Oil refinery fire in Geelong, Australia, could mean higher fuel prices within days, expert warns

Fire Rescue Victoria said it responded at 11.15pm (local time) last night after multiple reports of explosions and flames at the refinery.

Fire Rescue Victoria deputy commissioner Michelle Cowling said the fire is now out.

“We will be able to get in close with Viva refinery crews to hopefully make that area safe,” she told Sky News.

“The smoke has dissipated, so atmospheric monitoring has been done ...and communities can rest a little bit easier.”

Earlier, Cowling told ABC Radio Melbourne that the fire had been contained to the transfer part of the plant and would likely take four to five hours to extinguish, “because of the size of the tower that contains LPG, and there’s no physical way to get in to actually turn the valve off”.

“As you can imagine with significant fire, it is quite hot and has been burning since about 11pm last night [local time], so until we can really cool that area down, that open valve where that leak has been is just draining that tank.”

The fire sent smoke billowing across the region, with a sweeping “watch and act” warning for tens of thousands of residents, the Geelong Times reported.

Victoria’s Environmental Protection Agency are assessing effects on water quality and Corio Bay residents are warned to avoid contact with the water.

A wind change overnight led authorities to urge residents to shelter indoors immediately, but the Country Fire Authority downgraded the threat this morning.

The cause of the fire would be investigated, but was not thought to be suspicious, Fire Rescue Victoria assistant chief Michael McGuinness said.

Workers indicated that a leak was detected shortly before the small fire began, quickly increasing in size and intensity after repeated explosions.

The fire would affect petrol production, Viva Energy chief executive Scott Wyatt said.

“The units that are impacted are in the petrol part of a collection of units that do make petrol,” he told the Australian Financial Review.

The priority was to make the site safe for workers.

“We’ve still got work to do, as Fire Rescue Victoria have said, over the course of the morning, to really contain and extinguish the fire, make it safe, understand what damage has occurred and understand how we can safely restore production across the site.”

Two “units” of the refinery were out, Wyatt said this morning.

The units were in the petrol section, but there were also petrol units that had not been affected.

“Other units are operating at minimum levels to keep them ticking over.”

Bowen told the ABC that it wasn’t clear how fuel supplies would be affected, but the fire “will have an impact”.

The refinery was still producing diesel and jet fuel, but “at reduced levels, as a precaution”, Bowen told ABC’s News Breakfast.

“The major impact at this point appears to be more on petrol production.”

Kevin Morrison, an analyst for the Institute for Energy Economics and Financial Analysis (IEEFA), said Geelong was the bigger of Australia’s two remaining refineries.

Together, the two produce about a third of the country’s total petrol requirements, leaving little doubt that the fire damage will affect Australian petrol supplies.

Victoria could expect petrol outages in the coming weeks and months, supply chain expert Leaney told the ABC, adding that the “timing is terrible”.

“The impact will be most serious for Victorian petrol supply, and to a slightly lesser extent, Tasmania,” he said, with consequences in other parts of Australia being more minor.

He did not expect diesel or jet fuel to be affected.

Saul Kavonic, an energy analyst at MST Financial, said the Government would have to “scramble additional fuel imports” at higher prices, increasing the risk of further shortages.

The fire came “just as the crunch point of the global fuel shortage is about to hit us”.

A significant leak of liquid hydrocarbons and gases had fuelled the fire, McGuinness said..

The “quite ferocious” fire was still burning but had been contained to an area of 30m by 30m.

It started in the part of the refinery where motor petrol was produced, with 50 firefighters sent to put it out.

“There’s been some sort of leak, there’s hydrocarbons, flammable liquids, which very readily caught fire,” McGuinness told the ABC.

“It was burning in an area of approximately 30 metres by 30 metres. There have been several small explosions.

“The fire went from a small fire, through several explosions, to be quite a large and intense fire.”

The fire would be investigated but was not being treated as suspicious, he said.

“It may very well be just a malfunction of a piece of pipework or a valve.”

Peter Marshall, secretary of the Victoria branch of the United Firefighters Union, said it had brought up “serious concerns” about a two-minute increase to fire response criteria at the refinery.

“This could have gone horribly wrong. It’s not far from residential areas. It is a known facility and a very old facility, and we’re very lucky to have the people ... who are actually performing the work as firefighters.

“It’s not unexpected when you actually have a 1950s facility working at full capacity against the backdrop of the fuel crisis.”