Shell plans to convert Sydney refinery into terminal

Rick Wilkinson
OGJ Correspondent

PERTH, Apr. 21 -- Shell Australia said it may convert its Clyde refinery in Sydney into a fuel import terminal since it can no longer compete with megarefineries in India and South Korea that produce more at lower cost.

This means Australia would be forced to obtain from overseas the 10% of its refined products that Clyde currently provides. Clyde produces 75,000 b/d and has been operating for more than a century. About 85% of the crude required to meet the product mix in Australia was imported from Asia in 2008-09 and about 15% from the Middle East.

Andrew Smith, Shell’s vice-president of downstream operations, says the fate of Clyde is not yet determined, and a consultation process has begun between management and employees. He said the proposal to turn the refinery into an import facility reflects that Clyde is no longer regionally competitive and requires significant investment, including maintenance turnaround scheduled for mid-2013.

If the proposal is accepted, the turnaround will not be done, and the facility will be converted into an import terminal prior to that date.

The boards of Shell Australia and Shell Refining Australia are expected to decide within weeks whether to close Clyde. However, any decision would be unlikely to affect the company’s other Australian refinery at Geelong in Victoria.