Overview of the Incident#
Shares of Viva Energy Group Ltd, an Australian fuel supplier, experienced a significant decline on Monday after a fire disrupted operations at its Geelong refinery in Corio, Victoria. The stock dropped over 6%, reaching a one-month low of A$2.290. Trading was halted for two days following the incident.
Details of the Fire#
The fire occurred in the gasoline processing area of the refinery. Fortunately, other units, including those responsible for crude distillation, were not affected. The blaze was contained and fully extinguished by Thursday morning, allowing the company to assess the situation.
Production Capacity and Future Plans#
In the short term, the Geelong refinery will operate at approximately 80% capacity for diesel and jet fuel, and 60% for petrol. Despite the reduced output, Viva Energy confirmed it has enough fuel reserves to meet customer demand. The company anticipates ramping up production to over 90% capacity in the coming weeks and will begin reviewing the damage and financial implications of the fire.
Context and Market Impact#
Geelong is one of only two oil refineries in Australia, processing up to 120,000 barrels of oil daily. It supplies about 50% of Victoria’s fuel and 10% of the nation’s total fuel consumption. This fire comes amid rising concerns about fuel shortages, exacerbated by ongoing conflicts in the Middle East. Despite these challenges, Viva reported a 5.1% increase in total fuel sales volumes year-on-year, benefiting from higher refining margins due to increased fuel prices. The refinery primarily sources crude oil from North and South America, Southeast Asia, and Australia, ensuring a stable supply through July.