Victorian fuel prices could spike by 20c a litre due to Geelong refinery fire, experts warn | Petrol prices

Victorian motorists are being warned to prepare for a rise in petrol prices of up to 20 cents a liter due to a massive fire at Viva Energy’s oil refinery in Geelong, but oil and supply chain experts say the effects should be short-lived.

Viva’s Corio plant is one of two domestic refineries that are reducing Australia’s heavy reliance on direct imports of ready-to-use petroleum products from Asia.

A fire broke out at the facility late Wednesday and took about 13 hours before it was extinguished, authorities warned that the full extent of the damage was still unknown.

Victoria could see unleaded prices rise by as much as 20 cents a liter and more service stations face temporary fuel cuts, according to Vlado Vivoda, honorary fellow at the University of Queensland’s sustainable minerals institute.

“I don’t think there will be a real famine, but [oil and fuel] Tankers move very slowly…it takes time to bring extra cargo,” Vivoda said.

He said national prices and supply should not be affected as other states import fuel to meet their needs.

The Geelong refinery can process crude oil into petrol, diesel, jet fuel and some specialty products that are piped or shipped to storage terminals and delivered to service stations and commercial customers including airlines and road transport companies.

Most of the fuel refined in Geelong remains in Victoria, providing about 50% of the state’s oil supply, according to David Leaney, a supply chain expert at the Australian National University.

Leaney said Victoria could have “short-term price growth and short-term availability issues”.

“This will impact Victoria’s oil supply, but we’re talking weeks, not months, depending on the repair and restoration of supply from the refinery,” Leaney said.

Federal Energy Minister Chris Bowen said production of petrol, diesel and jet fuel at the refinery was continuing at reduced levels as a safety precaution. He said there would be an impact specifically on oil production.

The fire comes at a sensitive time for Australia, given the conflict in the Middle East has triggered a huge rise in oil prices and ongoing concerns about supplies given the fragile state of the ceasefire in the US and Iran.

While Viva operates the largest fuel and convenience network in Australia under the OTR, Reddy Express and Liberty brands, most of its stations outside Victoria, including New South Wales, rely on imported oil.

Viva also sells through Shell through a brand licensing agreement.

Lurion De Mello, an energy economist at Macquarie University, said the loss of supply in Victoria could force the federal government to authorize fuel companies to release more of their minimum stockpile, as it did in March.

“I think any extra supply going from wholesale to retail will definitely help with prices and so on,” De Mello said.

De Mello said crude oil orders to the Geelong refinery could be rerouted if the refinery could not process it into fuel.

Tracking data showed oil shipments from the US, Argentina and Algeria were on their way to Geelong on Thursday morning.

Viva Energy’s shares took a break early Thursday as the company received an announcement regarding the extent of damage to the refinery and expected oil supply disruptions.

Australia’s two refineries – the second is located in Brisbane and is operated by Ampol – produce about a third of Australia’s oil needs.