Amidst the downfall of global crude oil prices, the Australian government has decided to spend around $94 million on developing its stockpile of crude oil. Reportedly, the government is planning to initially store its oil stocks in the United States, before bringing it to the country.
According to reliable sources, the decision is focused on mitigating the country’s longstanding concerns over fuel security in the case of a huge disruption like a military conflict. The move also comes at the most crucial times where fuel prices have touched a new low.
However, the federal opposition has raised concerns about the location of the storage. The plan of storing its oil stock on the other side of the Pacific Ocean would be problematic under the events of global tensions, causing sea lanes to be closed.
As per the International Energy Agency norms, each nation is required to hold emergency crude oil stocks corresponding to almost 90 days of net oil imports. This comes as a preventive measure to avoid any hit from massive disruption to oil supplies. However, Australia’s stocks turn out to be equal to 55 days as of December.
Shedding light on the development, Angus Taylor, Australia’s Energy Minister, said that the government is intending to take advantage of the astonishingly low fuel prices around the world in order to expand its underdeveloped national oil reserve.
As of now, it will be stored it in the United States as the country currently does not own a storage space. But the government is willing to work with regional players to extend its overall local storage capacity over the longer term.
Going as per the recent agreement with the U.S., Australia would have access to storage facilities for an initial span of 10 years.