The Ministry of Defence is to sell off the Government Pipeline and Storage System (GPSS), ministers have confirmed.
The system is a network consisting of some 1,550 miles (2,500km) of pipeline and 46 other facilities which carries fuel for military and civil users. It distributes 40 per cent of aviation fuel.
Measures allowing the sale were included in the Energy Act last year and ministers ran a consultation on the possible implications of a privatisation.
In a written statement to MPs, Defence Support Minister Philip Dunne said: "It remains the case that commercial customers account for the majority of the GPSS throughput.
"MoD undertook market testing earlier this year and considers there to be a significant level of interest in purchasing the GPSS.
"We have concluded that sale of the GPSS would allow Government to transfer the financial risks of operating in the downstream oil market to the private sector, while still preserving the GPSS's military capability and ensuring that national resilience is not compromised."
The Ministry of Defence will now invite expressions of interest in buying GPSS and publicise the offer in the press and the Defence Contracts Bulletin.