Energy Minister Chris Bowen has ruled out imposing fuel rationing measures in response to a major fire at one of Australia’s two remaining domestic oil refineries after the facility’s operator said it would be able to meet shortfalls with additional imports.
A mechanical failure at Viva Energy’s oil refinery in Geelong at 11pm on Wednesday kick-started a huge blaze that burned out of control through most of the night. It damaged petrol production facilities and forced an indefinite decrease in the plant’s output, including diesel and jet fuel.
The 72-year-old refinery supplies about 10 per cent of Australia’s fuel, and almost half of Victoria’s demand, as well as specialty fuels for aviation.
Geelong and Queensland’s Lytton refineries had deferred maintenance work to ensure they could run at maximum capacity amid the constrained global fuel supply caused by the Middle East war.
Viva also operates 1300 Shell petrol stations across the country and runs a fuel and oil distribution network that supplies 25 per cent of Australia’s fuel.
Bowen said the situation at the Geelong site was fast moving, but it had not prompted the government to consider upgrading its overall demand response to the fuel crisis, such as implementing more robust rationing measures.
“Of course, this is one of the many things we’ll consider. We consider the international supply chain environment, we consider the situation in the Strait of Hormuz. We’ll consider this. But [the fire], in and of itself, doesn’t lead to a decision to change [rationing guidance],” he said.
“This is not a positive development. This is not good timing. And this is a setback.”
“[But] Viva have told us that they’re very confident they can replace the petrol with imports.”
Bowen said investigations were ongoing, but an equipment failure likely caused the blaze, and there was no evidence of “sabotage”. Bowen will host a meeting of federal and state energy ministers next week.
Viva is one of four companies given federal support via Export Finance Australia to help secure cargoes of foreign refined fuels. The other three are Ampol, Park Fuels and iOR.
Australia gets close to 80 per cent of its refined fuel from overseas.
Santos chief executive Kevin Gallagher said the gas major had recently accelerated its cargoes to the Viva plant and was prepared to redirect others to keep it fully supplied.
“We stand ready to help the government in any way that we can on that because we understand this is a precarious position,” he said after the group’s annual meeting in Adelaide.
Melbourne Airport has a pipeline to the Viva Energy facility, but it confirmed on Thursday that there was no impact on its ability to supply jet fuel to aircraft.
The federal government on Thursday secured two additional shipments of diesel – totalling 100 million litres – from Brunei and South Korea under new powers to underwrite fuel purchases through Export Finance Australia, as well as an assurance that Malaysian energy company Petronas would prioritise Australia for supply.
Speaking in Malaysia on Thursday, Prime Minister Anthony Albanese said there was no doubt the Geelong inferno would have an impact on Australia’s fuel supplies.
“Clearly, there will be consequences,” Albanese said. “We’ll continue to work with the company to do what we can to make sure that anything that is offline is brought online as soon as possible.”
Police cordoned off the refinery on Thursday morning, and by midday, smoke was no longer visible over the site.
Viva shares were placed in a trading halt on Thursday morning as the company worked to contain the fire and assess the damage. Shares in Ampol, which owns the Lytton refinery, were marginally higher during morning trading.
Viva chief executive Scott Wyatt said it was too early to be focused on resuming production and that a full audit of the safety implications and damage needed to be done first.
“We will only start increasing production again once we are confident we can do it safely,” he said.
Although the biggest impact of the fire will be on petrol for ordinary motorists, the affected part of the refinery also produces aviation gas for light aircraft. Viva said the production of jet fuel for commercial passenger airlines was not affected.
Rystad Energy partner Gero Farruggio said the Geelong outage should prompt the Albanese government to escalate its response and start reserving fuel for priority sectors.
But NRMA spokesman Peter Khoury said Viva’s confidence in its ability to replace production with imports meant Australians were unlikely to see significant price effects at the bowser from the situation at the Geelong refinery.
“No one wants to see a refinery catch fire in the middle of an oil crisis,” he said. “But given the price is set globally, we should not see Australians paying more for fuel,” he said.
He said the wholesale price of diesel and petrol had been falling dramatically, and Australians should soon see some relief at the petrol pump.
Viva and Ampol also secured extra taxpayer support on March 20 when the Albanese government agreed to increase the “fuel security services payment” introduced by the Morrison Coalition government in 2021.
But Ronnie Hayden, a branch secretary at the Australian Workers Union, said the government had not done enough.
AWU Victoria branch president Ross Kenna said Australia had not learnt the lessons from the impact of the COVID-19 pandemic on fragile international supply chains.
“We need to have government investment in this industry … we’re in another crisis where our supply chains are again stretched, and it’s ordinary, everyday Australians that are impacted,” Kenna said.
“The decisions that are made in corporate boardrooms are directly impacting mums and dads in Geelong and right throughout Australia.”
Victoria’s emergency services issued an alert in the early hours of Thursday, warning residents in the Geelong area to take shelter indoors, close windows and switch off any heating or cooling systems as the wind shifted in the direction of homes.
NSW Premier Chris Minns said his state would consider whether to build its own fuel stockpile. West Australian Premier Roger Cook has started work on a stockpile for his state, particularly its remote northern communities.
Extracted in full from: https://www.afr.com/politics/federal/fire-hits-viva-oil-refinery-in-victoria-police-say-20260416-p5zo9x
