Australia Unveils $7.2 Billion Fuel Security Plan Push After Iran War Supply Shock

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(Bloomberg) — Australia will include an A$10 billion ($7.2 billion) package for fuel and fertilizer security in next week’s budget proposal after the Iran war caused a run on supplies in the Pacific nation.

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The package will fund a permanent government-owned onshore fuel reserve of around 1 billion liters and lift the minimum amount of fuel companies are required to hold by around 10 days, Prime Minister Anthony Albanese said in a speech in Sydney on Wednesday. That will support an expansion of overall storage to 50 days of supply for diesel and jet fuel, he said.

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Despite being a major producer and exporter of energy, Australia sources the vast majority of its refined fuels from overseas and its stockpiles are among the lowest in the developed world. That left it exposed when the Iran war disrupted global oil supplies, contributing to widespread fuel shortages and rising prices.

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“This is aimed at making sure that Australians can have more confidence in protecting our energy sovereignty, not just during this crisis, but going forward as well,” Albanese said.

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The PM and Energy Minister Chris Bowen spoke about the plan on Wednesday after a national security meeting in Sydney. Bowen said Australia has responded to the crisis, and has more fuel today than when the conflict in Iran began. 

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“This is a big change in our approach as a country,” he said. “We have been looking at how to be better prepared for future shocks.”

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The package includes A$7.5 billion for the establishment of a fuel and fertilizer facility that will increase supply and storage by providing financial support such as loans, equity, guarantees, insurance and price support, according to Albanese.

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It also designates A$3.2 billion to establishing the government stockpile and A$10 million to support feasibility studies into new or expanded fuel refining capabilities, to be co-funded with state and territory jurisdictions.

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There’s at least one “serious proposal” for an additional refinery that would receive the support of the state and federal government, Albanese said. The nation only has two working refineries, one of which suffered an explosion last month.

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“Today, after the world’s worst oil shock, Australia’s fuel and energy requirements will go some way to being future-proofed,” said Peter Khoury, spokesperson for Australia’s National Roads and Motorists’ Association.

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(Updates with additional details from second paragraph, quotes from Albanese and NRMA.)

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