Albanese laments refinery closures following Geelong fire, foreign interference ruled out as cause

Prime Minister Anthony Albanese has slammed the previous Coalition government for its “error” in allowing four fuel refineries to close, a day on from a fire at one of the two refineries left in Australia that has limited production during the ongoing fuel crisis.

The government has also ruled out foreign interference as the cause of the fire at Viva Energy’s oil refinery at Corio, near Geelong, which exploded into flames on Wednesday night and burnt into Thursday.

Albanese visited the damaged refinery on Friday morning with Deputy Prime Minister Richard Marles and Energy Minister Chris Bowen.

“There were six refineries in Australia when we left office in 2013, and when we came back [in 2022] there were two. That was an error,” Albanese said.

On Thursday at the Viva site, Australian Workers’ Union state branch president Ross Kenna urged the federal government to “start taking fuel security seriously”, including by investing in the remaining facilities.

“Once you lose sovereign capacity, it’s hard to rebuild,” Kenna said.

“We are an island nation, we can do this ourselves, we have the capacity if we have the investment. So we do need to invest in these facilities, and make sure we hold multinationals to account.”

Asked if he was considering investing in increased storage capacity in Geelong, the prime minister pointed to the subsidies the government already provided for the two remaining refineries, effectively paying them to remain open when prices do not cover costs.

It will cost a minimum of many hundreds of millions of dollars to boost fuel security, which would deliver an unwelcome hit to next month’s budget.

The most recent program to build extra storage capacity and fill it with fuel was costed at $260 million in 2019, to hold 780 million litres of diesel in reserve. This represents about 20 per cent of petrol, jet fuel and diesel in the nation’s strategic stockpile.

Australia has about a month’s worth of average national petrol and diesel use in storage.
Construction and fuel prices have risen steeply since then, with experts saying prices may have doubled.

The Geelong fire, which took 13 hours and 100 firefighters to extinguish, has forced Viva Energy to reduce its production of some fuels while investigations continue into the cause of the blaze and the extent of the damage.

Production at the plant has slowed to 80 per cent capacity for diesel, 80 per cent for aviation fuel and 60 per cent for vehicle fuel as investigations into the fire continue.

The timing couldn’t be worse: Viva’s refinery, one of only two of its kind remaining in Australia, had been at full production capacity since the US-Israel war on Iran began on February 28, and was processing up to 120,000 barrels of oil per day.

Marles said foreign interference had been ruled out as the cause of the fire. “All of that, I think, has been ruled out,” he said.

Albanese also said the fire wouldn’t move Australia to the third stage of its national fuel security plan, which would prompt the adoption of practical measures limiting fuel use.

“The event here will not lead to any change,” he said.

“We’ll give an update tomorrow [Saturday] about fuel supplies that are on hand. Fuel is continuing to come in.”

Victorian Premier Jacinta Allan said she had spoken to Viva Energy chief executive Scott Wyatt and received the same advice that operations would continue sufficiently to ensure Victoria had adequate fuel supply.

“We’re continuing to monitor this really, really closely,” she said.

“It is also, importantly, why we have a national plan, and should the circumstances change that we’ll work through the future stages of the national plan.

“But the advice is right now that the incident at Geelong, the fire at the oil refinery at Geelong, will not have an impact on Victoria’s fuel supply.”

Allan would not say whether Victoria needed an additional refinery, but understood why the public was asking questions about how to bolster the current system.

“[That] Is why, as a national cabinet, state and territory and federal governments have agreed to work together on these issues,” she said.

Albanese said the fire was “regrettable” considering its timing, but most fuel production continued despite the incident.

There are hopes the refinery can “ramp up” production following the fire, but this morning Wyatt did not commit to when the facility would return to full production, saying the priority for now remained maintaining safety.

“I think there will be no impact to what we supply to the Victorian market as a result of this incident,” he said, vowing not to pass any fire-related cost increases Viva experienced onto consumers.

To visit the Viva refinery, Albanese cut short a trip to Brunei and Malaysia aimed at securing more fuel shipments.

An extra 100 million litres of fuel will arrive in Australia as a result of that visit, and Marles said that would largely offset the temporary reduction in output at Viva.

It is understood the blaze began in some piping in the plant due to a mechanical fault, and despite emitting a large amount of smoke, was eventually contained an area of 50 square metres. Albanese thanked emergency workers during his visit.

On Friday morning, Fire Rescue Victoria crews remained on standby at the scene, while a HAZMAT team was still conducting air monitoring around the perimeter.

FRV held a meeting in Corio for residents overnight, after which Geelong’s mayor Stretch Kontelj put out a statement.

“While the incident had the potential to be catastrophic, it was contained through swift, coordinated action. The focus must be on ensuring we are even better prepared next time, particularly when it comes to keeping the community informed,” he wrote.

About 25,000 people live in the Corio, Norlane and North Shore areas surrounding Viva Energy’s refinery.

With Daniel Lo Surdo and Jackson Graham

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