ANGUS TAYLOR: Good afternoon. Very good. Well, COVID-19 has created many challenges for Australia and Australians, but one of the opportunities we now see is lower fuel prices. We've seen that the petrol bowser with fuel prices as low as $1 or less a litre for commuters, for people buying fuel at the bowser. This is also a great opportunity for government. We are going to take advantage of historically low fuel prices across the world right now. We've seen prices go negative in recent hours, and are remaining very, very low. So I can announce today the Australian Government has made an initial allocation of $94 million to begin building a strategic fuel reserve. Initially, that reserve will be held in the United States where there is spare storage. We have fuel storages here in Australia, but in time, we're exploring opportunities with the industry to establish local storage. In reality, what this means for farmers, for miners, for manufacturers, for commuters, all of whom rely on a secure reliable source of fuel supply, is that they can know that the Government has their back. We will be establishing and are establishing a strategic fuel reserve that can ensure, even in the event that there is a global disruption that slows fuel supplies moving around the world, we will get access to the fuel we need to keep our country going. Right now, we have ample fuel supplies. Customers can be assured that when they go to the bowser, the fuel will be there. But we need to ensure that disruptions in the future that might slow down the supply of fuel to the bowser, the Government is in a position to ensure that there is a strategic fuel reserve, and that those farmers, those miners, those manufacturers, those commuters have access to the fuel they need to keep the wheels of business and to keep the economy moving.

JOURNALIST: Where will we store all this fuel? Will it be in Australia or overseas?

ANGUS TAYLOR: Initially the storage will be in the United States, in the Strategic Petroleum Reserve. I signed an agreement with the US a few weeks ago. Before the borders were closed, only just before that, I signed an agreement with the United States to access their reserves, simply because we don't have the storage space here in Australia right now. However, we are exploring options with the industry right now for the longer term to make sure we increase our local storage capacity.

JOURNALIST: How can we rely on that supply if it is in the US? Say, what if we need it quickly or what if there is a disruption to shipping lanes?

ANGUS TAYLOR: So, yeah, yeah, let me make two points about this. The first point is this is a unique opportunity to begin building a fuel reserve because we are seeing historically low prices. This is enormously important. Now is the time to move and we are moving with the storage we can access, which right now is in the United States. Now, it is also true that we want to have more fuel here in Australia over time. We've got to have the storage capacity to do that, and that is work we're doing with the industry right now and discussions we've begun with the industry some time back. So, that work is important and will continue. The other point I'd make, though, is we do need supply available in our supply chain. That is critical if a disruption emerges. We don't have a disruption right now. Obviously, we want more of that to be local. That is important. But right now, holding fuel in the Strategic Petroleum Reserves in the US is a very important start to building that fuel reserve.

JOURNALIST: But isn't one of the lessons of COVID-19, that supply channels globally are fragile, so that we've got to get the fuel to Australia-

ANGUS TAYLOR: [Talks over] Well, I've already answered that question.

JOURNALIST: I'm not sure you have, Minister. We've got to have the fuel in Australia before we really can rest easy.

ANGUS TAYLOR: Let's be very clear here. Now is the time to buy fuel, and we are doing that. Now it is true, as I have already said, that we want to make sure there's enough storage in Australia to keep enough fuel domestically, as well as across the international supply chain, and we began those discussions some time back and they will continue. But the important point here is just as it is a great time for consumers to be out buying fuel, at less than $1 a litre in many locations, so too the Australian Government is taking advantage of these historically low prices.

JOURNALIST: Could you give us a sense of scale, Minister. $94 million. How much of Australia's fuel need does $94 million buy, today?

ANGUS TAYLOR: Well, it depends on the price you're paying for the fuel, obviously, and the price has been quite volatile in recent days. That's an important point. But, you know- basically the way the numbers work is about 10 million barrels is a day's worth of consumption in normal times. It's obviously not normal times at the moment. We have ample fuel supplies and demand is lower. But they are the typical numbers.

JOURNALIST: Minister, how much fuel have we actually got on Australian soil at the moment? Not on the water, not overseas, but here.

ANGUS TAYLOR: Well, depends on the location and the type of fuel, but typically 20 to 30 days. You're seeing and those numbers have gone up in recent times. And we would like those numbers to be higher. We have been clear about that.

JOURNALIST: IEA days?

ANGUS TAYLOR: Well, 90 days is an IEA international obligation, and that's across the whole supply chain. In terms of IEA days, we have between 50 and 80 days, depending on how you want to calculate it. So, that's different from the consumption days you've just been talking about. The important point here though is this - now is the time to get in and start building this strategic fuel reserve. It's been talked about for many years, but we now have the historically low prices that allows us to do this, and to do it in a way which is attractive for the taxpayer because it's the taxpayers' money we're using here, and we have to use this carefully to get the maximum amount of fuel reserve we can for the dollars we spend. Now is the time to do it, and that's why we're allocating this money to get moving on that reserve.

JOURNALIST: On the question of sea lanes-

ANGUS TAYLOR: Sorry. Yeah. This one.

JOURNALIST: How long do you anticipate that this supply will be kept in the US for?

ANGUS TAYLOR: Well, I mean, obviously it's going to take time for us to increase our storage capacity in Australia. So, those discussions are ongoing with the industry. But that know that that is a priority. That's an important piece of work that needs to be concluded as soon as it possibly can.

JOURNALIST: Minister, on the storage capacity, what will that cost Australia to build that storage capacity?

ANGUS TAYLOR: Yeah, exactly these discussions that we're having with the industry now, that's part of what we're establishing. So, that's an important consideration, to get those costs and to ensure that those costs are economic for the taxpayer. And we are spending taxpayers' money here and so, the opportunity to buy and establish a fuel reserve is an extraordinary one now with these historically low fuel prices. The storage costs are small compared to the overall fuel cost.

JOURNALIST: Are we talking about scaling up the refineries here in Australia?

ANGUS TAYLOR: The focus at the moment is on building a Strategic Fuel Reserve. We are in discussions with the refineries on a very regular basis to make sure we maintain them in a very difficult time for refineries. We're seeing demand dropping sharply. Jet fuels dropped as much as 90 per cent, for obvious reasons even more than that. We've seen diesel holding on more. Petrol has dropped significantly as well. And that's a real challenge for our refineries - making sure that we have a supply of crude available to them, which the Australian Government can support them with in the event of a disruption, is an important part of their considerations as they think of their, consider their future. But we do want do see a strong refining sector in this country.

JOURNALIST: Are you concerned about the increasing activity of the Chinese military in those crucial strategic waterways that come to Australia, potentially where these strategic reserves will be coming?

ANGUS TAYLOR: Look, let me be clear about the history of this. We source fuel right now from many different countries. We have one of the most diversified sources of fuel supply in the world, and that's served us extremely well over a long period of time. We've avoided major disruptions. Some will remember the early '70s when there were disruptions, and Australia handled it surprisingly well under the circumstances, way back all those years ago. So, we have managed our way through this. But we think the better way to manage it going forward, as we've seen less production of upstream fuel in Australia, is to have a strategic fuel reserve and to ensure some of that, particularly over time, will be onshore in Australia. In terms of potential the disruptions as you look forward, which is the question you're asking, there's a whole range of possible disruptions to the supply of fuel. They come in many, many different- there's many different possibilities here. We're obviously ensuring that under a range of different scenarios, we're in a position to make sure those farmers, those miners, those manufacturers, those commuters, those tradies, all of whom rely on fuel for their livelihoods, have access to the fuel supplies they need to keep their businesses going.

JOURNALIST: How do you get the fuel here, though, if there is an enemy submarine or something like - this is a serious question.

ANGUS TAYLOR: No, no, I understand the question.

JOURNALIST: If you want to strangle this country's fuel supply, you just put a submarine off Botany Bay and let them target Kurnell, for instance. How do you manage this issue of getting the fuel here when it's not in the country in the time of a potential conflict?

ANGUS TAYLOR: Well, so, the point I've been making all along is now is the time to start building the reserve because we can do that in a way - let me finish - we can do that in a way which is attractive to taxpayers. That's the point. Now, over time, do we want more of that to be onshore? Of course we do. Of course we do. It is better to have it located in Australia than anywhere else in the world, but let's take the opportunity as it arises, and that's exactly what we are doing right here and now. Of course, there are many, many scenarios, many possible disruptions, where having fuel in your supply chain will help enormously. There are some extreme scenarios, as you've describe, where it's important to have enough fuel locally as well, and we're conscious of that, which is why those discussions with the refiners, with the local industry to make sure we've got enough storage here in Australia are an important part of the work we're doing right now.

JOURNALIST: So Minister, how does today's announcement change the day which you would expect us to meet the IEA's 90-day mandated minimum? Has that been brought forward, and if so, how far?

ANGUS TAYLOR: Well, we're obviously closer. We're going to spend $94 million to start building a strategic fuel reserve right now. So, that-

JOURNALIST: How much closer Minister?

ANGUS TAYLOR: Well, it depends on the price we pay for the fuel. I'm not going to get into forecasting fuel prices right now. But we're getting moving on this and that takes us closer. And that's an important, it is an important consideration. Look, the IEA obligation is all about making sure a group of countries can work in a coordinated way, all the members and parties to that agreement can work in a coordinated way in the event of a global disruption. That's the purpose of the exercise. We've got to do our bit, but we've also got to make sure, even independent of that, we've got enough supply for Australia and Australians when we really need it. That's what this announcement today is about - meeting both of those needs. And of course, we're close to meeting those IEA obligations as a result of the announcement today. Any further questions?

JOURNALIST: How much of that US supply do you plan to bring to Australia?

ANGUS TAYLOR: We'll work our way through that. Of course, we're having discussions with industry now about local storage. And that's an important, as I said a number of times, they are very, very important discussions. We need to make sure we meet our IEA obligations, which are a global obligation, and importantly, we meet the needs of our local fuel consumers, whether they be farmers, miners, manufacturers, commuters, tradies, you name it. They all rely on fuel.

NOTE: In response to an early question, Minister Taylor was meaning the cost which is roughly $10 million per day at recent prices. In terms of usage, Australia currently consumes around 0.5 million barrels of crude per day, and just under 1 million (0.95m) of petrol (295,000), diesel (515,000) and jet fuel (155,00) combined under normal consumption levels.

 ENDS