Competition for fuel reserve

Australia's fuel providers are expected to compete for new storage deals with the backing of the Morrison government.

Viva Energy CEO Scott Wyatt at their Sydney offices. Picture: James Croucher

Australia's fuel providers are expected to compete for new storage deals with the backing of the Morrison government amid a tough outlook for the nation's four remaining refineries.

The Australian Institute of Petroleum said both Viva Energy and Ampol had already committed to significant maintenance work this year in the understanding the federal government would consider policies and potential assistance to ensure the industry remained afloat.

Energy Minister Angus Taylor aims to add 7 to 15 million barrels of domestic fuel storage under the storage plans and AIP said the industry had shown early interest.

“The government has shown a willingness to assist and we’ll be exploring options including their desire for a domestic stock holding which could assist refineries and their revenue streams too,” AIP chief executive Paul Barrett said.

Viva on Wednesday warned record declines in fuel demand from COVID-19 had put fresh pressure on manufacturers and raised the prospect of closures as owners grappled with losses at their facilities.

However the fuels retailer, which runs the Geelong refinery, is expected to be among refiners competing for the supply opportunity.

“The announcements earlier this week from Minister Taylor to undertake a strategic review of the sector and consider bolstering strategic oil storage alongside refining operations are important signals that build confidence about the future,” Viva chief executive Scott Wyatt said.

Several of Australia’s four remaining refinery operators and fuel suppliers are weighing the future of their plants amid soft margins, high costs and plunging demand due to COVID-19 lockdowns.

The government in April said it would spend $94m on the strategic fuel reserve.