June 8, 2020 [Argus Media] – Australian energy minister Angus Taylor expects to make announcements soon outlining Canberra’s fuel security plans that will take into consideration the long-term viability of the domestic refining sector.
His comments today accompanied the formal signing of the agreement with the US government for Australia to lease storage lease space at the US Strategic Petroleum Reserve (SPR) to store and access oil during a global emergency.
The deal with the US and establishment of Australian government-owned oil reserves also are also a down payment for Australia’s longer term fuel security, Taylor said.
The Australian conservative coalition government plans to spend about A$94mn ($59mn) to store crude in the SPR as part of efforts to meet its obligation to the International Energy Agency (IEA) to hold 90 days of net imports.
The SPR lease and the planned purchase of oil to store in the SPR are part of the Liberal-National party coalition government’s plans to meet its obligation to the IEA as Australia has been non-compliant with the 90-day stocks obligation since March 2012. Domestic consumption has been rising since then. Production has been shrinking and a number of Australian refineries have shut down, leaving the country more reliant product imports.
The comments by Taylor on the long-term viability of the Australian refining sector in the context of oil storage reflects the downstream long-held position that it does not want any extra costs imposed on it by mandatory directives to hold more oil and petroleum stocks than what refiners see as commercially viable.
Australia’s refinery operators have been hit financially by the reduction in product demand as a result of the restrictions placed on travel to combat the spread of Covid-19. This has forced extended maintenance plans in an effort to reduce costs and improve margins.
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