Viva’s Geelong refinery welcomes $30 million federal lifeline

VIVA Energy’s Geelong refinery has welcomed the federal government’s decision to bring forward its production payments, and estimates the initiative will be worth $30 million into the business over the next six months.

The support will be provided through a minimum one cent payment for each litre of primary transport fuel (petrol, diesel, and jet fuel) from Australia’s three major domestic refineries that continue operations in Australia from January 1 next year.

Speaking at the refinery on Monday this week alongside Minister for Energy and Emissions Reduction Angus Taylor and Victorian Senator Sarah Henderson, Viva Energy chief executive officer Scott Wyatt said his company would produce 3 billion litres over the next six months so would result in production payments of $30 million.

The lower demand for fuel over the coronavirus pandemic has hit Australia’s refineries hard, and Viva Energy said in September it was considering shutting down its Geelong operations, which employ about 700 people.

“This package will certainly see us run through to the middle of next year, and with the discussions we’ve had so far, and the fuel security package that was announced in September, we’re expecting in the next six months to find a pathway to be able to continue refining beyond the end of the interim production payment,” Mr Wyatt said on Monday, adding that all the Geelong refinery’s units were restarted in November.

The short-term production payment – originally announced as part of the 2020/21 Federal Budget – will be worth about $83.5 million, and the long-term market mechanism for the production payment will come into effect no later than July 1, 2021.

Mr Taylor said the Morrison Government had not got the timing of the production payment wrong.

“Our plan was always to have the start date as soon as possible – we said that from the get-go – the question was how to best do that.

“The heart of this is recognising that for years refineries have played a special role in our energy system in this country.

“They provide the liquid fuels we need with a very secure source of supply for those essential industries. Obviously that’s an important role that we’ve taken for granted in the past – we can’t take it for granted now.”

Senator Henderson said the production payment was “certainly a wonderful Christmas present for the people of Geelong”.

“This is the latest example of how this government has stepped up to support manufacturing jobs in this region.”