(Bloomberg) -- The Australian government plans grants of A$200 million ($146 million) to build diesel storage facilities and will introduce other measures aimed at bolstering the nation’s teetering fuel industry.
The government aims to use the handout to fund an additional 780 megaliters of onshore diesel storage space, Angus Taylor, the country’s minister for energy and emissions reduction, said in a statement Monday. The projects will create as many as 1,025 jobs, the statement said.
The government of Prime Minister Scott Morrison is under pressure to save the oil refinery sector, hard hit by the Coronavirus epidemic, and preserve Australian energy security.
“Like all sectors of the economy, the Covid-19 pandemic is having an impact on Australia’s fuel industry,” Taylor said in the statement. “We need a sovereign fuel supply to shield us from potential shocks in the future.”
The government also announced a legislative package that will introduce key transport fuel reserve requirements for the first time. Gasoline and jet fuel storage will be mandated at around 24 days of consumption. Diesel stocks must be increased by 40% to 28 days in reserve.
The government also set a six-month timeframe to start the final design of a market-based system for production payments to ensure refineries receive a minimum of 1.15 cent per liter.
The latest announcement comes three months after the government announced a strategic study on how to boost domestic fuel storage capacity. In April, Australia said its fuel reserves had fallen short of the 90-day requirement stipulated by the International Energy Agency.
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