Prime Minister Scott Morrison will raise a plan to buy millions of barrels of oil from America’s vast, closely-held fuel reserves to guarantee Australia’s liquid fuel security when he meets with US President Donald Trump at the White House on Friday.

Mr Morrison will be met at Joint Base Andrews, Maryland by a guard of honour and trumpet fanfare on Thursday night local time, a sign of the red carpet being rolled out by the Trump administration.

The Prime Minister hopes to discuss a proposal for Australia to tap into the US’s enormous Strategic Petroleum Reserve in a private meeting with Mr Trump on Friday. The issue is also expected to come up in bilateral meetings Mr Morrison will hold while in Washington DC, including with Vice President Mike Pence, Secretary of State Mike Pompeo, Secretary of Defence Mike Esper and other senior administration officials.

Stored underground in massive caverns in Texas and Louisiana, the Strategic Petroleum Reserve was set up by president Gerald Ford in 1975 to keep the country running in a crisis. It holds more than 640 million barrels of crude oil.Advertisement

The stockpile has been tapped only 19 times, including after Operation Desert Storm and during hurricane emergencies. “Exchange” deals allow the US to lend millions of barrels in return for the recipient handing back the same quantity of oil, often at a higher quality, once the crisis is over.

Mr Morrison’s request, designed to shore up Australia’s fuel stockpiles in an effort to safeguard against an economic and national security crisis, is the core plank of a new push to bolster Australia’s fuel independence.

But it would put the Morrison government at odds with industry, with the nation’s two major petroleum bodies – the Australia Petroleum Production and Exploration Association (APPEA) and the Australian Institute of Petroleum – arguing a new era of oil exploration in Australia could be the path to long-term fuel security in the event of supply disruptions such as the recent attack on Saudi Arabia’s oil facilities.

Australia has 58 days of net fuel stocks, which is below the 90 days required by the International Energy Agency and fewer than New Zealand (95 days), the United Kingdom (275 days) and the United States (711 days).

Australian Institute of Petroleum chief executive Paul Barrett said there was more to be gained from significant oil resources off the coast of Western Australia and South Australia as Middle East drilling became riskier.

“The higher the oil price, the more willing explorers are to go out there and take some risks,” Mr Barrett said in an interview. “There is a whole bunch of fields that people are looking at right now which people didn’t think were prospective and they’ve found a lot there.”

APPEA CEO Andrew McConville said Australia’s fuel supply chain was “very deep” and fuel security would be bolstered by more local drilling. “Ongoing investment in the exploration for, and development of, Australia’s oil and gas reserves and resources is an important element of Australia’s ongoing liquid fuel security,” Mr McConville said via email.

Oil prices surged after a pre-dawn attack on Saudi Arabia’s top refinery on Saturday knocked out 5 per cent of global oil supply – the single biggest one-day disruption in output.

Oil companies have told the government’s liquid fuel security review there is no major issue with the global supply chain.

“Australia does not have a liquid fuel security problem,” Mobil Oil Australia said in its submission to the inquiry. “This is evidenced by industry’s strong record of efficient and reliable supply and supply chain management, which has seen no significant supply disruptions in Australia in recent times.”

Woodside Energy wrote in its submission that “greater use of Australia’s indigenous gas resources in place of imported liquid fuels” would help fuel security.

Extracted from SMH