The Viva Energy Group Ltd (ASX: VEA) share price is in focus as the company welcomes an update to government support for its Geelong Refinery, lifting the critical Fuel Security Services Payment (FSSP) Margin Marker cap and collar by 3.6 cents per litre.
What did Viva Energy report?
- The Federal Government has increased the Geelong Refinery FSSP Margin Marker cap and collar by 3.6 Australian cents per litre (Acpl), equivalent to A$5.7 per barrel.
- FSSP support will now kick in when the average Geelong Refining Margin Marker drops below 10 Acpl (A$15.9/bbl) over a calendar quarter.
- The maximum support rate remains at 1.8 Acpl (A$2.9/bbl) on key transport fuel output.
- Viva Energy has invested roughly $500 million in refinery and storage projects since FSSP began, bolstering fuel security.
- Additional fuel storage infrastructure has been completed in Perth and South Australia.
What else do investors need to know?
The latest boost to the FSSP means support for the Geelong Refinery will better reflect today’s higher operating and capital costs. This follows extensive consultation with the government to ensure local refining remains viable and continues supplying about 20% of Australia’s fuel needs.
Viva Energy completed major investments over recent years, including an upgrade to produce low sulphur petrol and the construction of new diesel storage. These projects help meet stricter environmental standards and strengthen supply chains for both Victoria and the nation.
What did Viva Energy management say?
CEO and Managing Director Scott Wyatt said:
Today’s announcement underscores the important role that domestic refining plays in strengthening Australian energy security. Viva Energy is proud to own and operate one of the two refineries, that together produce approximately 20% of the country’s fuel requirements. Viva Energy’s refinery at Geelong produces approximately 50% of Victorian fuel requirements and holds a significant proportion of the country’s oil and fuel reserves. We welcome the Federal Government’s continued support for domestic refining.
What’s next for Viva Energy?
With the revised FSSP in place until at least the decade’s end, Viva Energy’s Geelong Refinery gains more stable financial backing. This allows the company to focus on further improvements, potentially advancing sustainability and energy security goals as part of its long-term strategy.
Investors can expect Viva Energy to maintain its investments in storage infrastructure and cleaner fuels, consolidating its role as a cornerstone of Australia’s fuels supply network.
Viva Energy share price snapshot
Over the past 12 months, Viva Energy shares have risen 42%, outperforming the S&P/ASX 200 Index (ASX: XJO) which has risen 7% over the same period.
The post Viva Energy welcomes government boost to refinery support appeared first on The Motley Fool Australia.
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