Prime minister Scott Morrison said the new investment will include domestic diesel storage facilities, reforms to create a minimum onshore stockholding and will be delivered through market and regulatory reforms.
The government will spend A$200 million in a competitive grants program to build an additional 780 million litres-wroth of onshore diesel storage; create a minimum stockholding obligation for key transport fuels; and enter into a market design process for a refinery production payment.
"Fuel security underpins our entire economy. Not only does it keep Australia moving, the industry supports thousands of people across the country and this plan is also about helping keep them in work," Morrison said.
Oil refineries across the country have either curbed or shuttered production, as the bite of travel restrictions across the country due to COVID-19 restrictions continues to dampen fuel demand.
Earlier this month, Viva announced it was considering closing its Geelong refinery in Victoria permanently due to the longer-term outlook of fuel demand based on "global and local responses" to the pandemic.
Viva was left battered at the end of the financial year after a lack of jet fuel sales hit it hard, swiping more than 30% off expected profits. The Geelong facility lost the company more than $50 million alone.
Viva CEO Scott Wyatt welcomed the government measures, saying the company had worked with the federal government on the reforms, noting the business continues to face "significant, immediate challenges".
"The ongoing viability of domestic refineries supports the national interest," he said.
Energy minister Angus Taylor said this morning the diesel storage would go toward the government meeting its international fuel storage obligations and support up to 950 construction jobs and 75 ongoing jobs.
"A minimum stockholding obligation will act as a safety net for petrol and jet fuel stocks, and increasing (sic) diesel stockholdings by 40%," he said.
"The Government will work with industry over the next six months on the legislative and regulatory design of the package."
The International Energy Agency urges countries to hold at least 90-days-worth of fuel reserves, Taylor said Australia has about 80 days, and the new measures would get it over the threshold.
"Part of that stock holding will mean there's an obligation on companies to hold a minimum level of stocks, and that ensures that those companies are doing the right thing for those worst-possible circumstances," he said in an interview.
During the market crash, the government bought up to $94 million worth of super cheap crude oil to store in the US Strategic Petroleum Reserve, for access during a global emergency.
The deal was questioned by some analysts, wondering at the usefulness of having fuel half a world away during an emergency where sea lanes may be affected.
The government also announced today it would modernise the online fuel reporting system to make it easier for industry to report stock levels to the government and improve the timeliness of data.
It will also remove the application fees for fuel standard variation requests.
"Supporting our refineries will ensure Australia has the sovereign capability it needs for any event, protect families and businesses from higher prices and support thousands of jobs across the economy as we recover from COVID-19," the government said.
Just last week the federal Defence minister Linda Reynolds visited the Northern Territory and revealed plans to develop a fuel reserve in the Top End to ensure defence capabilities.
While Reynolds did not reveal much about the plans, the minister did say it would be jointly built and funded by the United States and Australia.