Australia is a signatory to the International Energy Agency (IEA) treaty called the 'Agreement on an International Energy Program (IEP)', and participates in IEA oil market and energy emergency committees. Key requirements under the IEP treaty are that member countries:
- hold oil stocks equivalent to at least 90 days of their prior year’s daily net oil imports
- in the event of a major oil disruption, contribute to IEA collective actions by way of a stock release, demand restraint, fuel switching, increased production or fuel sharing.
Australia contributed to IEA collective actions called in March and April 2022, in response to Russia’s invasion of Ukraine. Australia is committed to returning to compliance with the stockholding obligation by 2026 and this is backed by the Australian Government’s comprehensive array of fuel security measures.
Plan for return to compliance
In June 2016, the IEA Governing Board noted the Australian Government’s plan for returning to compliance with the 90 day stockholding obligation. In November 2017, Australia held oil stocks equivalent to 45 IEA days, increasing to an average of 63 IEA days over 2022.
Significant progress has been made since the presentation of Australia’s phased compliance plan in 2016 including:
- Delivering a set of comprehensive fuel security measures, including the Fuel Security Act 2021.
- The Act established the legislative framework for a national fuel reserve through an industry Minimum Stockholding Obligation (MSO).
- The Act also established the Fuel Security Services Payment (FSSP), which helps secure Australia’s long-term refining capabilities.
- Building additional storage capacity through the Boosting Australia’s Diesel Storage Program.
- Reviewing and modernising the Liquid Fuel Emergency Act 1984 will ensure Australia is prepared to respond efficiently and effectively in the event of severe market disruptions.
- Establishing mandatory reporting of petroleum data through the Petroleum and Other Fuels Reporting Act 2017.
- The Australian Government publishes comprehensive data each month on our fuel security in the Australian Petroleum Statistics.
- Resourcing a dedicated Energy Counsellor to strengthen our IEA engagement.
- Establishing the first bilateral arrangement to store Australian Government owned oil in the Strategic Petroleum Reserve in the United States.
- Forming diverse bilateral agreements with key trading partners to secure stocks in times of global supply crises.
The implementation of the Australian Government’s fuel security measures will create a step change in our compliance pathway. The fuel security reforms will strengthen our energy security, support jobs, improve fuel quality, and protect families and businesses from higher fuel prices.
The fuel security measures ensure Australia has the fuel it needs to maintain critical services in an emergency and support Australia’s IEA return to compliance. The measures not only build stocks but invest in our domestic refining capability and build redundancy in our system. Retaining a sovereign refining capability matched to our domestic crude oil production is aligned with our self-sufficiency obligations under Article 2 of the IEP treaty.
The MSO will see the establishment of minimum stock levels of key transport fuel stocks of petrol, diesel and jet fuel. A national fuel reserve established through the MSO could be relied upon and released to the market in times of supply disruption, in emergencies and if fuel demand unexpectedly increases.