Viva Energy Group Ltd said on Wednesday it expected its refinery business to make a loss in the third quarter and that it would make a decision on its future in December as the longer-term outlook remains highly uncertain.
Viva expects a A$30 million ($21.49 million) core earnings loss in its refining business in the three months to September, at a time when Australian refiners are under pressure from lower global demand for oil products, which Viva said would continue into 2021 and squeeze its margins.
"The company continues to incur unsustainable operating losses in this part of business and is pursuing all available options to improve cash flow and near-term profitability," Viva said in a statement.
It said it would provide an update on the future of its refining business in December, including on whether to continue operations beyond the first quarter of next year.
Design work on its liquefied natural gas import terminal in Victoria state is expected to start before the end of the year, Viva said.
With the industry under immense pressure and in spite of an offer from the Australian government with incentives worth A$2.3 billion ($1.65 billion) to keep it alive, rival Ampol Ltd said last week it was considering closing its Lytton oil refinery and weighing whether to turn it into a fuel import terminal.
($1 = 1.3963 Australian dollars)
(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Subhranshu Sahu)
