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Viva Energy (ASX:VEA) has today said it’s sure it can have its Corio refinery back to full production in the next few weeks, as the company deals with a shock fire that broke out at the Geelong plant’s gasoline complex, knocking out the alkylation unit and forcing the shutdown of the residue catalytic cracking unit.
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The Geelong plant has been operating with petrol output at about 60%, and diesel and jet fuel at roughly 80% following the fire late last Wednesday.
In what would be an outstandingly quick turnaround, Viva is now expecting to lift production to more than 90% of normal capacity once investigations are complete and key units are restarted over the next few days.
“An assessment of damage, repairs, duration and financial impact to return to fully optimised production will commence this week,” Viva wrote.
The cornerstone Australian energy producer is mainly insistent that it can get to full production quickly for two reasons. One, the Geelong refinery has been designed to operate in chunks rather than as a whole, and two, there’s a “commercial imperative to avoid a prolonged outage.” The now-damaged plant usually supplies around a third of the company’s transport fuel volumes.
Also helping things is the fact that Viva had full insurance cover for property damage and business interruption, and has now drawn on both.
The company also today told shareholders that it has “sufficient fuel stocks to cover this reduced production and expects to maintain normal fuel supply to our customers following this incident,” and several investigations.
“Over the next few weeks, and subject to plant inspection, the company expects to be in a position to restart the RCCU and lift production of diesel, jet fuel, and petrol to over 90% of capacity,” Viva also wrote today.
“The refinery is then expected to continue… at these levels until repairs are completed. [Meanwhile], the company will undertake a comprehensive investigation into the cause of this incident,” the company also wrote in an April 20 update. “Geelong refinery remains a strategic asset within the Viva Energy Group, and the company is committed to maintain operations and restore production.
To offset any disruptions in the meantime, the energy producer says it will be leaning on imports. Viva has also been quite vocal about stores being “sufficient” to maintain normal supply, with arriving cargo ships from Vitol to bolster that in May. The company will then start buying new imports in June.
Viva will need to source about four million litres of petrol and diesel a day from overseas and its commodity connections, The Australian reported today.
Viva also resumed trading on the ASX today following a sudden halt early last Thursday morning to detail the incident and assess the fallout. Since reopening, the Oz energy producer has dropped -7.5%.
To mid-arvo, VEA shares are now at $2.34 a pop.
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