06/07/2023 | News release | Distributed by Public on 06/07/2023 03:53
Adds comment from analyst in paragraph 5
A contractor crane has collapsed at Australian refiner and fuel marketer Viva Energy's Geelong facility in southern Australia, with the firm expecting the incident to lead to losses in refining earnings.
The crane collapse damaged a compressor that was being installed as part of planned maintenance, but the extent of the damage to the compressor is still unknown, Viva announced to the Australian Securities Exchange on 7 June. Repairs will likely take approximately three months to complete. The company predicts a loss of A$25mn-35mn/month ($16.7mn-23.4mn/month) in refining earnings before interest, taxes, depreciation and amortisation during the repairs, including the month of June, because of margin and production impacts.
Viva said the accident will not affect market supply from its 120,000 b/d Geelong refinery in the state of Victoria, adding it expects insurance coverage for property damage and business interruption to materially reduce the extent of financial losses.
The area was subject to a worker exclusion zone when the incident occurred and no one was injured by the falling crane, the company said. The maintenance turnaround at its No.4 crude distillation unit was announced in February and Viva updated its production outlook in April, reflecting the anticipated reduced output.
An RBC Capital analyst said the Geelong refinery will now produce no premium gasoline or diesel until September 2023 but will continue to produce some regular octane gasoline and jet fuel. The analysis note said that Viva would draw down product from inventory and rely on more imported refined product to cover the production loss, estimating a total impact on ebitda of A$85mn.
The refiner said the maintenance turnaround is expected to conclude by late June and unaffected units will then be available to restart operations.
Viva supplies about 10pc of Australia's fuel and is planning refinery upgrades to produce ultra-low sulphur gasoline by 2025 in order to meet new Euro-6 fuel standards.
By Tom Major