Viva Energy Halt Ends After Geelong Refinery Fire
Viva Energy (ASX:VEA) shares returned to trade this morning after four days in a halt, following the big fire at its Geelong refinery on the night of 15 April. The stock was frozen at A$2.53, having been up more than 20% for the year before the incident. Geelong is not just any asset. It supplies about half of Victoria’s fuel and around 10% of Australia’s total. In our view, this is far bigger than a VEA story. It is a real test of how stretched Australia’s refining setup has become, with clear flow-on effects for Ampol (ASX:ALD) and the wider energy sector.
What the Geelong Damage Means
The fire started in the MOGAS (motor gasoline) unit after equipment failure caused a gas leak that ignited. Standing alongside CEO Scott Wyatt at the Corio site on Friday, Prime Minister Anthony Albanese confirmed the refinery is now operating at 60% of petrol production, 80% of diesel production, and 80% of aviation fuel production. The damaged unit makes petrol, which is the main casualty, while diesel and jet fuel lines are still producing at reduced rates. For now, Viva plans to cover the gap through imports, and the government has already secured an extra 100 million litres from Brunei and Korea, with BP joining the Export Finance Australia arrangement. That keeps the pumps full, but it does not protect earnings.
The timeline is what investors need to focus on. If the damaged unit is back up in around three weeks, this is a small bump. Insurance and imports should do most of the heavy lifting, and full-year earnings stay roughly on track. If repairs stretch closer to three months, the story changes. Imported petrol usually carries thinner margins than making it locally, so earnings take a real hit.
Why the Fire Handed Ampol (ASX:ALD) a Near-Monopoly
With Geelong running well below normal, Ampol’s Lytton refinery in Brisbane is now the only domestic refinery running at full speed. And Ampol’s position is actually stronger than it looks. Back on 20 March, the company deferred its planned Lytton maintenance shutdown from early June to the start of August, a move that adds roughly 300 million litres of extra domestic petrol, diesel and jet fuel in that window. That means Lytton has clear air to run flat-out through the exact period Geelong will be recovering.
The market has already noticed. Ampol shares hit fresh 52-week highs on Thursday before settling around A$33.06 and are up roughly 60% over the past year. Tighter local supply should lift refining margins at Lytton and drive stronger demand across its wider supply network. That said, investors should not ignore the other side. Having one refinery carrying the country is also a big single-point-of-failure risk, and that tends to bring politicians to the table. We expect fuel security policy to return to the spotlight, which could mean stronger government support for both Viva Energy and Ampol over time.
The Investor’s Takeaway for Viva Energy
It helps to remember that refining is not Viva’s biggest profit engine. Its commercial and industrial business, along with its retail and convenience network, contributes more to group earnings. That softens the blow but does not cancel it. The main risks, in our view, are a restart that drags beyond guidance, a shortfall in business interruption insurance, and tougher government rules on fuel security. Restart delay is the one we would watch most closely.
For existing holders, holding through the update looks reasonable if the restart timeline is six weeks or less. If it stretches to three months or more, trimming to manage risk is sensible. For new investors, waiting for clear answers on repair timing and insurance is the smarter move.
