Demand for domestic fuel has been hit hard by global efforts to arrest the spread of the deadly pandemic, as borders close, airlines slash flights and passengers cancel travel plans. The coronavirus outbreak has slashed gasoline demand by 50 per cent and jet fuel demand by 70 per cent.
Caltex, which expects jet fuel demand to plunge by as much as 90 per cent, said its refining margins had nearly halved in 12 months. Caltex’s margin slumped from $US7.34 a barrel in 2019 to $US5.78 in January 2020, before falling another 28 per cent to as low as $US4.14 in February.
Viva Energy’s margin at the Geelong oil refinery fell 30 per cent from $US3.40 a barrel in January to $US2.40 in February.
Caltex interim chief executive Matthew Halliday told The Age and Sydney Morning Herald that Caltex’s maintenance turnaround project at Lytton represented a significant investment in the refinery’s future, adding that he believed the market would return to “something similar” to normal conditions once the coronavirus crisis abated.
Asked whether the industry may ultimately need taxpayer assistance if the headwinds persisted, Mr Halliday said the company was in “constant communication” with government leaders regarding its operational decisions, and praised how government leaders were handling the nation’s economic interests alongside the unprecedented public health emergency.
“The government has got a lot on its plate at the moment,” Mr Halliday said. “I think the government is doing a nice job of managing that very delicate balance.”
Energy Minister Angus Taylor said he had been in regular discussions with Caltex and the other refinery owners concerning their operations and ensuring the security of Australia’s liquid fuels during the pandemic.
“Caltex have assured me that they are committed to the future operation of this refinery,” Mr Taylor said.
Australia has become increasingly reliant on imported fuel over the past decade, with three of the nation’s seven domestic refineries closing down and domestic production of liquid fuels declining sharply.
However, the government and industry leaders are confident in the reliability of Australia’s fuel supply due to the fact Australia imports fuel from more than 70 nations, with no single country providing more than 20 per cent of petroleum imports.
Mr Taylor said Caltex’s decision would not affect Australia’s fuel security.
“Consumers should be assured that there is no current risk to our fuel supplies,” he said.
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Business reporter for The Age and Sydney Morning Herald.
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