The Australian federal government has allocated AU$14.8 billion to strengthen the country’s fuel supply and to insulate it from global oil disruptions.
The Fuel Resilience Package includes the establishment of a AU$3.2 billion government-controlled Australian Fuel Security Reserve. This permanent buffer will hold approximately one billion litres of diesel and jet fuel, ensuring that essential services remain operational during international crises.
Under the new plan, Australia will expand its minimum stockholding obligation (MSO) by an additional 10 days. Combined with the new reserve, the nation’s onshore diesel and aviation fuel stocks are set to reach a 50-day supply.
To support this domestic shield, the government has launched the AU$7.5 billion Fuel and Fertiliser Security Facility. Managed by Export Finance Australia, the facility has already underwritten the delivery of 450 million litres of diesel and 100 million litres of jet fuel to Australian ports.
“We are responding to the biggest oil shock in history with a comprehensive $14.8 billion plan to secure more fuel, strengthen our supply chains, build resilience, and take the sting out of prices,” said Treasurer Jim Chalmers in a Budget speech to Parliament.
“The Strengthening Australia’s Fuel Resilience package will deliver more fuel for drivers and industry, more fertiliser for farmers and more fuel security for our economy.”
Recognising the immediate pressure of rising costs, the Budget delivers several short-term relief measures. The government has more than halved the fuel excise and reduced the heavy vehicle road user charge to zero for three months, and deferred full cost recovery arrangements for agricultural export services.
To keep trucks, trains and planes moving and critical production online, the government is helping manufacturing and logistics businesses manage cashflow pressures with interest‑free loans from the National Reconstruction Fund’s (NRF) AU$1 billion Economic Resilience Program.
Gas reservation policy secures domestic supply
The government also confirmed a 20 per cent domestic gas reservation for LNG exporters, set to commence on July 1. The move aims to shield Australian households and industries from global price volatility by ensuring a significant portion of Australian-produced gas stays domestic.
Beyond infrastructure, a new National Fuel Security Campaign will encourage Australians to adopt fuel-saving behaviours to help supplies go further.
The government will continue to develop a domestic low carbon liquid fuel industry, along with a green fuel bunkering strategy. Working with industry, the federal government will introduce a demand measure that provides certainty for new Australian low carbon liquid fuel production and stimulates investment in new, clean fuel refining capacity. This will reduce Australia’s reliance on imported fuels, improving the resilience of its domestic transport industry.
Meanwhile, the Australian Energy Producers said the budget confirms that the oil and gas industry continue to deliver strong returns for Australians.
The Budget revised forecast PRRT receipts upwards by AU$1.6 billion over the five years from 2025-26 to 2029-30, driven by higher-than-expected oil prices and higher production volumes.
Overall income tax receipts have also been revised up by AU$4.3 billion over the same period, with stronger commodity prices including LNG exports cited as a key contributor.
“The claims the industry is not paying its fair share, or that the tax system does not respond to higher prices, are demonstrably false,” said Australian Energy Producers Chief Executive Samantha McCulloch.
McCulloch also welcomed additional funding to support ongoing work to modernise offshore gas regulations to support gas investment and help mitigate supply shortfalls, including clarifying consultation requirements for offshore oil and gas approvals.
