Viva Energy refinery blaze impacts petrol production, sends toxic smoke over Corio

A major fire at one of Australia’s two remaining oil refineries has disabled at least a fifth of the plant’s production capacity, raising fears over the country’s fragile fuel security and raising the prospect of new emergency measures to secure supplies.

A fire caused by equipment failure at Viva Energy’s Geelong refinery on the Corio Bay coast late Wednesday damaged two critical oil production units that usually provide about 20 per cent of its output, the company said.

Since the war in Iran broke out on February 28, the Geelong refinery has been operating at maximum production, pumping 50 per cent of the petrol, diesel and jet fuel used each day in Victoria and 10 per cent of the national total.

But even as the refinery is forced to operate at reduced capacity in the coming weeks, executives reassured officials and consumers on Thursday that they do not expect an overall decline in the volume of fuel brought to market.

“This is a very challenging event,” said Viva CEO Scott Wyatt, but stressed that the company has a “high level of confidence” that it can close the gap by increasing imports.

“Of course we would prefer this not to happen, but we have cargoes coming in through the end of May. We will soon start looking for June cargoes and start moving those forward.”

Global research firm Rystad Energy said the incident could raise the possibility that the federal government will have to move to the next phase of its fuel-saving strategy, including diverting fuel to priority areas, encouraging voluntary measures such as carpooling or working from home, and releasing more fuel from strategic reserves.

Victorian Premier Jacinta Allan said it was possible the fire would prompt the state and federal governments to move to the next stage of the national fuel security plan.

“Will we need to? The answer to that question … lies in the assessments that Viva will need to make regarding the impact of this fire on its production capabilities going forward, when it is safe to do so,” he said.

Allan said Victoria could only move towards stronger fuel saving measures in concert with all states and territories, as agreed in the national plan.

But federal Energy Minister Chris Bowen rejected suggestions the Geelong fire could lead to tougher action.

“This is not a good development when it comes to what we govern,” Bowen said. “But… this alone will not lead to a change in the status of the four-point fuel plan, as Viva has told us they are very confident they can replace oil with imported products.”

The Geelong refinery, which can process up to 120,000 barrels of crude oil per day to produce millions of liters of usable fuel, is the last remaining oil refinery in Victoria and the second last oil refinery in the country following a wave of closures over the last decade.

Other local refiners, including ExxonMobil and BP, have closed plants as they struggle to compete with cheaper imports following the expansion of larger, lower-cost mega-refineries in Southeast Asia.

Viva Energy said its diesel and jet fuel production units were not affected by the fire, but the plant was now operating at “minimum rates” while damage assessments continued. Viva is expected to present a detailed timeline for repairs and ramping up production on Monday.

As well as supplying fuel from its refinery, Viva also brings in large quantities of imported fuel through a network of shipping terminals scattered along the coastline and can leverage its partnership with trading partner Vitol, one of the world’s largest oil traders, to support deliveries. In total, Viva’s operations in Australia provide approximately 30 percent of the country’s fuel.

Wyatt said it was fortunate that the fire did not damage the refinery’s ability to continue producing diesel and jet fuel, both of which are in much more limited supply than gasoline.

“From a regional perspective, oil is an easier product to buy,” he said.

The fire comes as concerns grow about the state of Australia’s fuel security as the conflict in the Middle East continues with no clear timeline for resolution from US President Donald Trump.

The fuel industry and the federal government are confident supplies will remain stable, given that more than a month’s worth of fuel reserves are stored in storage facilities and dozens of tankers carrying crude oil and refined fuel are booked to arrive in the coming weeks. But the longer the conflict in the Middle East drags on, the greater the danger of eventual shortages.

Experts warn the ongoing disruption to shipping across the Strait of Hormuz, a key transit point for oil and gas tankers, is cutting off significant amounts of global crude from the Persian Gulf from being delivered to Asian refineries that usually account for the bulk of Australia’s imports. This raises the threat that regional supply shortages will worsen and hit Australia if stocks run out.

Energy analysts on Thursday warned that the hit at the Geelong refinery signaled a deterioration in Australia’s fuel security, as the country’s capacity to produce its own fuels is already limited and it meets 80 per cent of its needs with imports in an increasingly unstable global market.

Fire Rescue Victoria said on Thursday the fire started in some pipes at the refinery where there was a mechanical fault. Some flames were up to 60 meters high.

Approximately 100 people (50 firefighters and 50 from Viva’s workforce) battled the fire for 13 hours, extinguishing it just after noon and keeping the damage to 50 square metres.

“They got this fire under control really quickly to a small part of the refinery,” FRV deputy commissioner Michelle Cowling said. “A great job was done. No firefighters were injured.”

Cowling said it would have been worse if the fire had started around one of the plant’s fuel storage tanks.

“This could have been a huge fire,” he said.

Cowling later said firefighters would likely remain on the scene until at least Friday.

Refinery manager Bill Patterson said: “Given that these units are relatively small overall, we are still operating at fairly reasonable rates at the moment, but they are important units in the long term.”

Patterson said the part of the refinery affected by the fire had not been operating under “any abnormal conditions” since the conflict in the Middle East shook energy markets.

“The material made from the affected unit is a component of petroleum, but it’s not a component we can do without,” he said. “So with the loss of this unit we will lose some of the production capacity, but not a huge amount.”

Tony Hynds, an organizer with the Australian Manufacturing Workers Union, said: “We were told there were around 30 people on site, mostly operators.

“When the first explosion occurred, they had to immediately take off and get out of there. I was told there was a small explosion, then two larger explosions, and then a huge fireball.”

Australian Workers Union secretary Ronnie Hayden described the scene as a “war zone”.

“Some [workers] “They were pretty close, but they managed to run away to get away,” he said. “They said it was ‘coming towards us like a big fucking fireball.'”

Viva Energy’s plant in Geelong was undertaken with significant government support to secure Australia’s two remaining refineries.

In March, the federal government increased the Fuel Security Services Payment, which kicks in during loss-making periods. Viva said the plan, introduced in 2021, allowed it to spend $500 million to upgrade the Geelong refinery.

A resident near the Viva factory in Corio, who asked not to be identified, was awakened at around 1am by his house shaking and an ominous red glow on the horizon.

“I was in bed and wondering why everything was shaking and shaking,” the resident said. “The whole backyard lit up in red.”

A warning was issued for dozens of suburbs just after 2am when a change in wind blew smoke from the fire towards Geelong. It was downgraded shortly before 5.30am. FRV assistant fire chief Mick McGuiness said the warning was precautionary and there were “no contaminants” in the smoke.

Bowen said on Monday Australia’s fuel reserves were 38 days worth of gasoline, 28 days of jet fuel and 31 days of diesel.

via Reuters

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