Diesel storage contracts up for grabs in fuel-security move

AFR – Friday, 8 Jan 2021 – Page 14

Oil refiners and fuel storage providers will from Monday be able to bid for grants of up to $33.3 million from the Morrison government to build diesel storage facilities in a move intended to increase the country’s fuel security and provide a lift for struggling refineries .

Federal Energy Minister Angus Taylor will today formally advise of the opening of the competitive tender worth up to $200 million. It is part of the government’s fuel security package announced in September and will support construction of an extra 780 million litres of diesel storage.

Locally listed refiners Ampol and Viva Energy are both expected to take part, as well as majors ExxonMobil and BP, even if the latter has already decided to close its only remaining Australian refinery , at Kwinana in Western Australia.

Fuel storage companies such as Vopak are also expected to be interested in the grants, which are intended to cover up to half the cost of eligible projects, which should be in a strategic regional location or connected to existing fuel infrastructure.

Mr Taylor foreshadowed the March quarter timing for the grants program in October, when he said the scheme would help the fuel companies implement new obligations on diesel stockpiles . Industry will need to increase their reserves of diesel by about 40 per cent from current levels by 2024.

‘‘ The Morrison government will oversee the rollout of the diesel program this year, which will not only create jobs, but will help to make sure Australian families and businesses can access the fuel they need, when they need it,’’ the minister said.

‘‘ Fuel, and diesel in particular, is the lifeblood of so many sectors in our economy, including our farmers, truckies and tradies. It is essential that we get the right balance and location of our onshore stockholdings.’’

Construction of the storage projects should start from mid-year and be completed within three years.

The biggest part of the fuel security package is a subsidy on local production of petrol, diesel and jet fuel, to begin on July 1, 2021. An emergency interim payment of at least 1¢ a litre was announced by Mr Taylor in December in a bid to head off further refinery closures.

But so far, only Viva, which owns the former Shell refinery in Geelong, has said it will take the subsidy, which requires refiners to commit to keep their plant running.

Applications for the diesel storage grants close on February 22.