, Albanese said.

Australia imports about 80% of its fuel and has experienced localised shortages since the start of the conflict in the Middle East.

The A$10 billion fuel security package would be the centrepiece in the centre-left government's budget next week, Albanese said.

"This is aimed at making sure Australians can have more confidence in protecting our energy sovereignty not just during this crisis but going forward as well, protecting our nation's energy interests," he told a press conference.

The fuel reserve will cost A$3.2 billion. Australia's minimum stockholding obligation requiring importers and refiners to hold roughly 30 days of fuel will also be lifted by 10 days, costing A$34.7 million.

"Our fuel security reserve will focus on regional stockouts and supply constraints for essential users in the event of another supply crisis," Albanese said.

Additionally, A$7.5 billion in funding will go towards increasing stockpiles of fuel and fertiliser through providing loans, equity, guarantees, insurance and price support.

Energy Minister Chris Bowen said Australia was one of the few countries in the International Energy Agency which did not have a government-owned fuel reserve.

"We will now have a government-owned fuel reserve of around a billion litres to add to those minimum stocks that the private sector must hold, particularly focused on diesel and jet fuel," he said.

"This is a big change in our approach as a country and a good one."