Australia is preparing to join International Energy Agency members in a “global collective action” and use oil stocks held in the US Strategic Petroleum Reserve to keep supplies flowing to allies impacted by Russia’s invasion of Ukraine.

Energy Minister Angus Taylor said Australia had adequate gas and oil stocks to meet domestic demand and ride out expected disruptions in global energy markets.

The Morrison government is also working with Australian LNG exporters and US officials to plug gaps in international gas markets sparked by shortages in Russian supply to Europe.

Mr Taylor said he was confident Australia could withstand major shocks to oil and gas supplies.

“The situation between Russia and Ukraine has added to global oil price pressures, which are being experienced right around the world. We understand that as a result of this, many Australian families and businesses are feeling this at the pump when they go to fill up their vehicle,” Mr Taylor said.

“While we cannot control these international price spikes, we are closely monitoring the situation with the IEA and the United States and stand ready to take action to help alleviate these pressures.

“With measures we’ve taken in government to strengthen our national sovereignty, our strong international partnerships and diverse supply chains, I am confident Australia is well supplied to keep us moving.”

The Russian attack on Thursday sent the global oil price above $100 a barrel for the first time since 2014. While Australians can still access cheaper petrol and diesel compared with other OECD nations, the Australian Competition and Consumer Commission has been tasked with monitoring the market to ensure motorists aren’t overpaying at the bowser.

In a statement, Mr Taylor said Australia was prepared to “join other IEA member countries to contribute to a global collective action, if one is called, through using our oil stocks held in the United States’ Strategic Petroleum Reserve (SPR) and will continue to monitor global gas markets”.

The Morrison government has moved to secure Australia’s fuel reserves in the past year, taking advantage of historically low oil prices to purchase around 1.7 million barrels of oil stored in the US strategic reserve for use in a crisis.

It has also financially backed ongoing operation of the Ampol refinery in Brisbane and Viva Energy refinery in Geelong through the fuel security services payment scheme until at least mid-2027. It has allocated more than $300m in support of major refinery infrastructure upgrades to produce better quality fuels.

Since 2020, Australia has held on average 74 to 104 days of fuel stock, including reserves on their way to the country. National stocks on average last year were 32 days of petrol, 21 days of diesel and 56 days of jet fuel, which compares with 18 days of petrol, 15 days of diesel and 16 days of jet fuel in 2012.

After Germany suspended the Nord Stream 2 pipeline this week in retaliation against Russian aggression, Woodside Petroleum, which has reserved one-quarter of its LNG to be sold into short-term and spot markets, is the best placed Australian exporter to benefit from global shortages. Santos and Origin Energy, which have focused business models on long-term LNG contracts, are likely to benefit from higher prices. With the US and Qatar likely to fill gas shortages in Europe, Australian LNG exporters are expected to seize on gaps in the Asian market.

University of Sydney professor Yuan Chen predicted oil and gas supply chain issues and increased electricity prices in Europe would likely be a “short-term problem”.

“Europe’s winter is almost over and with it, its seasonal energy needs. If the current issues continue, there is plenty of liquefied natural gas produced in the US and the Middle East that can be shipped to Europe – but at a higher cost than those imported from Russia,” Professor Chen said.

“Globally, there are more than enough fossil fuels (coal, oil and gas) the world and Europe can use.”

Professor Chen said Australia was better placed than Europe to harness renewable energy sources.

Extracted in full from: Ukraine invasion: ears for global energy supplies (