The Federal Government’s new measures to lock in the future of the local petroleum refining sector and to reduce the country’s vulnerability in the event of interruption to offshore supplies have been passed in the Australian Parliament.
The Fuel Security Bill 2021 and Fuel Security (Consequential and Transitional Provisions) Bill 2021 follow extensive lobbying from a number of industries and are aimed at improving Australia’s stocks of transport fuels as well as providing support for continued domestic fuel production.
The legislation gives effect to key measures in the Government’s comprehensive fuel security package which was announced in the 2021-22 Budget.
The reforms will establish a minimum stockholding obligation (MSO) requiring fuel importers and refiners to maintain a minimum level of petrol, diesel and jet fuels.
The Bill also provides for the creation of a fuel security services payment (FSSP) to support local refiners during loss-making periods and enable them to continue refining until 30 June 2027.
The MSO will come into effect in July 2022 to safeguard key transport fuel stocks at a baseline level, with a 40 per cent increase in diesel stockholdings from mid-2024.
Supporting the two remaining local refineries will protect the jobs of 1,250 workers across the Ampol refinery in Lytton (Queensland) and the Viva Energy refinery in Geelong (Victoria) and create another 1,750 construction jobs.
“(The Bill) will also ensure we have the sovereign capability to respond to a major fuel disruption, protect our fuel dependent industries, families and businesses from higher prices at the bowser, and keep Australia moving as we secure our recovery from COVID-19,” said Federal Minister for Energy and Emissions Reductions, Angus Taylor.
The Government is also providing support for major refinery infrastructure upgrades to help refiners bring forward the production of better-quality fuels to 2024 instead of 2027. The ability to produce better quality fuels, including ultra-low sulphur fuels, will also improve air quality and deliver an estimated $1 billion in lower health costs.
“Enhancing Australia’s fuel security is a key plank in our plan to secure our recovery from the COVID-19 pandemic and to prepare against any future crises,” said Taylor.