Australia's Viva 1H 2021 refining margins bounce back to $6.60/b
Quantum Commodity Intelligence – Healthy refining margins and government subsidies have helped lift Australian refiner and fuels marketer Viva Energy to a "very strong" first half, with its sole refinery suffering none of the heavy losses that marked last year, the company announced Friday.
Viva reported the Geelong Refining Margin (GRM) for 1H 2021 was USD$6.6 per barrel, compared with USD$2.90/b achieved in 1H 2020, which was impacted by its sole Geelong Refinery closing its Residual Catalytic Cracking due to weak demand.
The refinery operated at or above break-even levels during 1H 2021 with additional support from the receipt of approximately A$40.6 million of the Federal Government's Temporary Refining Production payment.
Viva, which is controlled by global energy trading firm Vitol, bought the Geelong refinery in 2014 from Shell, along with hundreds of Australian retail outlets for A$2.9bn ($2.1bn).
Sales growth in fuels outside the aviation business were "strong", with supportive margins, said chief executive Scott Wyatt, but warned;
"Refining remains challenging. But supported by strong production levels, receipt of the short-term production payment grant and the long-term fuel security package commencing July 1, 2021 – that minimises the downside volatility of refining margins," Wyatt said.
Sales volumes of diesel were up 16% cent from 2019, and up 4% for gasoline (petrol), but jet fuel sales remain 60% cent down on the 1H of 2019.
The refinery has been back at full production since late 2020.
Weekly sales through Viva's service station alliance with Coles were 58.4 million litres, up from 54.1 million litres in 1H 2020 but still 2% softer than the same half in 2019.
The Australian government offered the country's remaining refiners an interim subsidy per litre of fuel produced in Australia starting January 1, ahead of a larger subsidy package that kicked in on July 1.
Viva secured a bigger subsidy than initially expected after two rival refiners decided to shut their plants instead amid large losses and a weak outlook for the sector.
Viva said gross earnings for1H 2021 would be between $390 million and $410 million, up about 48.5% from the $269.3 million in the first half of last year.
Shares in Viva rose as much as 9.1 per cent to $2.15 in morning trading, softening to $2.06 by early afternoon Australia.
