Key facts
- Australia and Singapore signed a new protocol on economic resilience and essential supplies.
- The agreement aims to strengthen cooperation in energy trade and defence.
- Singapore is a critical supplier of gasoline, gasoil, and jet fuel to Australia.
- Australia is vulnerable to supply chain shocks due to reliance on imported fuels.
- A new defence agreement was also signed to build upon existing cooperation between defence industries.
Canberra and Singapore have deepened their ties in energy trade and defence with the signing of a new protocol aimed at strengthening cooperation. The Protocol on Economic Resilience and Essential Supplies, signed on July 27, fulfills a commitment made in April to bolster the security of essential supplies, particularly gasoline, of which Singapore accounts for 55% of Australia's imports.
Singapore also supplies 15% of Australia's gasoil imports and 23% of its aviation fuel imports. Recent data shows Singapore's gasoline stocks rose by over 92% in the week to July 22, with Australia being a key export destination. Australia's vulnerability to supply chain shocks is highlighted by its reliance on imported fuels, with domestic refining meeting less than 25% of demand due to past facility closures.
Concerns over supply and high prices have prompted Canberra to underwrite fuel imports and temporarily reduce taxes on gasoil and gasoline, a measure set to expire on August 2. Australian gasoline demand has decreased, falling by 7.1% to 251,000 barrels per day in May, partly in reaction to rising prices following the US-Iran conflict. Concurrently, electric vehicle sales in Australia are surging, representing 23.4% of all purchases in June.
In addition to the energy pact, a new defence agreement, the Australia-Singapore Industrial Base Resiliency Arrangement, was signed. This builds upon existing cooperation, including Australia hosting Singaporean troops at training bases and conducting joint military exercises.