Australia plans diesel storage grants in 1Q 2021

The Australian government plans to issue A$200mn ($143mn) worth of grants to domestic refiners and downstream firms to build 780mn litres (4.9mn bl) of diesel storage as part of efforts to meet its IEA strategic reserve commitment and boost fuel security.

The 4.9mn bl storage capacity will boost Australia's diesel stocks by 40pc and add around 10 days to the IEA member requirement to hold 90 days of net oil imports in strategic reserves, energy minister Angus Taylor said at the Australian liquid fuel security conference.

The grant programme will be launched in January-March 2021 and focus on strategic regional locations, connections to refineries and existing fuel infrastructure, the minister said.

In addition to these measures, the government will update its liquid fuel legislation, improve the online fuel reporting system and reduce the reporting burden on industry, Taylor said.

The A$200mn storage grant programme will help the sector implement these obligations and reduce costs for industry, Taylor said. Canberra first announced its A$200mn subsidy for the downstream sector last month when it unveiled that Australian taxpayers will pay A1.15¢/litre of refined product as part of the A$200mn funding and pay for upgrades required for refineries to meet tighter gasoline specification standards of sulphur limits of 10ppm (0.001pc) from 2027 and replace the current upper limits of 150ppm, bringing Australia in line with Europe, the US and China.

The upgrade to the Australian refineries to meet the new sulphur limit by 2027 is expected to cost around A$1bn.

By Kevin Morrison