Three-week Vic petrol tanker sit-in ends

A three-week standoff in Melbourne's Port Phillip Bay has ended, with a group of sailors and their union calling on the government to protect jobs and fuel security.

Petroleum ship Tandara Spirit and its crew set sail for Singapore about midday on Wednesday, after refusing to move for 20 days.

The crew started the action after they were told to sail to Singapore, where they expect to be made redundant, but ended the dispute to avoid "destructive legal action".

The Maritime Union of Australia and the crew say their usual route will likely be replaced by another ship, with foreign workers.

But Viva Energy Australia says it no longer requires a costal vessel to transport petroleum products within Australia because truck-based deliveries in the state have increased.

"It does not make sense to continue to hire a dedicated coastal vessel at a cost of tens of millions of dollars if the need has substantially reduced," Viva Energy Australia spokeswoman Jessica Marriner said in a statement.

"If Viva Energy needs to charter a vessel from Geelong Refinery, it will be on a spot charter basis."

The company said the ship's contract expired in January and the vessel had to be returned to its owners in Singapore.

Teekay Australia, the operator of the vessel and employer of the crew, said no decision had been made but the crew of 36 would likely be made redundant, with full entitlements.

MUA Victorian branch secretary Kevin Bracken called on the federal government to step up.

"It's a tragedy when working people face having their house taken off them, when they're doing the job which the government of this nation should do," he told reporters.

The crew and union have also raised concerns about Australia's fuel security and environment, claiming there is a risk in allowing foreign workers to control the import of petrol and diesel.

"We believe that a serious environmental disaster in Australian waters is inevitable," they said in an open letter.