National

Big state fuel buffer to protect against foreign shocks

May 10, 2026

A road train on the on Stuart Highway — South Australia is investing in its own diesel reserve as a buffer to keep the state motoring. -AAP Image

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.

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Under a commercial deal with bulk fuel supplier IOR, the Malinauskas 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.

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.

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.

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.

The Port Bonython tanks already exist and the state will be able to sell the diesel back into the market if conditions ease.

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.

In Queensland, the government has fast‑tracked BP's lease extension at the Bulwer Island terminal in Brisbane, unlocking up to $100 million in private investment to refurbish idle tanks.

That project is expected to deliver 54 million litres of extra commercial storage for diesel, petrol and aviation fuel, with the option to add another 49 million litres of capacity or build new tanks.

"We are restoring our ability to drill, refine and store, to ensure we are never again at the mercy of foreign conflicts," Premier David Crisafulli 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.

Mr 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.