Coronavirus: US-based $94m crude oil purchase fuels debate over national energy security

Australia has taken advantage of rock-bottom oil prices by securing a $94m strategic fuel reserve to be stored in the US.

Minister for Energy Angus Taylor. Picture: Bianca De Marchi/AAP

Australia has taken advantage of rock-bottom oil prices by securing a $94m strategic fuel reserve in the US, with plans to further expand the nation’s domestic storage capacity down the track.

The US deal will equal more than 315 million litres of fuel for Australia, but critics claimed the plan did not go far enough to ­secure the nation’s energy needs during a pandemic and any future pandemics or wars might prevent fuel stored overseas from getting to Australia.

Energy Minister Angus Taylor acknowledged the fuel would have to be brought to Australia over time, but said the government had announced the acquisition of the fuel reserve because of the “unique ­opportunity” of plummeting crude oil prices.

“We have seen prices go negative in recent hours and they are remaining very, very low,” Mr Taylor said on Wednesday.

“In reality, what this means for farmers, for miners, for manufacturers, for commuters — all of whom rely on a secure, reliable source of fuel supply — is that they can know the government has got their back.

“We are exploring options with the industry right now for the longer term to make sure we increase our local storage capacity.”

Mr Taylor would not reveal what price the government planned to buy the crude at, but said Australia consumed about half a million barrels of oil, worth $10m, on a normal day, which has not been reflected in pandemic usage.

His office refused to reveal who Australia was buying the fuel from because of commercial sensitiv­ities, ­although The Australian understands the government will purchase the crude oil from the private sector, with details currently commercial-in-confidence.

The petroleum industry welcomed the US deal, but Australian Institute of Petroleum chief executive Paul Barrett told The Australian the fuel would become useful only once it could be transported to Australian shores.

“We’ll need to get it here. Our expectation is it will be made available locally reasonably quickly, but we don’t know how that will look,” he said.

“They could operate this in a variety of different ways. It could well be several different sites, depending on what objectives the government has. We can only hope this leads to Australia’s long-term fuel security. Buying when the crude oil market is at low levels is probably a good thing from a ­national point of view.”

Anthony Albanese blasted the US fuel plan, claiming it would not meet Australia’s obligations under the International Energy Agreement. “It is not in line with our initial obligations because it is in the US. The point of the international agreement is Australia should have here 90 days’ worth of liquid reserves,” the Opposition Leader told ABC News.

“The government has dismissed the issue, and what we need to do is to actually build a capacity here … it is in the national interest.

“The US isn’t New Zealand — I mean it’s not next door.”

Centre Alliance senator Rex Patrick, who has long pushed for greater fuel reserves in Australia, said the deal could be foiled by events such as another pandemic.

“It would take 25 days for this oil to get Australia,” he said.

“We have been lucky so far, but national security shouldn’t be ­underpinned by luck.”