Viva Energy’s Geelong refinery is nearing a return to more than 90 percent of its normal production capacity following a major fire in April that led to the shutdown of key processing equipment. The refinery, which is Australia’s largest and a critical supplier of petrol, diesel, and aviation fuel across southeastern Australia, has resumed operations of most units except for its alkylation unit, which will remain offline until at least 2027.
Preliminary investigations into the April 15 incident revealed that the fire was caused by the failure of a section of piping within the alkylation unit, which released fuel that subsequently ignited. The alkylation unit plays an important role in converting liquefied petroleum gas (LPG) into high-octane petrol blending components. Without this unit, Viva Energy must find alternative uses or markets for LPG, which typically commands a lower value than finished petrol or diesel products. This shift is expected to impact refinery economics more than total fuel volumes produced.
While the company confirmed the residue catalytic cracking unit (RCCU) has been restarted, restoring the refinery’s ability to upgrade lower-value intermediate products into transport fuels, it has not disclosed the anticipated costs associated with repairing or replacing the damaged alkylation unit. Viva Energy indicated that the alkylation unit has been isolated from refining operations and will remain offline as the company evaluates long-term repair or replacement options.
Despite the disruption, Viva Energy’s financial performance at Geelong remains robust. The refinery reported a refining margin of US$23.90 per barrel during April and May, compared with an average margin of US$9.60 per barrel projected for 2025. The strong earnings reflect a combination of higher fuel prices, tighter product markets, and the resumed operation of key facilities such as the RCCU, which enhance fuel yield and refining margins.
Shares in Viva Energy declined following the announcement, falling between 2.35 and over 3 percent on market concerns about the uncertainty surrounding the damaged alkylation unit and potential costs of restoring full operational capacity. However, Viva Energy has maintained that petrol production will not be materially affected by the continued outage.
The Geelong refinery’s importance has grown amid the closure of several Australian refineries over recent years and the heightened geopolitical tensions that briefly unsettled energy markets, including concerns related to crude oil shipments through the Strait of Hormuz. The facility remains a strategic energy asset for Australia, ensuring supply continuity for southeastern regions despite ongoing challenges from the April fire incident.