With global demand for oil slowing to a trickle owing to worldwide virus lockdowns, crude prices turning negative and storage facilities bursting at the seams, Energy Minister Angus Taylor said it was time to act.
Australia has long had one of the lowest levels of emergency petroleum stockpiles in the developed world, leaving it hugely exposed in the event of tensions in hotspots such as the Strait of Hormuz.
Taylor said Australia would spend Aus$94 million (US$59 million) to begin developing an oil stockpile established on US soil.
"This is a unique opportunity to begin a fuel reserve because we are seeing historically low prices," he said.
"Now is the time to move. We are moving with the storage we can access, which right now is in the United States." The two allies signed an agreement in early March allowing Australia to lease space in the US Strategic Petroleum Reserve, which could be accessed in emergencies.
Taylor said Australia's own oil storages were already full, but the government had begun discussions with local industry to boost capacity and eventually move the strategic reserve onshore.
"In the event there is a global disruption that slows fuel supplies, moving around the world, we will get access to the fuel we need to keep our country going," he said.
The deal will also allow Australia to begin complying with International Energy Agency (IEA) obligations to hold 90 days of the previous year's net imports in reserve.
Taylor said the country currently has 20 to 30 days' worth of consumer supply on Australian soil, but held the equivalent of about 50 to 80 days under the IEA requirements.
