Viva Energy to build new diesel storage in Geelong Refinery
Viva Energy Group Limited confirmed that it has finalised the terms of the grant agreement in relation to the Federal Government’s Boosting Australia’s Diesel Storage Program.
Under the agreement, Viva Energy Group will build 90 million litres of new strategic diesel storage at its Geelong Refinery in Corio, near Geelong in the Australian state of Victoria. The grant will cover up to 50% of total eligible expenditure up to a maximum of AUD33.3 million (USD23.75 million). The total project expenditure is estimated to be between AUD75-85 million (USD53.48-60.61 million).
Subject to regulatory approvals, construction of the new diesel storage is expected to commence shortly ahead of planned completion by mid-2024, prior to the introduction of stage 2 of the Minimum Stockholding Obligations.
Australia is dependent on oil and refined liquid fuel imports to meet its fuel needs—this is potentially a source of energy insecurity in the case of a major disruption to these supply chains. The Minimum Stockholding Obligation is intended to support fuel security by requiring refiners and fuel importers to hold a minimum stock of fuel in Australia on designated obligation days that will be prescribed by Ministerial Rules.
The Australian Government, which in recent years, has placed more emphasis on increasing fuel security, has allocated AUD200 million (USD142.61 million) for expanding Australia’s diesel storage capacity,
Between 2010 and 2015, the number of oil refineries in Australia was reduced from seven to four. Then in October 2020, BP Australia announced that it was converting its refinery in Kwinana, Western Australia, to an import terminal. This was followed by the announcement in February 2021 that the ExxonMobil refinery in Altona, Victoria, would also be converting to an import terminal—leaving two active refineries in Australia.
The Geelong refinery was established by Shell Australia in 1954. It was sold to global oil trader Vitol as part of a deal to buy all of Shell’s Australian downstream assets in 2014. Vitol established Viva Energy as an Australian subsidiary. Viva Energy was floated on the Australian Securities Exchange in July 2018, with Vitol retaining a 45% stake in the company.
In 2021, the Geelong Refinery became one of only two oil refineries in Australia (with Lytton Oil Refinery in Brisbane) that had not closed or announced closure within the year. The refinery can process up to 120,000 barrels of oil per day, manufacturing petrol, diesel, LPG, jet fuel, avgas, bitumen, specialty solvents for a wide range of industries, and Low Aromatic Fuel to support the Federal Government’s petrol-sniffing prevention program. It supplies over 50% of Victoria’s and 10% of Australia’s fuel.
