GEELONG VIVA REFINERY LOSES $95M IN ONE YEAR:

Viva pumps up refinery’s future after $95m loss

THE Geelong refinery is back to breaking even after costing Viva Energy almost $2m a week last year.

Returning the refinery to a sustainable position is the key focus of Viva Energy’s business recovery plan, but with refining expected to face ongoing challenges, a fuel security deal with the federal government is seen as critical to its long-term future.

Viva Energy on Wednesday reported significant growth in its non-refining business in 2020 but a $95.1m loss at the refinery dragged it back to a $35.9m net loss for the year after tax.

While the refinery’s financial performance was down almost $211m on 2019, Viva Energy has continued to invest in it, with a vital four-yearly maintenance event during the year costing $92.3m.

It also finished the year with a strong balance sheet from which it can pursue further investment, including plans to develop the Corio refinery into a broader energy hub.

After agreeing to a sixmonth refinery production payment from the federal government for the first half of this year, Viva Energy is continuing to work with the government on a long-term lifeline.

Announcing the 2020 fullyear results, CEO Scott Wyatt said while the poor result for the refinery was not unexpected due to a fall in local and global fuel demand during the COVID-19 pandemic and weak refining margins, it underscored the significance of the challenge. He said the return to full production and federal interim support payments had the refinery operating at break-even levels, while its commitment to a long-term fuel security package provided confidence for the company.

“That package has the potential to provide the longterm security that we need,” Mr Wyatt said.

“It is really important, the government understands that as well. The approach they are taking to develop the details of that package are really positive.

“I remain optimistic that we will find a solution and that we will find that solution before the end of the first half of this year.”

He said there were also areas where the state government could “continue to really support us” in developing the Geelong energy hub, which includes a floating gas terminal.

“That support, in concert with the package from the federal government, will really provide the ingredients that we need for a really vibrant energy hub at Geelong over the long run, which is what we aspire to do,” Mr Wyatt said.

Despite the tough year, earnings at Viva Energy’s nonrefining businesses were up 16.5 per cent. Viva Energy has returned $595m to shareholders in the past year, including proceeds from the sale of Viva Energy REIT and a first-half dividend, but it will not pay a second-half dividend.

After the announcement of the full-year results, Viva Energy shares traded up about 5 per cent at $1.75.