An oil producer is reviewing its aviation gasoline refinery due to the global impact of the deadly disease.
Viva Energy is seriously considering the future of its $600 million Geelong Avgas Refinery in Corio, 67km southwest of Melbourne.
The refinery has reduced production and shifted its focus to maintenance due to dwindling demand from piston engine plane operators during the Chinese coronavirus (COVID-19) recession.
Up to 700 jobs at risk
The proponent may have to resort to more drastic measures if conditions still do not improve after the Victorian Government relaxed restrictions to help contain the pandemic on September 6.
A complete shutdown in October would directly impact on the refinery’s entire workforce of about 700, with pay cuts and redundancies expected to be the most likely step that follows.
Even if the refinery resumes full production in November, Viva Energy profits will be affected by crude oil prices that recently dropped 7.6 per cent to US$36.76 (A$51) a barrel. This represents the lowest level seen since mid-June according to the Wall Street Journal.
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“Unfortunately, the impacts of COVID-19 and the restrictions on mobility and the economy are putting extreme pressures on the refining business that we have not experienced before and are not sustainable over the longer term,” Viva Energy CEO Scott Wyatt said in a public statement.
“We are closely monitoring the evolving situation and will continue to keep our employees, investors and stakeholders updated.”