The defence minister, Richard Marles, says he is considering increasing Australia’s onshore fuel storage as new figures show the nation has just 58 days’ of emergency fuel in storage, less than two-thirds of the international standard of 90 days.
Marles was responding to research commissioned by the department of defence and released on Tuesday morning that warned 90% of Australia’s fuel imports would be at risk amid conflict in the South China Sea.
The latest statistics, from June, show Australia is last on the list of countries that have signed up to the International Energy Agency agreement on emergency reserves.
According to parliamentary research, Australia has been non-compliant for about a decade. Fifty-eight days’ worth is the average for the past decade. There are a range of measures in place to ensure the country is compliant by 2026.
The research emerged as China continued its aggression against Taiwan, including air and naval exercises, and it’s ongoing militarisation of the South China Sea. The research pointed to “shipping choke points” in the lanes needed to transport fuel to Australia, or to deliver fuel to other countries that then exported to Australia.
Marles said Australia relied heavily on imports, needed to maintain the ability to refine fuel, and that the government was “very much” looking at the issue of fuel storage.
He said the research highlighted the importance of the global rules based order, the “rules of the road”.
“When we see those rules placed under pressure, that directly engages our national interests, which is why we are so focused on activities which assert the UN Convention on the law of the sea, freedom of navigation on bodies of water around the world, but particularly on bodies of water where our trade passes in the South China Sea is one of those,” he said.
The defence research said Australia should diversify import sources; increase its local refining capability; reduce its dependence on fossil fuels; increase strategic research; and educate and prepare the population for possible shortages.
Research co-author, Richard Oloruntoba, an associate professor of supply chain management at Curtin University, said the agreement with the IEA to hold 90 days’ fuel in reserve was done to stabilise the market. Fuel reserves can be released if there are global supply disruptions or price spikes.
Australia does have some oil stored in the United State’s strategic reserves.
But that would not help Australia if shipping lanes were blocked.
“That is not meant to flow to Australia if there are shortages, that is to stabilise global oil prices,” Oloruntoba said. “If there is a disruption to global supplies and prices are raising astronomically, the US government will release that into the market.
“It’s not backup for any shortages in Australia.
“The Australian government relies completely on the open market, to get the cheapest prices through supply and demand.
“We don’t have 90 days’ supply in stock,” he said. “[In general] we roughly have between 60 and 65 days.”
Extracted from The Guardian