The Federal Government’s Boosting Australia’s Diesel Storage Program has invested up to $260 million to secure its domestic supply of diesel fuel to ensure key industries can withstand rising fuel prices caused by the Russia-Ukraine conflict.
The Program will see the government support about 1000 new jobs and increase the country’s diesel stockholdings by 40 per cent.
The program includes a $25 million investment in Coogee Chemicals’ strategic storage project in Kwinana, Western Australia, where construction is already underway.
Assistant Minister for Defence Andrew Hastie emphasised the need for a secure supply of diesel fuel.
“Diesel is vital to Australia’s energy security – it keeps our economy running, and it underpins our critical infrastructure, trucking sector and key industries, such as mining and agriculture,” Hastie said.
“This $25 million investment from the Morrison Government is enabling a local, family run business here in Kwinana, Coogee Chemicals, to build the infrastructure to store 100 megalitres of diesel – that is not only great for their business but great for our national security and manufacturing sovereignty.”
A report from the Australian Renewable Energy Agency (ARENA) in 2017 showed that Australia’s mining industry derived 41 per cent of its energy from diesel sources, with natural gas in second at 33 per cent.
Since then, major developments have been made in renewable energy and electrification, but the use of diesel on Australian mine sites remains significant in the near to mid-term.
Now, as conflict continues between Russia and Ukraine – the former producing 12 per cent of global oil supplies in 2020 – fuel security is precariously placed.
The Australian Institute of Petroleum found that average wholesale diesel prices for the week ending March 20, 2022, reached 206.3 cents per litre.
Australian Competition & Consumer Commission chair Rod Sims linked these prices directly to the conflict in Eastern Europe.
“The world was already experiencing high crude oil prices late last year due to the continuing actions of the OPEC and Russia cartel, and the enduring Northern Hemisphere energy crisis,” Sims said.
“The shocking events in Ukraine have forced crude oil prices even higher, as Russia is a major supplier of oil.”