Anthony Albanese has announced a new plan to lift Australia’s fuel reserves to 50 days and stockpile fertiliser in the wake of the energy crisis prompted by the Iran war.

The Prime Minister announced that a new, more than $10 billion “Fuel Security and Resilience package” would be a key feature in the upcoming Federal Budget on Tuesday to protect the nation’s “energy sovereignty”.

Speaking in Sydney on Wednesday alongside Energy Minister Chris Bowen, Mr Albanese said $3.2 billion would go towards establishing a permanent Government-owned reserve of about one billion litres.

A further $7.5 billion will be provided in financial support to help establish on-shore facilities to store fuel and fertiliser, including in loans, equity, guarantees, insurance and price support for purchasers and suppliers.

Mr Bowen said the package would help secure supplies of jet fuel and diesel, which were critical for the Australian economy.

“Australia is actually in a minority of countries in the International Energy Agency who don’t have a government owned fuel reserve,” Mr Bowen said.

“We will now have a government-owned fuel reserve of around a billion litres to add to those minimum stocks that the private sector must hold.

“Particularly focused on diesel and jet fuel, where we do need to ensure greater domestic capacity and supply in the worst of circumstances.”

It comes after Mr Albanese has been engaging with regional partners abroad to shore up Australia’s supplies since the world’s oil trade was disrupted after the de facto closure of the Strait of Hormuz.

While Australia has reserve stocks between 30-40 days, depending on the type of fuel, it is heavily reliant on Asian markets for refined fuels as only two domestic refineries remain operational.

The PM said that as part of the package, the Government would work with State and Territory governments to explore the establishment of new or expanded fuel refining capabilities.

Mr Albanese said he raised the matter with leaders during their virtual National Cabinet meeting on Wednesday.

“The fourth element (of the package) is $10 million to support feasibility studies into new or expanded fuel refining capabilities to be co-funded with State and Territory jurisdictions,” he said.

“As a matter of courtesy, I went through these measures at the National Cabinet meeting that met this morning.

“We know there’s at least one… serious proposal that will receive the support of a State government.

“We want to make sure that there’s buy-in, which is why any proposals will be jointly funded by State and Territory governments as well as the Commonwealth.”

Opposition Leader Angus Taylor told a press conference in Melbourne on Wednesday that the PM’s plan to lift the reserve was still a long way short of the 90-day stockpile required under International Energy Agency agreements.

“We’ll look at the details of the package and decide what we can support and what we can’t,” Mr Taylor said.

“But as always with this Government, it’s too little too late, with respect to the funding of feasibility studies into new refinery capabilities.”