PERTH (miningweekly.com) – The Australian government on Wednesday said that the formal inking of the US/Australia Strategic Petroleum Reserve Lease Agreement was part of the government’s actions to shore up fuel security in Australia and to enhance its ability to withstand global shocks.

The agreement will allow Australia to lease space in the US Strategic Petroleum Reserve (SPR) to store and access Australian-owned oil during a global emergency.

Australian-owned stocks held in the SPR can be counted towards Australia’s compliance obligations with the International Energy Agency (IEA).

Under IEA obligations, Australia is required to hold 90 days of oil reserves and can hold these reserves offshore where a bilateral arrangement is in place.

Australian Energy and Emissions Reduction Minister Angus Taylor said on Thursday that the leasing deal is a very clear testament to both the US and Australia's shared commitment to the security of the global oil market.

“The deal and establishment of Australian government-owned oil reserves also acts as a down payment for Australia's longer term fuel security. We'll soon be making further announcements on the next steps on our domestically focused fuel security package and that will explore looking at onshore storage with industry and better understanding the long-term viability of our refining sector. 

“Now, not only will this agreement contribute to Australia's IEA compliance and strengthen our fuel security, I'm optimistic that other countries will look to this as a model for success and see the opportunities that the SPR presents for boosting efforts to stabilise and boost global oil markets,” Taylor said.

“I know that's important to both Australia and the US, that we have a stable global oil market. We are a major participant. As the largest liquefied natural gas (LNG) exporter in the world, that is obviously very closely linked to the oil market, and it is enormously important to us.”

US Secretary of Energy, Dan Brouillette said that the agreement would deepen the relationship between the two countries, while advancing the strategic interest of both nations and strengthening global energy stability and security.

“This agreement today will strengthen global energy security and support Australia's contribution to an IEA collective action in the event of a supply disruption. And in that regard, it is a win not only for the US and for Australia, but the entire IEA membership. 

"We're thankful that you chose to be the first country to demonstrate the judgment of leasing storage in the US's SPR. Oil producers will also be thankful for these purchases during a time of oversupply imbalance,” said Brouillette.