Beijing | Chinese state-owned oil companies have been given the green light to begin discussing fuel exports with Australian buyers after a late-night meeting between Foreign Minister Penny Wong and her Chinese counterpart Wang Yi, in a breakthrough that could help ease a deepening supply crunch.
Wong said Beijing had agreed to open channels between Chinese suppliers and Australian companies on jet fuel, describing the move as an “important first step” towards restoring flows disrupted by the Middle East conflict, though she cautioned negotiations were still at an early stage, and no volumes or timelines had been locked in.
“The Chinese government is facilitating engagement with Australian businesses on jet fuel,” Wong said at a press conference in Beijing. “This is an important step. However, it is the first step.”
The development came after several hours of talks in Beijing as Canberra ramps up diplomatic and commercial efforts to secure diesel, jet fuel and petroleum, leaning on its role as a major exporter of iron ore, LNG and food to press its case for reciprocal supply.
“The whole reason I’m here is to press for and advocate for Australia’s interests, and in particular for the provision of liquid fuels,” Wong told reporters after the meeting, adding that engagement between companies was expected to lead to commercial contracts over time.
Australia has been scrambling to shore up fuel supplies as the war with Iran by the US and Israel disrupts flows through the Strait of Hormuz, which typically carries about a fifth of global oil trade and accounts for the bulk of crude shipments into Asia.
The shock has hit regional economies hardest, with refineries tightening production of diesel and jet fuel as feedstock imports fall.
China – the region’s largest refiner and a key swing supplier of petroleum products – had curtailed fuel exports earlier in the crisis to preserve domestic supply, exacerbating shortages across Asia.
A resumption of flows, even partial, would provide relief to import-dependent economies such as Australia.
Wong said the Chinese government’s decision to facilitate talks between suppliers and Australian buyers reflected a shared interest in maintaining regional energy flows.
She noted that fuel imports into Australia underpin exports of commodities critical to China’s economy. “We receive diesel, jet fuel, petrol and fertiliser, and that comes back to the region in LNG, coal, commodities and food,” said Wong.
China supplies about 30 per cent of Australia’s jet fuel and 2 per cent of diesel. Australia imports 20 per cent of its jet fuel from South Korea, 30 per cent of its diesel and around 23 per cent of petrol. Australia also imports mostly diesel from Japan.
Wong’s diplomatic push is being backed by direct intervention in commercial markets, with the Albanese government underwriting fuel purchases and working with importers including BP, Glencore and Viva Energy to secure additional cargoes from alternative suppliers.
“We are underwriting risk and working with companies to work out what contracts we need to obtain alternative supply and underwriting those,” she said during an earlier interview.
“We are enabling companies to engage with suppliers where there is greater price risk, and which they may not have traditionally engaged with before.
“There are a range of options about how you secure fuel now and into the future. We don’t know when this war will end or when the Strait [of Hormuz] will be open. And there is a very long tail on this.”
Australia’s refined fuel stockpile is among the lowest in the developed world.
Prime Minister Anthony Albanese this month also embarked on an Asian tour to secure additional diesel from South Korea, Brunei and Malaysia, while Wong is sounding out South Korea, Japan and China.
“We’re going eye to eye with leader to leader, minister to minister, and saying we have a shared interest here,” Wong said.
Pacific nations, many of which lack the balance sheets to compete in tight fuel markets, are emerging as particularly vulnerable, raising questions about whether China will step in to support these smaller economies as shortages deepen.
“We are very conscious of that, and we will keep working with them,” Wong said.
Earlier in the day, Wong also met with China’s Vice President Han Zheng, a meeting that was disrupted when Chinese officials attempted to block Australian media from filming her remarks.
At the start of the talks, a Chinese official moved to obstruct an Australian government cameraman and usher journalists from the room before Wong had finished speaking. Ignoring the efforts to move them on, Australian media remained in place until Wong finished speaking.
Han, in his opening comments, said the China-Australia relationship had experienced growth alongside setbacks over the past decade.
“The Chinese side is ready to follow through on an important consensus reached between our leaders and offer a more mature, steady and more fruitful China-Australia comprehensive strategic partnership.”
Extracted in full from: https://www.afr.com/world/asia/wong-reminds-china-of-iron-ore-exports-to-secure-fuel-supply-20260429-p5zrx4
