CANBERRA, AAP – The Morrison government says a plan to boost onshore diesel storage will create about 1000 jobs and provide greater fuel security.

Energy Minister Angus Taylor on Friday announced the opening of applications for a program offering up to $200 million in competitive grants over three years to support the construction of 780 megalitres of diesel storage.

The broader plan also includes a production payment for the local refining sector and a minimum stockholding obligation for key transport fuels.

“Fuel, and diesel in particular, is the lifeblood of so many sectors in our economy, including our farmers, truckies and tradies,” Mr Taylor said.

“It is essential that we get the right balance and location of our onshore stockholdings.”

Successful projects will receive grants of up to $33.3 million, with the government covering up to 50 per cent of total eligible project spending.

Projects are expected to begin construction from mid-2021 and be completed within three years.

The program will also assist industry in meeting the new minimum stockholding obligation by 2024.

The obligation will require industry to hold about 40 per cent more diesel than current levels.

Applications open on January 11 and will close on February 22.