The future of Viva Energy’s Geelong oil refinery remains in the balance after its losses accelerated in the September quarter, piling further pressure on the federal government’s fuel security measures to prevent the closure of a key manufacturer in lockdown-hit Victoria.
The loss in refining totalled $30 million in the quarter, adding to the deficit of almost $50 million amassed in the June half.
Viva said it was “pursuing all available options” to improve cash flow and stem “unsustainable” losses at the plant and will update the market in December on whether it will continue operations there beyond March 2021.
Rival Ampol advised last week it may close its Lytton refinery in Brisbane after a blowout in losses, while Australia’s other two refineries are similarly struggling with the slump in demand for jet fuel and weak refining margins caused by the COVID-19 pandemic.
Viva is working with the Morrison government on the details of the $2.5 billion fuel security package as it tries to save the plant. That package includes a direct subsidy of 1.15¢ a litre for the local production of fuel, as well as potential contracts for fuel storage that may provide extra revenue.
The government drew up the plan – announced last month – with the twin aims of improving the security of supply in liquid fuels for the nation and preserving critical manufacturing as supply chains come under pressure due to COVID-19 and mounting regional tensions.