Geelong Refinery Production Nears 90% After RCCU Restart, Margin at US$23.9/bbl
Viva Energy has brought its Residue Catalytic Cracking Unit back online at the Geelong Refinery, pushing production to over 90% capacity following a fire in April. However, the Alkylation unit remains offline and is expected to be out of action throughout 2027.
- Residue Catalytic Cracking Unit restarted, boosting production
- Alkylation unit offline for remainder of 2027
- Geelong Refining Margin at US$23.9/bbl during April-May
- Fire caused by piping failure in Alkylation unit
- Insurance and cause investigations ongoing
RCCU Restart Signals Near-Normal Production
Viva Energy Group Limited (ASX:VEA) has completed repairs to the Residue Catalytic Cracking Unit (RCCU) at its Geelong Refinery, following the fire that disrupted operations on 15 April 2026. With the RCCU and related units back online this week, the refinery’s output is expected to exceed 90% of its usual capacity, restoring a critical processing capability that had been offline for over two months.
The RCCU is vital for converting heavier residues into higher-value products. Its restart will enable the refinery to improve product yields and enhance the Geelong Refining Margin (GRM), which stood at US$23.9 per barrel for April and May 2026. This margin reflected the impact of reduced production and lower yields following the incident, alongside rising crude premia during the period.
Alkylation Unit Damage to Keep It Offline Through 2027
In contrast, the Alkylation unit remains isolated and offline. This unit processes LPG, a by-product of refining, into gasoline, so its absence will constrain the refinery’s gasoline output capacity. Viva Energy is prioritising an assessment of repair or replacement options, but current evaluations suggest the unit will remain out of service throughout 2027.
The prolonged outage of the Alkylation unit means the refinery will operate with a reduced ability to convert lower-value intermediates into finished fuel products, potentially weighing on margins and product mix for the foreseeable future.
Preliminary Cause Points to Piping Failure
Investigations into the fire’s cause are ongoing, but preliminary findings indicate a failure in a section of piping within the Alkylation unit led to a fuel release that ignited the blaze. Viva Energy praised the immediate response of its refining team, which contained the fire quickly and minimised harm to personnel and the wider plant.
The company is actively engaging with insurers over property damage and business interruption claims arising from the incident, though no financial details have been disclosed yet.
Operational and Financial Implications
The return of the RCCU is a significant milestone in restoring the Geelong Refinery’s operational profile, reversing some of the production setbacks reported in earlier updates. However, the extended downtime of the Alkylation unit introduces ongoing operational challenges and potential margin pressure through 2027.
Viva Energy’s ability to fully recover refining margins will hinge on the Alkylation unit’s repair timeline and the company’s success in managing supply and cost dynamics during this period.
Bottom Line?
While the RCCU restart marks a recovery step, the Alkylation unit’s extended outage poses a notable drag on refining efficiency and margins into next year.
Questions in the middle?
- What is the detailed timeline and cost for Alkylation unit repairs or replacement?
- How will the refinery’s fuel output mix and margin profile evolve with the Alkylation unit offline?
- What financial impact will insurance claims have on Viva Energy’s earnings and cash flow?
