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Australia is in talks with the United States for buying crude oil from the U.S. Strategic Petroleum Reserves in order to boost its own strategic reserves, the Sydney Morning Herald reports, quoting Energy Minister Angus Taylor.
According to the SMH, the country only has enough crude oil and gasoline to last it 28 days, which is substantially below the 90-day standard. The United States, in comparison, has enough oil to last 700 days.
"The government has undertaken this new initiative since the election to ensure that we continue to deliver increased security for Australians," the Australian official said.
The strategic reserve problem is not new. Media reported last year stockpiles of liquid fuels were much below the international standard. This should hardly be acceptable for a country overwhelmingly dependent on imports of liquid fuels, at up to 90 percent of the fuels it consumes.
Interestingly enough, the negotiations with the U.S. would not involve any actual transfer of crude into Australia. Rather, Canberra is seeking to secure access to the U.S. SPR, distributed across four locations along the Gulf Coast.
"The whole point of this is to minimise costs," Taylor told ABC. "What we don't want to do is establish a physical reserve at very high cost in Australia and pass on that cost to Australians at the bowser."
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The issue is potentially urgent: Australia relies on Asia for most of its fuel imports and Asia in turn relies on Middle Eastern oil to produce the fuels. With the growing tensions in the Middle East, the Australian government is getting increasingly worried about the security of fuel supplies.
"Australia's reliant on traffic through the Strait of Hormuz for a percentage of our oil supply, so we're doing everything that we can do be a good government and be prudent to ensure a continuity of supply," Australia Defence Minister, Linda Reynolds said.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.