Australia and the United States have signed a milestone arrangement to bolster Australia’s access to emergency oil supplies in the event of a major global disruption.
As informed, the arrangement will allow Australia to lease space in the US Strategic Petroleum Reserve (SPR) to store and access Australian owned oil during a global emergency.
“The U.S. Strategic Petroleum Reserve is a critical asset for energy and national security that America has had at our disposal for decades… we are glad that Australia is choosing to entrust us with their reserves,” Dan Brouillette, U.S. Secretary of Energy, said.
“This arrangement with Australia will strengthen the energy reliability of one of our strongest allies, providing them options in case of an emergency, and bolstering their energy security.”
Australia has signed a milestone Arrangement with USA that will bolster fuel security and improve our resilience, as well as strengthen the close bonds between our two great nations @secbrouillette #auspol 🇺🇸🇦🇺 pic.twitter.com/flEi4EVrfD
— Angus Taylor MP (@AngusTaylorMP) March 10, 2020
“This landmark Australia-US Arrangement represents our joint commitment to maintaining fuel security and improving Australia’s resilience, as well as strengthening the close bonds between our two great nations,” Angus Taylor, Australia’s Energy and Emissions Reduction Minister, commented.
“The Strategic Petroleum Reserve is the world’s biggest emergency stockpile of oil. The U.S. is a trusted ally who has been essential for global oil security and we are glad to be building on our strong, longstanding relationship, while ensuring Australia is best prepared to act during a global oil disruption.”
Under the agreement, Australian government-owned stocks held in the Strategic Petroleum Reserve can be counted towards Australia’s compliance obligations with the International Energy Agency (IEA).
Under International Energy Agency obligations, Australia and other member countries are required to hold oil reserves equal to 90 days of the previous year’s net imports and are permitted to hold these reserves offshore where a bilateral arrangement is in place.
A separate leasing agreement is currently being negotiated between Australia and the US. This would detail any future purchases Australia may make now the arrangement is in place.
MUA: US fuel arrangement will not secure Australian fuel
Referring to the newly announced arrangement, the Maritime Union of Australia (MUA) warned in a separate statement:
“The Morrison Government’s arrangement to store Australia’s emergency fuel reserves in the United States is nothing more than an accounting trick that will do nothing to ensure the country’s resilience to a global crisis that disrupts fuel supplies.”
MUA explained that the agreement has provided no details on “how that oil stockpile would assist Australia in a genuine crisis, how long it would take to bring to Australia, or how it would be transported when there are no Australian-owned oil tankers.”
According to Ian Bray, MUA Assistant National Secretary, the IEA requirement for minimum fuel reserves — which Australia has been in breach of since 2012 — were about ensuring adequate reserves were available to address potential shipping disruptions caused by military conflicts, economic crisis, or natural disasters.
“More than 90 per cent of Australia’s fuel is imported, all on foreign tankers, yet in recent years the country has regularly had just a few weeks of fuel available, putting the economy at risk of grinding to a halt if any major incident cut those supplies,” Bray pointed out.
“To claim that storing Australian-owned oil in the US Strategic Petroleum Reserve will somehow solve this is fanciful, especially as the Morrison Government has provided no information on how it would transport those fuel supplies during a crisis.”
Bray further said that the Australian government should take advantage of a collapse in global oil prices to construct a domestic fuel reserve, ensuring the products needed for transport, aviation and industry were on Australian soil and ready to use during any future crisis.
“Rather than look to accounting tricks, the Morrison Government should emulate that model and construct a domestic fuel reserve that ensures adequate supplies of fuel are always available to address potential shipping disruptions caused by military conflicts, economic crisis, or natural disasters,” Bray concluded.