Emergency crews are responding to an out-of-control fire at one of Australia’s two remaining oil refineries, which supplies 10% of the country’s fuel.

Fire Rescue Victoria said the fire at Viva Energy refinery in Geelong, 65km southwest of Melbourne, was likely caused by an equipment failure.

It was expected to impact petrol production, Energy Minister Chris Bowen said.

Victorian emergency services sent 17 fire vehicles to the scene. No injuries have been reported.

Fire Rescue Victoria said it responded at 11.15pm (local time) last night after multiple reports of explosions and flames at the refinery.

“The fire is not yet under control, although it is currently contained to the plant,” it said, adding that the fire involved “liquid fuels and gases”.

FRV deputy commissioner Michelle Cowling told ABC Radio Melbourne the fire has been contained to the transfer part of the plant and would likely take 4 to 5 hours to extinguish, “because of the size of the tower that contains LPG, and there’s no physical way to get in to actually turn the valve off”.

“As you can imagine with significant fire, it is quite hot and has been burning since about 11pm last night, so until we can really cool that area down, that open valve where that leak has been is just draining that tank.”

The refinery supplies 10% of Australia’s fuel and 50% of Victoria’s, news.com.au has reported.

The fire sent smoke billowing across the region, with a sweeping “watch and act” warning for tens of thousands of residents, the Geelong Times reported.

Impacts on water quality are also being assessed by Victoria’s Environmental Protection Agency, with an alert warning Corio Bay residents to avoid contact with the water.

A wind change overnight led authorities to urge residents to shelter indoors immediately, but the Country Fire Authority (CFA) downgraded the threat this morning.

The cause of the fire would be investigated, but was not thought to be suspicious, Fire Rescue Victoria (FRV) assistant chief Michael McGuinness said.

Workers indicated a leak was detected shortly before the small fire began, quickly increasing in size and intensity after repeated explosions.

Petrol production impacted - refinery boss, minister

The fire would affect petrol production, Viva Energy chief executive Scott Wyatt said.

“The units that are impacted are in the petrol part of a collection of units that do make petrol,” he told the Australian Financial Review.

The priority was to make the site safe for workers.

“We’ve still got work to do, as Fire Rescue Victoria have said, over the course of the morning, to really contain and extinguish the fire, make it safe, understand what damage has occurred, and understand how we can safely restore production across the site.”

Two “units” of the refinery were out, Wyatt said this morning.

Victorian motorists can expect petrol outages in the coming weeks and months, following the fire, an expert says.

The units were in the petrol section, but there were also petrol units that had not been affected.

“Other units are operating at minimum levels to keep them ticking over.”

Bowen told the ABC that it wasn’t clear how fuel supplies would be affected, but the fire “will have an impact”.

The refinery was still producing diesel and jet fuel, but “at reduced levels, as a precaution”, Bowen told ABC News Breakfast.

“The major impact at this point appears to be more on petrol production.”

‘We can expect petrol outages across Victoria’

Victoria could expect petrol outages in the coming weeks and months, Australian National University supply chain expert David Leaney told the ABC, adding that the “timing is terrible”.

“The impact will be most serious for Victorian petrol supply, and to a slightly lesser extent, Tasmania”, with consequences in other parts of Australia being more minor.

He did not expect diesel or jet fuel to be affected.

Saul Kavonic, an energy analyst at MST Financial, said the Government would have to “scramble additional fuel imports” at higher prices, increasing the risk of further shortages.

The fire came “just as the crunch point of the global fuel shortage is about to hit us”.

‘Not suspicious’ - fire chief

A significant leak of liquid hydrocarbons and gases had fuelled the fire, said McGuinness, the FRV assistant chief.

The “quite ferocious” fire was still burning but had been contained to an area of 30 metres by 30m.

It started in the part of the refinery where motor gasoline was produced, with 50 firefighters sent to put it out.

“There’s been some sort of leak, there’s hydrocarbons, flammable liquids which very readily caught fire,” McGuinness told the ABC.

“It was burning in an area of approximately 30 metres by 30 metres. There have been several small explosions.

“The fire went from a small fire, through several explosions, to be quite a large and intense fire.”

The fire would be investigated, but was not being treated as suspicious, he said.

“It may very well be just a malfunction of a piece of pipework or a valve.”

Union says fire ‘not unexpected’

Peter Marshall, secretary of the Victoria branch of the United Firefighters Union, said it had brought up “serious concerns” about a two-minute increase to fire response criteria at the refinery.

“This could have gone horribly wrong. It’s not far from residential areas. It is a known facility and a very old facility, and we’re very lucky to have the people that we do have who are actually performing the work as firefighters.

“It’s not unexpected when you actually have a 1950s facility working at full capacity against the backdrop of the fuel crisis.”