Viva Energy CEO Scott Wyatt says fuel sales recovering as coronavirus lockdowns ease
Retail fuel sales have begun to recover as coronavirus travel restrictions have lifted, according to Viva Energy boss Scott Wyatt.
The federal government’s moves to increase domestic fuel security should also play an important part in keeping Australia’s local fuel refineries open and competitive, according to Viva Energy boss Scott Wyatt.
Mr Wyatt assured shareholders at Viva’s annual shareholder meeting the company was still confident in the long-term future of its Geelong refinery site, saying Viva had opened talks with potential partners for a natural gas importer terminal at the facility and was pleased with the progress of discussions with the federal government over the establishment of greater domestic fuel reserves.
Energy Minister Angus Taylor opened a formal “request for information” process last month, asking major fuel companies to put together ideas to help Australia reach its international commitment to retain stockpiles of at least 90 days worth of fuel. At the end of February only 56 days of fuel were on hand locally, with another 25 days of stocks in held in overseas ports or in transit to Australia.
The RFI called on Australian fuel majors to submit basic proposals for new storage facilities, including “storage details, location and project financing options”.
Mr Wyatt confirmed Viva had responded to the government’s request for information, which closes on Friday, saying he believed the strategic fuel reserve proposal should also be linked to efforts to support the local refining industry.
Three Australian refineries have shut since 2012 and the four remaining plants now supply less than half the nation’s fuel needs, with the bulk of the market now supplied from refineries in Singapore, South Korea and Japan.
If the government pushes ahead with the establishment of a local reserve, Viva is expected to battle it out for contracts with local and international rivals including Ampol, Esso and BP, as well as fuel storage experts such as Vopak.
“It’s a good potential commitment to an investment in not just oil storage in Australia, but if it’s aligned with the refining businesses, a real potential support for the viability of refineries and the ability to improve our storage at those locations which we believe is an important part of the energy mix in Australia,” Mr Wyatt told Viva shareholders.
Mr Wyatt said fuel storage contracts would help support the long-term future of its Geelong facility, where the company is also considering construction of an LNG import terminal, along with a solar farm. “We have significant room for expansion not only at Geelong, but also across our infrastructure and terminal network throughout Australia,” he said.
Viva had launched a process to find potential partners for the import terminal.
Mr Wyatt confirmed the company expected to report a solid financial result for the first half of 2020, confirming earlier guidance of underlying group EBITDA of between $257.5m to $287.5m, despite the collapse in retail fuel sales due to the coronavirus crisis.
Viva fuel sales dropped from 70 million litres a week at the start of the year to less than 40 million in April, but Mr Wyatt said they were now showing strong signs of recovery.
Sales of aviation fuel had been devastated by the coronavirus, but Mr Wyatt said other areas of Viva’s business had held up well.
Viva shares closed down 4c at $1.76 on Monday.
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