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Australians have been warned a fire that’s broken out in Geelong at one of Australia’s two operational oil refineries “will have an impact” on the nation’s fuel supplies, though the extent of the fallout has yet to be confirmed.
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Victorian firefighters have largely contained the blaze, which started at VIVA Energy’s (ASX:VEA) Geelong facility around 11pm last night and burned through the night. The massive fire shut down production and hit the part of the refinery that turns liquefied petroleum gases into petrol used by drivers at the bowser.
The Corio plant supplies 50% of Victoria’s and 10% of Australia’s fuel and is just one of two facilities – the other’s in Brisbane – that refines fuel domestically.
It could not be worse timing, with Australia’s local refining capacity already bowing under immense and constant pressure from the U.S.-Israeli attacks on Iran. The country is currently relying on imports for ~90% of its liquid fuels.
Viva chief Scott Wyatt admitted Thursday the extent of the damage is not yet clear, and added he’s “confident” imported fuel will cover the shortfall in production.
“There are units that make petrol that haven’t been impacted by this incident as well, but naturally, petrol will be one of the products that are potentially impacted,” the company’s CEO said in an update this morning after the fire’s threat was downgraded. “We’ll only start increasing production again once we’re confident we can do that safely. We’ll obviously have to do it without these units.”
Viva operates up to 1,300 Shell petrol stations Down Under and supplies 25% of Australia’s fuel through a wide oil distribution network. The Oz company is also notably the only manufacturer that produces aviation fuel.
Energy Minister Chris Bowen has today suggested that jet fuel production will continue at Corio, but at a reduced rate compared to usual refinery output. The Minister explained that, “at this point petrol rather than diesel and jet fuel will be impacted,” before then adding: “It’s not great. It’s not great timing.”
(Beyond Viva and Energy, this also firms Qantas (ASX:QAN) and Virgin Australia (ASX:VGN) as close watches through Thursday’s trade. Qantas had just this week reduced its service capacity by up to 5% to manage fuel issues.)
Fire Rescue Victoria Assistant Chief Michael McGuinness said the fire started in the “mogas” section, where motor gasoline was produced. The emergency services were called in after multiple reports of “explosions and flames.”
As many as 50 firefighters were called in to suppress the blaze. All on-site staff had been accounted for, and there have been no reported fatalities.
Heading into Thursday morning, VEA is selling at ~$2.53/share.
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