Liquid Fuel Emergency Amendment Act 2017 Receives Assent

Wednesday 20 September 2017 @ 12.07 p.m. | Trade & Commerce

The Liquid Fuel Emergency Amendment Act 2017 (Cth) ('the Act') received the Royal Assent on Monday, 18 September 2017.  The Act will enable the Australian Government to enter into commercial oil stockholding contracts, including what is known as “ticket contracts” with Australian and foreign entities. The Act will commence operation on 1 January 2018. 

“Ticket contracts” are agreements made to purchase rights to access oil stocks.  They involve the seller agreeing to reserve a predetermined amount of oil for a buyer for a period of time for an agreed fee.  During the period where the amount is reserved, the buyer may purchase the stocks or release them into the market. 

The International Energy Agency

The new Act will enable Australia to meet its obligations as a member of the International Energy Agency ('IEA').  The IEA was founded in 1974 to “help countries co-ordinate a collective response to major disruptions in the supply of oil”.  It currently has 29 member countries, including the United States, the United Kingdom, New Zealand, Japan, Sweden and Canada.

According to the IEA website, its four main areas of focus are:

  • Energy Security: Promoting diversity, efficiency, flexibility and reliability for all fuels and energy sources;
  • Economic Development: Supporting free markets to foster economic growth and eliminate energy poverty;
  • Environmental Awareness: Analysing policy options to offset the impact of energy production and use on the environment, especially for tackling climate change and air pollution; and
  • Engagement Worldwide: Working closely with partner countries, especially major emerging economies, to find solutions to shared energy and environmental concerns.

The Act

Giving the second reading speech in the House of Representatives for the Liquid Fuel Emergency Amendment Bill 2017, Minister for the Environment and Energy Josh Frydenberg explained:

“The Agreement on an International Energy Program, the founding treaty of the International Energy Agency, requires members to hold stocks equivalent to 90 days of the previous year's net oil imports. Australia has not been compliant with this obligation since 2012, due to both decreasing domestic oil production and increasing fuel consumption.

The government has developed a plan for returning to compliance with our obligations as a member of the International Energy Agency. As part of this plan, the Australian government will initially purchase 400 kilotonnes worth of oil stock tickets in the 2018-19 and 2019-20 financial years. This bill will give the Australian government the legislative authority to purchase ticket contracts.”

According to the Explanatory Memorandum, the Australian Government has committed $23.8 million of funding over the next four years to comply with the oil stockholding requirement measure.  This includes: “establishing the Energy Security Office in the Department of the Environment and Energy, reestablishing an Energy Advisor posting in Paris, funding for the Collective Action Response Measures and implementing the mandatory reporting of petroleum statistics.”

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Sources:

Liquid Fuel Emergency Amendment Act 2017 (Cth), Bill, Explanatory Memorandum and Second Reading Speeches - available from TimeBase's LawOne service

International Energy Agency: Our Mission © 2017 OECD/IEA

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