State and federal governments announce fuel security plans

STATE and federal governments have announced a raft of new fuel and fertiliser security measures.

Today, 6 May, the West Australian state government announced it has secured an extra eight million litres of diesel for WA's strategic stockpile, bringing the state-controlled backup supply to 20 million litres.

The WA announcement follows on from Queensland announcing its fuel security plan on Monday.

The federal government also announced today that the Federal Budget next week will include an Australian Fuel Security and Resilience package that it said will ensure energy sovereignty and protect the nation’s energy interests.

A federal government media release said the package would provide more than $10 billion to secure Australia’s near-term fuel and fertiliser security, establish a permanent government-owned Australian Fuel Security Reserve of around a billion litres, and lift the Minimum Stockholding Obligation by around 10 days for every type of fuel.

“This will support an overall expansion of Australia’s onshore fuel reserves to ensure at least 50 days of fuel supply and storage of diesel and aviation fuel,” the release said.

The package will include::

• $7.5 billion for the establishment of a Fuel and Fertiliser Security Facility to increase supply and storage of fuel and fertiliser by providing financial support including loans, equity, guarantees, insurance and price support.
• $3.2 billion to establish a Government-owned Australian Fuel Security Reserve of around a billion litres to increase long-term diesel and aviation fuel supply and storage in combination with an increase to the Minimum Stockholding Obligation (MSO), to increase Australia’s critical fuel reserves to 50 days. The Australia Fuel Security Reserve will focus on regional stockouts and supply constraints for essential users in the event of another supply crisis.
• $10 million to support feasibility studies into new or expanded fuel refining capabilities, to be co-funded with state and territory jurisdictions.

“The government will consult on implementation of the fuel reserve to enable the ability to underwrite or purchase fuel, support storage, and trade stocks as needed to ensure our fuel security during severe or prolonged fuel supply disruption.

“An additional 10 days of fuel holdings through an uplift to the Minimum Stockholding Obligation for all fuels is also supported in the budget with $34.7 million over four years to support ongoing management of Australia’s fuel security, including government engagement with industry to plan the uplift in fuel holdings.

“It will be achieved by increasing current requirements on refiners and importers holding stocks of aviation fuel, petrol and diesel.

“The changes will take place progressively over time, backed by support to invest in new and refurbished fuel storage to support the uplift in fuel stocks.

“The government will work with state governments to undertake feasibility studies into new or expanded refining capabilities, building on work with current refinery operators to retain our current refining capability in the decade beyond 2030.”

More details of the Australian Fuel Security and Resilience package will be released next week as part of the Federal Budget.

The WA state government announcement said its extra supply of fuel, provided by BP , can be accessed in Kalgoorlie, Geraldton and Kwinana where it can be quickly distributed to farmers and miners facing supply challenges.

Expected to be net debt neutral, the fuel will be sold on to customers.

The announcement said the supply comes as a shipment of 4 million litres of diesel arrived in Wyndham on Monday, shoring up emergency supplies in the Kimberley.

“The cargo is the first tranche of the state's strategic stockpile and is expected to be used by remote communities which rely largely on diesel generation for power in addition to the agricultural, resource and transport sectors,” the statement said.

“The strategic stockpile will be 100% WA owned and able to be used at the discretion of the state, providing an agile volume of liquid fuel when supply is compromised.

“This approach complements the federal government's Minimum Stockholding Obligation, which requires fuel companies to hold reserves.”

The state government's security response has included implementing state of emergency powers compelling fuel companies to provide detailed supply chain information; adding every retailer in the State to FuelWatch and increasing fines by 400%; and allowing larger triple road trains and heavier loads of milk and perishables.

State energy minister, Amber-Jade Sanderson said while supply is firming up and prices are trending downward, the state government wants to be overprepared, which is why they are continuing to build the state's strategic stockpile.

"The fuel crisis has shown just how important it is to act fast and be flexible,” Ms Sanderson said.

"Having a stockpile of diesel strategically positioned in areas of need gives us the ability to quickly address specific supply issues and solve problems before they arise."

BP country president for Australia Paul Augé, said: “backed by BP's global import capability, this adds resilience to the supply chain and provides Western Australians with confidence, bolstering fuel security and supply during periods of volatility and heightened demand".

A move by the Victorian state government to secure a 10 million litre diesel reserve for the agriculture industry also has been welcomed by the Victorian Farmers Federation, which VFF acting president Peter Star said was a sensible step to strengthen confidence across the sector.

“Securing this vital diesel reserve is a practical and welcome move that gives farmers greater confidence after one of the most volatile periods in recent memory,” Mr Star said.

“Farmers have been at the coal face and bearing the brunt of diesel scarcity. Without a reliable supply of diesel, our industry grinds to a halt and so does our ability to produce food and fibre. This move will help ensure farmers can keep farming and providing food for our supermarket shelves.”