US reaches final deal to house Australia's first oil reserve in SPR caverns

Washington — Australia has finalized a deal with the US to create its first emergency oil stockpile and store it in the US Strategic Petroleum Reserve caverns on the Gulf Coast.

The Australian energy ministry said Wednesday that it would spend A$94 million ($59 million) to buy crude at current low prices and store the supply in the SPR for an initial period of 10 years.

With NYMEX June WTI crude trading around $15/b Wednesday, Australia could buy about 4 million barrels of US crudes. That would sink to around 2.8 million barrels at current ICE June Brent prices of about $21/b.

ClearView Energy Partners said those volumes drawn from Gulf Coast commercial stocks would create about 2.1-2.8 days of storage headroom based on the 9.8 million-barrel stock build the Energy Information Administration reported in weekly data earlier Wednesday.

OIL IMPORT SECURITY

The US-held stockpile would contribute to Australia's commitment to the International Energy Agency to hold 90 days of its net oil imports.

Australia currently has about 81 days' worth of oil supplies, including 25 days of stocks in overseas ports and in transit to Australia, the energy ministry said.

The US Department of Energy did not immediately respond to a request for comment.

The plan between Washington and Canberra has been in the works since 2018.

"The new measures will take advantage of the current low prices for oil and Australia's privileged position of access to the SPR, which is amongst the world's most cost-effective long-term oil storage facilities," Australian Energy Minister Angus Taylor said in a statement. "This work is a down payment on a stronger and more secure fuel supply for Australian households, motorists, industry, and the national economy."