A fire at the largest of Australia's two oil refineries has hit petrol production just as the nation faces pressure to shore up fuel security with the Iran war disrupting global supply.
State fire authorities said the blaze, which broke out at a 120,000 barrels-per day refinery run by Viva Energy on Wednesday night, had been brought "under control" at noon on Thursday.
The fire came at a bad time for Australia as it depends on imports for 80% of its fuel needs and has been racing to replace supply disrupted by the Middle East conflict, which has driven up energy prices worldwide.
"This is not a positive development, but obviously there's a long way to go in terms of working out just what the impact is," Energy Minister Chris Bowen told Channel Nine.
Viva Energy's refinery supplies over half of the fuel in Australia's second most populous state, Victoria, and a tenth of the country's total demand.
Fire crews were dispatched to the site in Corio, southwest of Melbourne, about 11pm on Wednesday following reports of explosions and flames.
The Viva Energy Geelong refinery supplies more than half of Victoria's fuel and about 10 percent nationwide, according to Viva's website.
Viva Energy called a trading halt on its shares on the stock market, ahead of an update on the damage caused by the blaze.
Disruptions to petrol production are expected as a result of the fire, while production of other fuels is expected to slow in the immediate term.
While investigators will probe the cause of the fire, Fire Rescue Victoria deputy commissioner Michelle Cowling said equipment failure was likely to blame.
"It looks like a valve has given way and has started a small leak," Ms Cowling told ABC.
"(It) obviously found an ignition source and ignited into a significant explosion.
The company said it expects output of petrol and aviation gasoline will be affected, but it will meet fuel demand through imports.
The plant is still producing jet fuel and diesel but at reduced levels for safety reasons, Bowen said.
“I would expect we'd see a price hike depending on the scale of the damage, and secondly, it reinforces the challenges we have in terms of sovereign and resilient capabilities here,” Australian Strategic Policy Institute analyst John Coyne said.
The incident comes as Prime Minister Anthony Albanese visits Kuala Lumpur on Thursday to discuss securing fuel supplies with his Malaysian counterpart, Anwar Ibrahim, following similar trips to Singapore and Brunei.
Malaysia and Brunei, which produce crude oil and refined products, could increase production but only to a certain degree, Coyne said.
No injuries have been reported from the fire at the refinery located about an hour's drive from Melbourne. The cause of the blaze and the extent of the damage was not immediately clear.
In the nearly seven weeks since the war began, supply fears have stoked panic buying, doubling demand for fuel in some areas, despite assurances from the government the market is well supplied.
Last month, Albanese announced temporary relief measures including halving the fuel excise and suspending the heavy road user charge for three months to help households cope with a surge in costs driven by the Iran war.
"It's going to be a very bumpy and expensive few months,” said Tennant Reed, climate change and energy director at Australian Industry Group.
In March the government committed to underwriting a portion of fuel purchases by refiners and suppliers.
"We'll continue to work with the company to do what we can to make sure that anything that is offline is brought online as soon as possible," Albanese said at a media conference in Malaysia's administrative capital, Putrajaya.
Reed said the government could go to market to secure more supply to make up for any loss of production at Viva's plant, but it would still take weeks for the cargoes to arrive.
Viva Energy CEO Scott Wyatt told reporters the primary focus was to completely put out the fire that hit operations at two units at the refinery before assessing damage and safely restoring production.
"All the other units are still operating and still in production but they are at minimum rates to maintain safety across the site," he said.
"We'll only start increasing production again once we're confident that we can do that safely."
The fire broke out at units responsible for the production of petrol, speciality regional products and aviation gasoline, which is distinct from jet fuel.
Petrol production has been disrupted but imports will be sufficient to cover any shortfalls, Viva Energy Australia's chief executive Scott Wyatt said.
"We'll only start increasing production again once we're confident we can do that safely," Mr Wyatt said.
"To the extent we have shortfalls in production, just cover that with our import programme, which is quite full for the next… couple of months."
The Victorian government has been assured there is no immediate impact on fuel supply, state Energy Minister Lily D'Ambrosio said.
"There's no cause for alarm," she told ABC Radio.
"From indications thus far from Viva ... they have in hand those additional shipments."
Petrol is far more easy to import through the global market than diesel or jet fuel, she added.
The refinery can produce more than 120,000 barrels of oil per day, manufacturing petrol, diesel, jet fuel, LPG, avgas and low aromatic fuel.
Along with Ampol's Lytton Oil Refinery in Brisbane, the Geelong plant is one of two facilities capable of refining fuel domestically.
Both have been under the spotlight in recent weeks amid fuel security challenges related to conflict in the Middle East.
Energy Minister Chris Bowen said the fire came at an inopportune time given global supply constraints, but insisted production would not come to a grinding halt.
"At this point, production of diesel and jet fuel continues and (there is) no reason to believe at this point that it will stop that," he told the ABC on Thursday morning.
"I'm sure that petrol production will continue, but it may be impacted for some time."
Opposition Leader Angus Taylor said the fire would have a direct impact on the country's fuel supply.
"It was a horrific scene we've seen today of the fire down at Geelong," he told reporters at the Gold Coast on Thursday.
"I'm glad to hear that as far as I know, at least there's been no safety issues there, but clearly there will be an impact on our fuel supply."
About 50 firefighters, ten fire trucks and a boat attended the scene, Fire Rescue Victoria assistant chief fire officer Michael McGuinness told reporters.
"(It was) quite ferocious. The fire went from a small fire through several explosions to be quite a large, intense fire," Mr McGuinness said.
There are no reported injuries and all employees and emergency responders have been accounted for.
