Viva Energy Australia will cut back production from the Geelong refinery, 50 km west of Melbourne, citing COVID-19 restrictions and the precipitous fall in demand for its petroleum products.
It is shutting down its residual catalytic cracking unit and one of its crude distillation units in May. One other crude distillation unit and all other processing units will remain operational; however, Viva will reduce its refining intake by about 2.5 million bbl/month.
The Geelong refinery is the second largest in Australia. Formerly owned by Royal Dutch Shell, it was part of the package of Shell’s downstream operations in Australia bought by Viva’s parent, the privately-owned Swiss trading company Vitol Group, in August 2014 (OGJ Online, Feb. 21, 2014).
Part of the deal was that the Shell brand would be retained and Melbourne-based Viva Energy Australia became the exclusive distributor of Shell products throughout the country.
Viva said it would use the closure to bring forward major maintenance work at Geelong refinery which was originally scheduled to begin for August through October (OGJ Online, Feb. 26, 2020).
Financial impact of the cutbacks will be minimal given the current low refinery margins, the company said. The refining margin for the March quarter was down to $2.7/bbl with an intake of 10.8 million bbl.
Retail fuel sales at the end of March had fallen by around 40%, while aviation fuel demand had dropped by 90% as a result of the COVID-19 travel restrictions.
