Emergency diesel supplies will be sourced from Singapore to create a strategic reserve in South Australia, with the state government today announcing $40 million in spending to bolster fuel stocks amid uncertainty arising from the Iran war.
It said the plan to purchase 10 to 20 million litres would inject what amounted to, in terms of current consumption, an extra four days’ worth of diesel into the state’s current stockpile.
The government, which previously rejected state-based approaches to the issue, today said the extra diesel would be stored at bulk fuel supplier IOR’s facility at Port Bonython near Whyalla in the Upper Spencer Gulf, and that the move was largely intended to provide certainty to the state’s farmers.
“This is a reserve — it’s going to be here in case there’s an emergency. And it doesn’t fix every problem if there [is], but it just gives us a degree of confidence into the future,” Premier Peter Malinauskas said.
“We are acquiring this reserve for the worst of circumstances, if it presents itself.
“This is not an everyday transaction. This is a very unique event.”
Under the plan, fuel will be stored at Port Bonython. (Federal Government)
Grain Producers SA welcomed the reserve, saying it would provide extra assurance to primary producers.
“With the uncertainty of the ongoing war, what’s going to happen with fuel and fertiliser supply in the long term is relatively unknown, so South Australia needs to be doing everything we can to keep farmers farming,” CEO Brad Perry said in a statement.
Corbin Schuster, who produces grain and hay at Freeling, about 65 kilometres north of Adelaide, and was currently seeding crops, said the magnitude of recent spikes in the price of fuel had come as a shock to the sector.
“When things kicked off over there in the Gulf, it was a concern for us,” Mr Schuster said.
“On our farm we’d be using probably over 200,000 litres a year.”
Freeling farmer Corbin Schuster says he typically buys fuel in bulk. (ABC News: Daniel Taylor)
He said while many farmers had their own on-site fuel storage, extra supply was a “good outcome”.
“This strategic fuel reserve for South Australia — hopefully we never have to use it — but if we can set it up, it’s there for the long term,” he said.
Last week, the federal government announced the upcoming budget would include a $10 billion funding package aimed at increasing Australia’s fuel stockpiles.
Move overdue, opposition says
The new reserve would include an initial purchase of 10 million litres as well as an option to double that amount, the government said.
Mr Malinauskas described it as a contingency plan, and said it was not an indicator of imminent supply restrictions.
“It’s approximately four days’ worth of diesel supply on top of around about 30 days that is currently here,” he said.
“If you’re quarantining it for very specific purposes, it’s a lot more than that.”
SA Premier Peter Malinauskas today signed an agreement with IOR CEO Drew Morland. (ABC News)
In mid-April the WA government announced it was creating its own “strategic stockpile” amounting to 4 million litres of diesel, but SA Energy Minister Tom Koutsantonis rejected that approach.
“What we need is the Australian government coordinating this nationally. We don’t want states competing with the Australian government to purchase fuel,” he told 891 ABC Adelaide on April 15.
“States going out and arbitrarily buying fuel is probably not in the national interest.”
The SA opposition, which had previously called for the creation of a strategic reserve, said an extra 20 million litres of diesel would hit “the sweet spot”.
“That’ll mean that our agricultural industry can run for two weeks if there is a complete [cut to] the supply chain,” Liberal leader Ashton Hurn said.
“It’s exactly what a smart government should be doing because we know that farmers in particular — but our state more broadly — can’t run off the smell of an oily rag.”
Liberal leader Ashton Hurn says the plan should have been adopted weeks ago. (ABC News: Daniel Taylor)
She said the decision to create a reserve signalled a “change of tune” from the government.
“We think that when we called it for it three weeks ago, the government could have recognised a good idea, but it’s really only been over the last couple of days that they’ve started to reinvent history a little bit,” she said.
“Why didn’t they come out when we proposed it in the middle of April and say this is a fantastic idea?”
Mr Malinauskas, who today signed an agreement with fuel supplier IOR, said the government had “been negotiating” with the company since March.
IOR CEO Drew Morland said the company was committed to working with governments “to unlock the ability to store more fuel in country to keep industry moving”.