What is the safest way to cut up an old kerosene storage tank?
Kerosene is not terribly flammable, so it probably is not a problem anyway. I'd pick a windy day, or even simpler, maybe have a fan blowing across where you are working, to keep any fumes away from the motor.

I'd also use a reciprocating saw, not an angle grinder, at least if I had the choice. Even if you have a carbide blade for the grinder, a reciprocating saw may still cut as fast or faster than a grinder, and it will generate less heat when cutting a plastic tank body.

If you are still worried, I'll bet that a good sharp (hand powered) pruning saw, the type that cuts on the pull stroke, will cut up a plastic tank at least as easily as would an angle grinder.