Australia’s two oil refiners are turning their backs on purchases of Russian crude oil following the invasion of Ukraine, but four cargoes already bought and paid for are still due to arrive on Australian shores and are needed to avoid potential fuel shortages.
Viva Energy said it had explored options to sell the two cargoes of Russian crude that it expects in Australia over the next two months for processing at its Geelong refinery, but had found “no credible purchasers”.
Without the two cargoes, which have been purchased from international oil companies rather than Russian producers, “the company faces gaps in its refining program and potential fuel shortages”, it said.
Ampol said it has not bought any Russian crude since the conflict began and will not enter into any new contracts, but has two cargoes “in our current planned supply chains” that will arrive before the end of April.
The situation illustrates the difficulty that customers of Russian oil and gas are facing all over the globe as they try to wean themselves off energy exports from one of the world’s biggest suppliers.
Viva owns and operates the former Shell Australia refinery at Geelong and the Shell-branded network of petrol stations in the country. Ampol owns a refinery in Brisbane.
The prospect of a ban on Russian crude supplies by the West helped drive oil prices as high as $US139.13 a barrel on Monday Australian time, the highest since 2008, raising fears about the impact on inflation and the global economy.
US Secretary of State Antony Blinken said on Monday the Biden administration and its allies were discussing an embargo on Russian oil.
Russian oil accounted for only about 3 per cent of Viva’s crude purchases over the past 10 years, and was less than that in 2021, a spokesman said.
Crude oil used at Viva’s refinery are made through its part-owner Vitol, a global trader of energy based in Singapore.
“Viva Energy sources crude from many different countries, and expects to be able to maintain supplies of crude oil and fuel to support Australia’s energy security during these difficult and uncertain times,” the company said.
“We are keeping the Australian government informed of the evolving situation.”
Ampol said the Australian transport energy market was not reliant on Russian oil, noting that its Lytton refinery uses crude also from south-east Asia, Africa, North America and the Middle East. Supply chains for petrol and diesel in Australia also typically run without any Russian oil products, it said.
“Despite this, geopolitical events in the Ukraine and current international sanctions are putting pressure on global oil prices and this is, in turn, impacting Australian retail fuel prices,” it said, adding it would focus on delivering products safely and reliably to our customers using existing supply chains.
Viva did not comment on the expected impact on its business of halting purchases of Russian crude, or of the surge in oil prices. Its ban on Russian oil will last “while the conflict continues”, it said.
Shares in Viva were down 3.7 per cent at $2.32 in mid-afternoon trading, while Ampol shares were 3.4 per cent softer at $28.49.
Extracted from AFR