Viva Energy says sales volumes in the first three months of 2022 jumped 9 per cent year-on-year as a global energy crunch and increased mobility after COVID-19 restrictions eased drove demand for refined oil.
The result buoys the outlook for Viva, which has ridden a wave of heightened oil demand in recent months, sending shares up 3 per cent in early trade on Thursday to hit a three-year-high.
Viva said volumes sold totalled 3288 million litres in the March quarter of 2022, up from 3030 litres the refiner processed one year earlier.
The result was driven, Viva said, by strong diesel sales within its commercial businesses. Aviation sales volumes increased 3 per cent year-on-year, and were up 16 per cent in the quarter ended December 31 as restrictions over interstate travel were eased.
Retail petrol sales also rose, despite the impact of floods and COVID-19 outbreaks, Viva said.
Offering some forward guidance, Viva also said retail demand has been boosted by the government’s decision to cut the excise duty on petrol.
“Retail fuel market demand is showing signs of recovery as CBD workers begin returning to offices and motorists benefit from lower retail pump prices following the federal government’s temporary reduction in fuel excise,” the company said.
Refinery margins
Viva also reported strong margins from its Geelong refinery. As a result it received no government subsidies.
Margins in the first quarter of 2022 totalled $US8.3 per barrel, up from the $US5.9 per barrel in the previous period, due to strengthening refining margins as global oil demand recovers and oil market sanctions reduce supply. Viva said the Geelong refining margin in March was even stronger, at $US11.5 per barrel.
The federal government last May said it would pay Ampol and Viva Energy to keep producing amid heightened fears about Australia’s energy security as both companies struggled against larger Asian refineries and COVID-19 lockdowns.
Refineries will receive a maximum payment of 1.8 cents a litre when the margin they make per barrel of oil falls to $7.30.
The strong margins were a key driver behind Viva reporting its largest annual profit since its 2018 float in February.
Viva said its net profit for the 2021 financial year rose to $191.6 million, up from $33.4 million a year earlier.
While capitalising on strong oil demand, the company is also seeking to position for Australia’s energy transition.
Viva Energy last month said it would build Australia’s first public hydrogen refuelling station at its Geelong refinery site in a move aimed at capitalising on the transport and haulage industry’s expected transition to zero emission vehicles.
The refuelling station is part of a $43.3 million project – about half-funded by the Australian Renewable Energy Agency – that also involves construction of a 2 megawatt electrolyser and a financial contribution towards the funding of hydrogen-powered vehicles to be used by partners including Toll Group and Cleanaway.
Viva said it would spend $11 million to build the service station and electrolyser as the oil refiner pushed ahead with its plan to take a lead in the refuelling of hydrogen-powered trucks and buses, and to set up a nationwide refuelling network at its existing service stations along major road transport routes between Melbourne and Sydney, and on to Brisbane.
Extracted from AFR