Western Australia Establishes Strategic Fuel Reserve

Australia is facing a historic energy crisis with much of its gulf-sourced energy facing not one but two blockades. But at least some parts of the country are doing something about it, even if it is too little, too late. 

Western Australia will establish its own strategic reserves of diesel fuel to ease “acute shortages,” the state’s government said.

As Bloomberg reports, the government signed a deal with Cambridge Gulf to buy and store 4 million liters of diesel, which is expected to arrive in the coming weeks, according to a statement. The inventory may be expanded to 12 million liters, which should be enough to last the local infrastructure at least a few days. 

The move comes as the war in Iran and resulting blockades of the Strait of Hormuz hampered global oil flows, with panic buying in Australia leading to fuel shortages. Australia has a far bigger national fuel reserve, which included more than 2.8 billion liters of diesel as of April 7, but much of that is located on the nation’s east coast — thousands of miles away from Western Australia.

Read More: Are Australia’s Low Fuel Reserves Cause for Concern?: Explainer

Western Australia consumes a high amount of diesel due to its large mining and agricultural industries. Gas stations around the state have reported shortages, though just 18 of the 771 stations did so in the week to April 10, down from 61 in the prior period.

Western Australia is the country’s biggest producer of wheat and is home to vast mining operations including iron ore and gold, with Sanderson estimating the state accounts for 25% of the nation’s diesel consumption. Prime Minister Anthony Albanese is due to visit more Southeast Asian nations this week in an effort to shore up fuel supplies as the Iran war shows no signs of abating.

“This would be solely for West Australians and be directed at the discretion of the state government to areas that need it most,” Energy Minister Amber-Jade Sanderson said at a press conference on Sunday, adding that more details would be provided in the coming days and weeks. The reserve would hold “millions of liters” and use “capacity in the existing distribution network,” she said.

“We have made real progress in the last month to address supply issues across regional areas, but we need to be prepared for the months ahead,” Sanderson said in a follow up statement Monday. “This strategic stockpile will give WA a source of fuel under its direct control – providing much needed flexibility as we continue to navigate this global issue.”

Establishing a strategic reserve is a “sensible move,” said Aaron Morey, chief executive officer of the Chamber of Minerals and Energy of Western Australia, adding that the CME was looking forward to continuing work with the government “on the design and implementation” of the mechanism.

The Western Australian Farmers Federation said that they proposed separate stockpiles at a roundtable with the government on March 10, according to a statement, adding that it would improve supply security for growers.