Josh Frydenberg (Kooyong, Liberal Party, Minister for the Environment and Energy) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill will enable the Australian government to enter into commercial oil stock ticket contracts, assisting Australia in meeting its obligations as a member of the International Energy Agency.

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 have 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.

A ticket is a type of commercial oil contract, where oil stock is reserved for the buyer who is able to purchase the stock at the market based price or release the stock back into the global oil market to increase supply, throughout the contract period. An oil ticket market has existed in Europe for decades. Tickets are generally purchased from overseas entities, but, under certain market conditions, tickets could be purchased from Australian companies as well.

Ticketed stock counts towards the International Energy Agency's 90-day oil-stockholding obligation and can also be used by Australia to contribute stock in the event of a declared collective action event. A collective action is declared by the International Energy Agency when there is an actual or potentially severe oil supply disruption in the global market. After an assessment of the situation, the International Energy Agency may need to coordinate a specific drawdown of stock from the emergency reserves of its members to help diminish associated economic damage.

The government is committed to ensuring it achieves value for money when it purchases tickets. Extensive engagement with the International Energy Agency and our international partners is underway to expand the ticket market to increase competitiveness. The measures in this bill demonstrate Australia's ongoing commitment to international oil security cooperation.

Debate adjourned.