SA secures diesel backup in up to $40 million deal
The state government has struck a deal to secure a diesel reserve to ensure a backup fuel supply is available to farmers for any future “unforeseen events”.
South Australia could hold one of the nation’s largest fuel reserves with a potential 20 million-litre diesel stockpile to buffer itself against shortages.
Under a commercial deal with bulk fuel supplier IOR, the state government will immediately buy and store 10 million litres of diesel at Port Bonython facilities in the upper Spencer Gulf, with the option to double the holding.
It would cost the state approximately $40 million for the full 20 million litres, but the government expected to recoup most of that if the diesel is deployed into the market.
The Port Bonython tanks already exist and the state will be able to sell the diesel back into the market if conditions ease.
The diesel will be shipped from Singapore as additional supply, using existing capacity at IOR’s terminal, so the state is not bidding against farmers or other buyers already struggling to secure the commodity.
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Premier Peter Malinauskas said the reserve was built for worst‑case scenarios, with primary producers front of mind as conflict in the Middle East continued to rattle global energy markets.
“While diesel continues to arrive on our shores, and the Commonwealth has committed to a $10 billion plan to ensure Australia’s long-term fuel security, it is prudent that we invest in our own reserve to provide a buffer in the case of unforeseen events,” he said on Sunday.
Liberal Opposition Leader Ashton Hurn told reporters yesterday that the diesel reserve was “exactly what a smart government should be doing”.
“It’s exactly what we’ve been calling for the government to act on for the last three weeks,” she said.
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“We know that farmers in particular and our state more broadly can’t run off the smell of an oily rag.
“Making sure we have a strategic diesel reserve for the future is the right thing to do.”
The move puts South Australia alongside multiple other states setting up fuel reserves independent of existing national stockpiles.
But the 20 million-litre ceiling would make the southern state’s stockpile larger than those planned for Victoria or Western Australia.
IOR chief executive Drew Morland said the company was pleased to support the government plan.
“This is a practical example of how industry and government can work together to deliver timely, targeted solutions that benefit communities and critical sectors,” he said.
The federal government will set aside $10 billion in Tuesday’s budget for various fuel security measures, including the establishment of a permanent, government‑owned reserve of more than one billion litres.
It and existing, privately held reserves will provide guaranteed supplies of at least 50 days’ worth of critical fuels.
Malinauskas said the SA diesel plan had been designed to sit alongside the state’s planned gas reserve deal with Santos.
Some 20 petajoules a year of gas will be diverted from export markets to domestic use, including for the Whyalla steelworks, from 2030 under the scheme.
– with AAP
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