Gasoline and diesel supplier Viva Energy said it contemplates the total closure of its deficit refinery in Geelong amid COVID-19 “extreme pressures,” even as the federal government considers tactics to keep plants open.
The refinery, which materializes more than part of Victoria’s fuel, employs about 700 people.Some production sets were already closed after fuel demand fell in March from the closure, and maintenance work is currently underway on site.
“Unfortunately, the effects of COVID-19 and restrictions on mobility and the economy are putting excessive pressure on refining activities we have never experienced before that are long-term sustainable,” Viva’s executive Chairman Scott Wyatt said in a statement..
The Geelong oil refinery at Viva Energy’s loss could simply be closed. Nic Walker
“We closely monitor progress and continue to inform our employees, investors and stakeholders.”
One of only 4 oil refineries still operating in Australia, the Geelong plant was in danger of disappearing six years ago when former owner Shell left.The risk resumed this year with new owner Viva when the pandemic reduced transport demand.sunken fuels and refining margins.
The plant suffered a loss of approximately $50 million in June of the year.
The federal government tested the feasibility of the affected refining sector to retain the country’s critical industries after the pandemic, including a hiring plan for fuel storage, as a broader review of the sector.
Viva said the company was “encouraged” through the review, but given the importance of the issues, it is comparing other features “including the option to move to a full facility shutdown.”
He said he would inform the market about the long-term of the plant, which is already operating at reduced capacity, in its Quarterly Commercial Update in September, which will be released in October.
The global refining sector is “certainly in times of crisis,” said Sri Paravaikkarasu, head of The Asian oil sector at FACTS Global Energy in Singapore in May, underlining the threat that none of Australia’s remaining plants will make costly investments to meet the strictest sulfur.standards for gas supply in 2027.
Wyatt has warned in recent months about the industry’s long-term dangers, as has Ampol’s leading executive Matt Halliday.Lytton’s Ampol plant in Brisbane, ExxonMobil’s Altona refinery and BP’s Kwinana plant in Western Australia have had to be reduced.and modify operations due to declining demand.
The news comes after Victoria’s government on Sunday prolonged a six-week blockade for a fortnight, accelerating hopes for a faster reduction in restrictions that can simply bring the state economy to life and save jobs.
Viva took note of Sunday’s announcement and said that if restrictions are eased as planned and fuel recovers sufficiently, the Geelong plant could re-complete production in November.
“The situation, however, is very doubtful and will be heavily monitored in the coming weeks to determine whether these prolonged restrictions will have an effect on those plans,” he said.
Viva, owner of Shell’s network of gas stations, said its fuel retail “remains resilient” to ongoing restrictions in Victoria.
He said sales volumes in his partnership with Coles remain at more than 50 million litres in line with the week, while retail margins remain “favorable.”Once restrictions in Victoria are loosened, the company said it would expect a recovery in sales in Victoria.as you’ve noticed in other states and territories.
Viva’s commercial activity, aviation fuels, remains “relatively unaffected” by restrictions, he added, noting that it had reduced prices and operating expenses to reflect falling sales.
“While yesterday’s government ads only provide directional guidance to ease restrictions, we are confident of the functionality of retail and advertising corporations in this widespread era of restrictions,” Viva said.
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