The need to bulk up oil supplies has grown increasingly acute recently because of the volatility in key shipping routes such as the Strait of Hormuz off Iran and the South China Sea.
The deal, which involves leasing US storage facilities, means the government will not need to spend billions of dollars building expensive new storage facilities in Australia.
The oil stored in America will count towards Australia’s overall supply, allowing the government to meet its IEA requirements.
“This landmark Australia-US arrangement represents our joint commitment to maintaining fuel security and improving Australia’s resilience, as well as strengthening the close bonds between our two great nations,” Mr Taylor said.
“The US is a trusted ally who has been essential for global oil security and we are glad to be building on our strong, longstanding relationship, while ensuring Australia is best prepared to act during a global oil disruption.
“This arrangement further improves our ability to ensure stocks of critical diesel, petrol and aviation fuel to keep the economy going in the event of disruptions to supply chains.”
Stored underground in massive caverns in Texas and Louisiana, the US Strategic Petroleum Reserve was set up by president Gerald Ford in 1975 to keep the country running in a crisis.
‘This arrangement further improves our ability to ensure stocks of critical diesel, petrol and aviation fuel to keep the economy going in the event of disruptions to supply chains.’
Angus Taylor, energy minister
It holds more than 640 million barrels of crude oil. One cavern is so big it could fit Chicago’s 110-storey Willis Tower in it.
The agreement to be signed by Mr Taylor and US Energy Secretary Dan Brouillette will kickstart detailed contractual negotiations about how much crude oil Australia can buy from the US and how much space it can use in the underground caverns to store it.
No final decisions have been made about how much fuel Australia wants to buy or how much it is willing to spend.
US politicians have previously raised concerns about the idea of selling off fuel from the petroleum reserve to other countries. But the fact Australia’s deal involves leasing facilities in the US – rather than shipping the oil directly to Australia – helped assuage some worries in Washington.
In an interview with The Sydney Morning Herald and The Age last year, IEA executive director Fatih Birol said he welcomed the prospect of such a deal between the US and Australia.
While in the US, Mr Taylor will also visit the oil and gas state of Texas to meet with top industry executives.
He will also visit the US government’s National Renewable Energy Laboratory in Colorado, which is leading research into production of biological hydrogen as a clean source of energy.
The Australian government has released a National Hydrogen Strategy designed to encourage the expansion of the local hydrogen industry.
Bevan Shields is the Europe correspondent for The Sydney Morning Herald and The Age.
Matthew Knott is North America correspondent for The Sydney Morning Herald and The Age.